Do you need a business license to sell on Amazon?

In many cities and states, including California, selling on Amazon requires obtaining a business license, TIN, licenses and certificates. A business license is also known as a business permit in many cities.

Selling on Amazon, Example

Heather makes custom-made jump ropes, and though she hasn’t started an official business yet, her products have already earned rave reviews. Heather’s friends and family in Los Angeles, California, love her lightweight exercise ropes, each decorated with a customizable design and available in bright colors and different sizes.

Heather does some research and finds that there is not much competition for selling jump ropes on Amazon. However, based on her friends’ early feedback, and the advice of her family, Heather decides she might be sitting on a million-dollar idea. She even knows what she wants to call the new online company: Heather’s Hops.

Heather couldn’t be more excited about her new idea and taking high-quality pictures of the jump ropes and videos of people using them. Everything appears to fall into place until Heather speaks to her friend Sally.

Sally asks Heather what Heather knows about selling on Amazon. For example, Sally asks, do you need to register your business first? Heather tells Sally she isn’t sure. Sally continues: does Heather need a business license to sell through Amazon? Heather shakes her head—she doesn’t know the answer to that question, either.

Heather makes a list of questions she needs to be answered before selling her jump ropes, including:

Does Heather need a Tax ID Number?
Does the online business need a license?
Does the online business need to be registered
How should the online business be structured?

Heather is worried that she could lose her competitive advantage on Amazon when she finds the answers to these questions. Heather needs to find out more information about selling goods online and fast.

How Can I Successfully Sell Online?

Across the country and worldwide, entrepreneurs are exploring what it is like to sell their goods online through platforms such as Amazon, eBay, and Etsy. However, even experienced business owners have questions about the rules and regulations that surround online vending.

Do the rules correspond to the state, country, or website? What do entrepreneurs need to start an online business? Do they need a specific license to use Amazon as their marketplace?

This article will cover the process of selling goods online on Amazon and similar websites. When an entrepreneur wants to sell on Amazon, there are certain things they must do and other things they do not need to worry about. This article will explain everything business owners need to know about selling goods online.

Can I Sell Products Online Without Registering For Business?

For entrepreneurs, the business landscape changes quickly every day. This seismic change means new and old entrepreneurs often have questions about everything from licensing to technology to business structure. In addition, many entrepreneurs have questions about selling items online and whether businesses that want to start selling through online platforms need specific licenses.

For example, many entrepreneurs look at the profits of a company like Amazon.com and want to find out more about selling their goods on the site. Amazon has become a model of efficiency and profitability, and many entrepreneurs want to take advantage of Amazon’s vast built-in audience, ease of use, and company-friendly sales policies. However, entrepreneurs all over want to know: do they need a business license to sell their goods on Amazon?

The brief answer to this popular question is that companies, including Amazon, do not need business licenses to sell their wares online. The justification for this is that most of the products sold on Amazon are without federal regulation. In addition, most products sold online through various platforms are sold without government approval or intervention.

Many other platforms, like Amazon, do not require business licenses to sell through. These include Facebook, Etsy, Craigslist, eBay, and Shopify.

For example, suppose an entrepreneur in the fashion industry wants to sell their sweatshirts and sweatpants on Etsy. In that case, they can do so without forming a business, registering it, and without a business license. However, the entrepreneurs must comply with Etsy’s terms and the percentage that Etsy charges or takes from each sale, depending on Etsy’s official policies.

This short answer may seem satisfying, but there is more to say. In this article, we will provide all of the necessary details entrepreneurs should be aware of regarding selling their products online. We have you covered from licensing and legality to the business structure if you want to start an online business.

How Do You Make An Online Business Legal?

When a business owner’s company begins making reporting a profit, it is time to take care of the following tasks. Here are the four important steps entrepreneurs must take to ensure that their online business operates legally.

Select a Structure for the Business

Depending on the size of the company, desired tax structure, location, and goals of the owners or partners, it is time to decide how the company will be structured and what roles the partners will fill. Again, many choices exist, from a sole proprietorship to an LLC.

Register the Business

Once the owner chooses the company’s structure, the company must be registered with the state. Visit the secretary of state’s website for instructions regarding registering the business. At this point, the business also needs a name, and unless the company uses the owners’ or partners’ names, the business will need to select a Doing Business As (DBA) name.

