Do You Need a Business License to Sell on Amazon?

Kahnattorneys.com – Selling products on Amazon is an excellent method of earning an extra income. If you want to be an Amazon seller, you must not hesitate to make an Amazon seller account. You may be questioning ‘Do you need a business license to sell on Amazon?’ before making this account.

You can find the answer to this question here. Moreover, here, you can also find other related information on this topic. Therefore, you can make your Amazon seller account without worrying too much about licenses, permits, and other documents.

About Business License

A business license is a document that gives the document holder the right to run a business. Business licenses are available in several types. Business owners do not need to have all these licenses. The license they must acquire depends on the product or service they offer and the location of their business.

Below are several types of business licenses.

• Wholesale License: This license is for business owners who purchase products in large quantities from distributors or manufacturers. Having a wholesale license allows you to sell these products without charging tax to customers who have a reseller permit.

• Professional License: The professional license is for specific professions and trades. Trade examples that require this license are trading cosmetics, foods, and health-related products.

• Sales Tax License: Those who sell goods that are subject to tax must have a sales tax license. Sellers with this license can collect tax from customers and forward it to the government.

• Home Occupation Permit: A home occupation permit is a must-have for those operating a business at home. However, some states may require different permits or licenses to run a business from home.

Do You Need a Business License to Sell on Amazon?

Do I need a business license to sell products on Amazon? Yes, you do. Amazon does not require sellers to have a business license to sell products on its platform. 

Amazon applies this policy because most products sold on the platform are not federally regulated. In general, they are consumer products, which sellers can trade without government approval.

However, Amazon will ask sellers to register their professional selling plan if they intend to sell over 40 items per month on this platform. Moreover, these sellers must have an Amazon Professional Seller account. They also need to pay a monthly fee of $39.99

In conclusion, the answer to the question of ‘Do you need a business license to sell on Amazon?’ is no. Therefore, everyone can have an Amazon seller account and sell products on Amazon without the hassle of obtaining a business license.

The Advantages of Having a Business License

Nonetheless, some experts recommend Amazon sellers to have a license or to register their business. Obtaining a license and registering your business will give you some advantages.

• Professionalism: Registering your business and acquiring a business license will give the impression that you are a professional seller. This professionalism can attract more customers. They think that you are a trusted seller and it is safe to conduct business with you.

• Legitimacy: Your business license will also give customers the impression that you are a legitimate seller. This legitimacy will make customers more confident in purchasing your products. Therefore, they will make repeat orders and become loyal customers.

• Better Product Pricing: A business license will give you access to specific wholesale suppliers or platforms. To shop at these suppliers or platforms, you must show proof of your business license. This access allows you to purchase products at lower prices.

• Tax Deductions and Incentives: Your business license may qualify you for particular tax incentives and deductions. Therefore, you can lower your tax liability.

How to Obtain a License and Register a Business for Amazon Sellers

Since the answer to the question of ‘Do you need a business license to sell on Amazon?’ can be a yes, you must consider obtaining a business license as soon as possible. Obtaining a business license and registering yourself as an Amazon seller is not difficult.

You can follow the steps below to get a business license.

1. Researching Business Regulations in Your Area

Different states may have different regulations on selling products online. Therefore, you must research the business regulations for online sellers in your area. You can research the regulations on your local business bureau or government office.

Moreover, you must understand the regulations applied to local Amazon sellers. Observing these regulations will allow you to have smooth online trades.

2. Select a Business Model

The next step is selecting a business model. Most Amazon sellers set up their business as a sole proprietorship and LLC (limited liability company). The sole proprietorship is ideal for a small business operated by a single individual.

This business model does not require you to form a separate legal entity. Meanwhile, an LLC offers you the benefits of a corporation, such as protection for personal assets.

Moreover, it also offers the simplicity of a sole proprietorship. Therefore, many Amazon sellers prefer to set their business as an LLC. 

3. Register the Business and Obtain the License

After selecting a business model, you can visit local authorities to register your business and obtain a license. Different business models require different documents.  Therefore, you must prepare them in advance.

Moreover, registering your business may involve obtaining a federal tax ID. What license do you need to sell on Amazon? It depends on the type of business model and the products you sell.

For example, you need a professional license if you sell cosmetics, foods, and health-related products on Amazon. Moreover, you must have a home occupation permit if you sell home-made products.

Do You Need a Business License to Sell Products on Other Marketplaces?

Selling products on several marketplaces can boost your profits. Therefore, you must not only sell your products on Amazon, but you must also sell them on other platforms. However, you must find out whether or not you must have a business license to sell on these platforms.

Shopify doesn’t require its sellers to have a business license. However, eBay will require you to have a business license if you purchase items from wholesalers or have an eBay store.

Do you need a business license to sell on Amazon? This marketplace does not require sellers to have this license. However, having a business license will give sellers advantages. It will make customers more confident in doing business with them. Therefore, they will have more customers and higher profits.