Business License to Sell on Amazon – Do You Need a Business License to Sell on Amazon?
If you plan to put up a business, you should plan it well. Online and offline markets have their own sets of rules and requirements. Getting a business license will give your store an identity. Amazon aims to provide sellers with a selling platform where anyone can sell their items and make a profit.
Amazon will not require any licenses from the seller, yet you can register your business as LLC when you plan to expand and hire more people to work under you.
As a start-up business and sole proprietor, you just need to study the process of selling and drawing profit from Amazon.
When you want to sell on an online platform like Amazon, you need to comply with all the primary documents and information that the platform will need to start. Amazon also wants to ensure that all their sellers are genuine in their intention to sell and do not goof around in the marketplace. Sellers should know that being a part of an Amazon platform is easy.
Difference between the Business License and the Seller’s Permit
A business license is a whole different document from the seller’s permit. If you have a business license, you can conduct business in the state where you will be operating.
Being a part of Amazon, the platform itself did not require you to submit a business license to operate online. If you are a seller that sells items and goods at wholesale and retail directly to the customers, you should obtain a seller’s permit for you to sell on the Amazon marketplace.
What is Amazon, and how difficult is it to start selling on this platform?
Amazon is an eCommerce platform website and the largest eCommerce store where businesses, manufacturers, and individual entrepreneurs can sell their goods. Thousands of entrepreneurs started earning on Amazon and continue to make profits online through the following proven processes of marketing. In 10 years, Amazon is considered the most overvalued online market in the US and continuously gaining popularity with customers.
Amazon is the most accessible platform where you can start selling goods online. You might worry if you become successful in registering on this marketplace without submitting your business license. Amazon welcomes eager business owners to sell in Amazon stores and be their own partners in delivering goods to Amazon consumers and customers.
Amazon’s headquarter is located in Seattle, WA, USA, but they have individual websites and fulfillment centers in different locations worldwide. It provides jobs to thousands of workers – the reason for their successful operations over the years. Lots of entrepreneurs invested in Amazon because of the number of millionaires it produces yearly through eCommerce.
Amazon provides everyone the opportunity to use the platform. Once you are of legal age and understand the rules and regulations of the platform, you can register your business right away without worrying about the business license.
Amazon believes in a Lean Start-up Method that favors non-complicated registration. Through this, business owners can start selling and making a profit from the platform. Amazon works with wholesaling, FBA, and Dropshipping. It provides the seller to specialize and customize their marketing strategies to maximize their income. With the boom in eCommerce, the vision has become a reality for Amazon’s owner and is presently showing growth and eCommerce domination in the USA.
What are the requirements for selling on Amazon?
You don’t need any documents to start up selling on Amazon. All you need to do is register the basic information that the website needs to start up. The website will also require the details of the seller and information about the business. If you are planning to sell taxable goods, you can inquire about taxes in your respective area.
Do you need a business license to sell on Amazon?
Anyone can be an Amazon seller. Amazon will not require a business license to start your business, except if you are to sell your goods in your neighboring State. Your location and the kind of product that you will sell will determine your need for a business license.
In the United States, Amazon only requires your business information for you to start selling, and government approval to start selling on any eCommerce platform is not necessary. If you are starting up and want to sell a few goods on Amazon, registering as a sole proprietor is the best choice.
The fact that most of the items being sold online are consumer goods, US government approval for a business license is not necessary for online transactions. Businesses that are selling federally-regulated items in the United States will require a business license to operate. This is also mandated for all other eCommerce platforms registered and working in the United States.
What are the products considered as the “Federally Regulated Products?”
Amazon follows two sets of rules when it comes to restrictions. These are restricted categories and restricted categories of products. Amazon doesn’t have a clear description of the restricted products. The only general rule when you are planning to sell on Amazon is to do product research ahead to ensure a smooth transaction in your online business.