Obtain a State Tax ID

Next, the business needs a State Tax ID to sell goods legally. This ID also allows the business to pay state taxes without any problem.

Obtain a Federal Tax ID

Businesses cannot forget to also get a Federal Tax ID. This ID differs from a State Tax ID because it allows the business to pay federal taxes without hiccups.

What Business Structure Should I Choose?

Many entrepreneurs are unaware they can start a company without choosing a business structure. However, most attorneys and business veterans do not recommend doing so. A formal business structure provides the business with financial safety and legal security. For example, if a client or competitor was to take legal action against the business, and the business did not have a formal structure, the lawsuit could create problems.

Online businesses often start small, so sole proprietorships are popular, especially when web-based companies are just starting out. An entrepreneur can start a business from their home, for example, selling homemade smartphone cases. The entrepreneur’s income is reported on their income taxes yearly, and the sole proprietorship can continue successfully.

Another choice for online entrepreneurs is a Limited Liability Company (LLC). LLCs are a great choice for online owner building their business and adding workers as they go along. LLCs are popular because they allow owners to separate business expenses from living expenses. LLCs are also structured so that business owners do not personally take on the debts and liabilities of the business.

Business structure is one of the most important choices when selling goods online. The decision can be challenging, and we recommend consulting a certified public accountant and an experienced business attorney. LLCs and Sole Proprietorships are excellent choices for new online companies. Many entrepreneurs begin with sole proprietorships and then change to the LLC structure as the business evolves.

How Much Does it Cost to Register a DBA in California?

When entrepreneurs want to conduct business as a person other than themselves, they must register as a DBA.

For example, if an LLC is registered under the name “Dick Vale Enterprises LLC” but Dick Vale wants to run his business under the name “D’s Smart Smartphone Cases,” then the names would be as follows:

Dick Vale Enterprises LLC
DBA D’s Smart Smartphone Cases

A DBA name allows the entrepreneur more freedom in naming the business and, in many cases, gets more exposure based on the information the name conveys.

For example, if a business owner finds a sole proprietorship and they are selling coffee, they might want the company to be named “Java for Jazz.” They would need a DBA name to use this name. Since every state deals with DBA names slightly differently, the best thing for business owners is to contact the local government and visit the secretary of state’s website for instructions.

Why Do I Need A Tax ID Number For My Business?

When business owners want to begin selling online, they must pay attention to their state tax policies. However, they also must realize that their buyers will probably be from all different states when selling online.

These more wide-ranging sales mean that the entrepreneur must collect the correct sales tax from each state they do business in. For example, suppose the business owner lives in Rhode Island but sells their coffee cups to people who live in California. In that case, they must do their due diligence in collecting sales tax and reporting it to California.

Additionally, those wishing to sell goods online cannot open a business bank account without a Federal Tax ID number, also known as an EIN. Do not forget this important step because if the owner structures the business as an LLC, a business bank account is an excellent idea that helps with financial security and account separation.

Sole proprietors do not need a business bank account, but we recommend separating bank accounts to keep personal funds away from business finances.

Remember that entrepreneurs must apply for their EIN with the Internal Revenue Service (IRS) when they form LLCs. This step is essential in the creation of an online business.

Can I Sell On Amazon Without Registration?

Business owners do not need to register their companies to sell goods via Amazon. When entrepreneurs have an excellent idea for an online business, they can sell through Amazon or other platforms without worrying about registering the business.

However, the local government may require new online vendors to register with the local municipality or state. We recommend contacting the local government and conducting online research to determine if registration is needed. If the state requires online businesses to be registered and a company ignores this policy, this could create problems, so check with the local government first.

Selling via Amazon.com is equivalent to operating an online business. Still, the significant determining factor is that they do not need to register the business if the business is not selling anything federally regulated. Starting the online business, in this case, is easy: simply sign up for Amazon or the preferred website and begin selling the goods.

How Can a California Business Lawyer Help Entrepreneurs Start Online Businesses?

At Nakase Wade, starting any new business can be as stressful as exciting. When an entrepreneur decides to begin selling products online, the process can quickly become overwhelming, even when business prospects are high.

If business owners have questions about registering the company, taxes, business structure, and more, they should contact the California corporate attorneys and lawyers at Nakase Wade. We offer top-notch legal guidance to online businesses, so get in touch for a free consultation today.

