Home and online business license requirements

General business license and registration requirements (home-based, ecommerce, brick-and-mortar)

Your license, permit, and registration requirements depend upon several factors: type of business, business structure, whether you have employees, and geographic location of the business. The following licenses and registrations are not home-business or ecommerce specific — they are just part of the process of opening any business. (While few businesses will require all the permits, each business will require some.)

Secretary of State registration

Forming a legal business entity such as an LLC or corporation involves filing with the Secretary of State.

EIN 

An Employer Identification Number (EIN) issued by the IRS. An EIN is the business equivalent of a Social Security number and is needed for taxes, banking, and payment.

General business license

The jurisdiction where your home is located is likely to require a general business license. This license, sometimes referred to as a business privilege license or business tax registration, serves a two-fold purpose. First, licensing protects the residents of the city or county by identifying businesses operating in its jurisdiction. Second, licensing raises revenue for the local government. For this reason, most general business licenses must be renewed annually.

Sales tax registration

If you sell tangible goods — even online — you may need to collect sales tax from your customers. Plus, many states tax a wider variety of services than they have in the past, so you may need to collect sales tax if your business is a service business. If you are required to collect sales tax, you will need to apply for a tax permit with the state tax department. (In most states, you must have registered before your first sale is made.) You can obtain more information from your state’s department of revenue website.

Additional sales tax requirements for ecommerce businesses

You may also need a sales tax permit and be required to collect sales tax in other states, even if you don’t have a physical location in those states. A 2018 US Supreme Court decision, South Dakota v. Wayfair, Inc., held that a physical presence is not necessary for a state to require a seller to charge and collect tax on sales to customers in the state. A threshold level of activity is required, which may be based on the revenue earned in the state, the number of transactions, or another basis. More information can be obtained from the revenue departments of the states where you make sales. It's also a good idea to have a conversation with your accountant before you start taking orders. For more information on sales tax requirements for online businesses, see An updated look at the impact of the supreme court’s Wayfair decision on state sales tax laws.

Professional/occupation licenses

In addition to the licensing requirements imposed on businesses, states require certain professions — such as attorneys, architects, contractors, and hair stylists — to have state-issued licenses or certificates. Every state has its own list of licensed occupations, so it is essential to know your state’s laws.

DBA or assumed name registration 

Every state has its own DBA ("Doing Business As") requirements for businesses. If your business is operating under a name other than your own name (if you are a sole proprietor) or the name of all your partners (if you have a general partnership) or the name of your corporation or LLC (if you formed one), you will need to register that assumed name. You may even have to register your assumed name in multiple locations, such as the county and city where you’re doing business.

Unemployment and worker’s compensation registration 

In some states, you must register even if you are the only employee.

Weights & measures registration

If you weigh items for sale, your state may require that you have this type of permit. These permits are state-specific and sometimes even city-specific, so check with your local government to determine what may be required.

Alarm permit

You may need a permit from a “fire protection district” or the local government if you plan to install a commercial fire alarm system. If you provide home-based childcare, you may have to have your home inspected by the local fire department prior to receiving a permit to operate your business.

Health inspection/certification

If you prepare any type of food products, you may be required to obtain permits and undergo inspections. In fact, you may find you need both food industry related permits at the state and local levels.

Privacy, advertising, and digital rights/copyright laws

Every business owner needs to be aware of — and comply with — a variety of privacy laws and online advertising and marketing laws.

If your business will be largely conducted online, you will also need to understand your obligations under digital rights and copyright laws. Violating these provisions, even unintentionally, can be a costly mistake.

CT Corporation can help

Farming out business registration and license research, applications, management, and renewals can help you take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of all the licensing applications and instructions you need to operate your online or home-based business legally, you can focus on starting and growing your business while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us.

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