Before you plan for your business and what products you wish to sell, you should know their category first so that you can secure documents before placing them on any eCommerce platform.
Federally regulated products are products that can or might cause health problems and danger to humans and animals when they are not properly secured and administered. Some of them are living animals in the wildlife and fish, which are popular on some online selling platforms.
Although sellers would justify that they will secure the products and containers on the shipping of these goods, there might be some instances that it will explode, leak, and cause danger on some items during shipping. The business license serves as legal protection for the seller. An eCommerce platform such as Amazon maintains its goal of maintaining a safe marketplace for everyone.
If you sell federally regulated products online, all eCommerce websites operating in the United States shall require sellers to submit their business licenses. Federally regulated products are considered dangerous when they are not properly administered and might cause health problems to users, living matters, and surroundings. Here are some items sold online that are classified under Federally Regulated Products:
- Alcoholic and Tobacco
- Firearms, Ammunition, and Explosives
- Fish and Wildlife
- Maritime Transportation
- Nuclear Energy
- Radio and Television Broadcasting
- Drugs and Paraphernalia
- Currency, Coins, and Cash equivalents
- Jewels and precious gems
- Recall Products
- Surveillance Equipment
- Refrigerants and all other substances can harm the ozone layer.
If you are selling none of these products, then you can now start selling on Amazon and earn.
Choosing the proper business structure
Choosing the proper business structure is very important in a start-up business. Your business structure is the exact plan of the business. Normally, all businesses will face risks. The structure of the business will help the business to see and manage the risks.
Start-up business owners who started their business and registered as sole proprietors freely sold their items without a business license. Business licenses only come in when you plan to hire more employees under your umbrella and restructure your business as an LLC. This business structure is for the growing business.
1. Register your business as a DBA
DBA, also known as a fictitious business name filing. It protects the consumers who are conducting business with the entity. You can still use DBA even if you are running a sole proprietor or a partnership.
2. Register for Sales Tax and get a Sale Tax ID
You might have probably met this term before from a buyer’s perspective. Sales tax is simply defined as the minimum amount added to the original price of an item that a customer would pay. It is included in every sales and tax report of the seller. Online merchants who use an online platform in business can charge their sales tax online. Taxes play an essential part in any running business.
Since you already know about the different licenses you need for legal, you should check out this blog too: Things You Should Never Do to Get Your Amazon Account Suspended.
Frequently Asked Questions
Do you need a business license or any permit when you want to sell on Amazon?
No, there is no need to get clearances or business licenses when you are planning to sell your items on Amazon, except if they are planning to sell items that are regulated by the state as Federally Regulated Products.
What happens if a seller does not live up to its promises on its listings?
Amazon does not want anyone to be deceived by the use of its platform. If there is somebody who wants to bend the rules, consequences might be listing cancellation, limitation, suspension, or removal of listing privileges which can be difficult to reinstate, thus, compliance to the rules and regulations of Amazon is very necessary.
What documents does Amazon require when you want to sell on their platform?
Amazon does not require any documents when you start up as a sole proprietor. They will require sellers to register with their business information.
Do I Need a State Sales Tax Number in Operating for Multiple States?
There are different fulfillment methods in Amazon that you can use when you sell on the platform. You have FBA, FBM, and many more. FBA or Fulfillment by Amazon is the process wherein you need to apply for state sales tax numbers where you are planning to operate your FBA service. It is illegal to operate in any state in the US if you did not comply with the State rules.
Even if you are operating online, you are still operating normally like the other business owners who need to comply with the tax obligations. From the permits, licensing, certification, and TIN, a business owner should verify the documents that they should comply with during their application on Amazon. Knowing these, will keep your account active and at the same time avoiding facing criminal charges.
If you want to sell on Amazon, it is to start. No business license is required for that. However, after reading this blog, there are specific rules and recommendations about the process, which you now know. Hopefully, they will help you start your business in eCommerce and scale it and make a decent profit out of it.