importance of business license
Today in the modern world, everything is bought online. If you have a store online, you need an online business license. To be honest, you just do not need a license or other permits to make your business credible. It is also essential for the legal requirements to establish your company. Here in this article, we have listed everything you need to know about having a business license.
What is a business license?
In easy words, a business license is a permit to run and operate your business. Similarly, an online business license allows you to run your business online. However, the type of license you need varies on the state and government laws, but their purpose is the same. These permits show that you have legal permission to operate your business in an area or online.
You need a business license to prove that your business is legit and legal regardless of what you are selling. There are many factors to consider when applying for an online business license.
A seller’s permit or a business license
While most people confuse a seller’s permit with a business license, both of these are very different from each other. A seller’s permit is required for businesses that sell goods and taxable services to residents. It allows you to register your business to collect taxes and sell taxable items. In some states around the world, you are provided with a temporary selling license to cover a specific period. Ideally, businesses can register themselves for an area where they have a physical presence.
On the other hand, a business license is also called a general license or a business operating license – which permits you to operate online as a company in a certain area. Almost every business (physical or online) requires this license to operate. However, the requirements and fees may vary depending on certain factors.
These business licenses are to be renewed every year.
Licenses needed to sell online
Depending upon the nature of work, you might need a mix and match of licenses. These licenses are made considering the laws of federal, country, and/or state to run your business online. Here is a list of licenses that you might need to sell online:
- Seller’s Permit
If you sell products that qualify to be taxed, most laws require you to obtain a seller’s permit – with or without a physical store location. You need permission to collect tax, which a seller’s permit will allow you to do. Moreover, it allows you to purchase certain products without paying taxes. You are given a resale certificate, which confirms that the products you are buying will be sold through your store either wholesale or retail.
- Sales tax license
An important part of selling services is that your customers are paying taxes. Charging your customers for taxes is a requirement, not an option. In case you do not do it, you will be charged with penalties. However, this again depends upon the area you are living in. Make sure you check for the regulations and laws before starting.
- DBA license
This is the most common license, known as Doing a Business License. For this license, not all businesses have to register. If you have a business that is not under your own name or wants to operate under a pseudo name, this license is your requirement. It gives you permission to trade under a supposed name. You need this license to execute certain contracts, such as opening a bank account. Although this business license only applies to some businesses, we recommend you check with your state requirements. Moreover, if you previously had another name and have changed it to something or wish to do so, we strongly recommend you look into doing a business license.
Maintain your business license
The next step after you get a business license is to maintain it. Every year, you should make sure that your business fulfills the requirements of the license that it holds, even if the renewal is not required at the moment. As most businesses require the license renewal every year or even biannually, you must check the websites annually that announce the requirements in regards to the license renewal. This would help you stay updated regardless of the license requirements of your business.
Many state websites provide opportunities to sign up for email notifications. This could be one of the great ways to stay updated about any new or changed laws in the area you live.
A lot of excitement comes with plans for a new business. However, while you get excited to start new – make sure that you start a business through proper channels. The biggest risk you can put your business into is not getting a license at all. The license your business needs depends upon the type of business and the place you are living in.