Best Free Payroll Software for Small Businesses and Startups in 2025

Find the best free payroll software options for small businesses and startups in 2025 with essential tools and flexible features. Compare user-friendly platforms offering global payments, tax calculations, employee portals, and cloud access at no cost.

What Services Does a California Business Lawyer Provide?

A California business lawyer helps protect your company by providing legal guidance on structure, taxation, contracts, and compliance. Their services ensure you avoid costly mistakes and navigate disputes, allowing you to focus on growth.

Where Can I Find a Business Lawyer?

Find a skilled business lawyer to navigate legal matters like contracts, trademarks, and liability issues. Protect your company with expert legal advice and support.

What Are the Requirements for a Business Contract Termination Letter?

A contract termination letter must clearly state the reason for termination, reference the original contract, and follow required notice procedures. Ensuring proper documentation and adherence to contract terms helps prevent legal disputes and wrongful termination claims.

Are Verbal Contracts Binding in California?

A verbal contract can be legally binding in California, but proving its terms in court is often difficult. Written agreements provide stronger legal protection, reducing risks of disputes and misunderstandings.

Where Can I Find a Business Lawyer Near Me?

Find a business lawyer by seeking referrals, researching credentials, and ensuring they specialize in your industry’s legal needs. Schedule consultations to assess their expertise, compatibility, and pricing structure before making a final decision.

What Is the Statement of Information and When Is It Required?

A Statement of Information is a required filing for California corporations and LLCs, providing key business and leadership details. Filing deadlines vary, requiring annual or biennial submissions to maintain compliance and avoid penalties.

What Is Indemnity and How Does It Apply to Insurance Contracts?

Indemnity protects individuals and businesses from financial loss by ensuring compensation for damages under legal agreements, including insurance contracts. Various indemnity policies cover liability, property damage, and professional risks, with terms defining coverage limits and exclusions.

What Is Gross Profit and How Is It Calculated in Financial Statements?

Gross profit represents the revenue remaining after deducting the cost of goods sold, helping businesses assess production efficiency and pricing strategies. Calculating gross profit involves subtracting direct expenses from revenue, providing insights into cost control and financial performance.

What Is Gross Income and How Does It Differ From Net Income?

Gross income includes all earnings before deductions, while net income is what remains after taxes and expenses. Understanding these figures helps determine tax obligations, loan eligibility, and overall financial health.

What Is Beneficial Ownership Information and Why Is It Important for Compliance

Beneficial ownership information helps prevent financial crimes by increasing transparency in corporate structures. Businesses should stay informed on reporting requirements to avoid penalties and ensure compliance with evolving regulations.

What Is Arbitration and How Does It Resolve Disputes?

Arbitration resolves disputes by allowing a neutral third party to make binding decisions, offering privacy and efficiency over traditional litigation. Businesses and individuals prefer arbitration for its speed, cost savings, and adaptability, ensuring enforceable outcomes across various legal frameworks.

What Is a Corporation, and How Does It Differ From an LLC?

A corporation is a separate legal entity owned by shareholders, while an LLC offers flexible management and pass-through taxation. Corporations require stricter compliance and structured oversight, whereas LLCs provide fewer formalities and adaptable ownership structures.

How Do You Incorporate a Business, and What Are the Benefits?

Incorporating a business creates a separate legal entity, protecting personal assets and offering potential tax advantages. This process enhances credibility, simplifies ownership transfer, and provides growth opportunities while requiring compliance with specific regulations.

How Do You Get an LLC, and What Are the Benefits of Forming One?

An LLC provides liability protection, tax flexibility, and management freedom for business owners. Follow seven simple steps to establish one efficiently.

How Do You Start a Business, and What Are the Legal Requirements?

Starting a business in California requires careful planning, legal compliance, and financial preparation. From selecting a business structure to obtaining permits, tax registration, and funding, each step is crucial for long-term success.

How Do Accrual Accounting and Cash Accounting Differ in Financial Management?

Accrual accounting records transactions when they are earned, while cash accounting records them when money changes hands. Choosing the right method impacts taxes, financial planning, and cash flow management for businesses.

Do I Need a Permit to Operate a Vending Machine?

A vending machine business requires permits, including a business license, EIN, and compliance with state and federal regulations. Proper location approval, ADA compliance, and product labeling are essential for legal operation and profitability.

Are There Grants Available to Start a Business?

Government and private grants provide funding to help entrepreneurs start businesses, with eligibility varying by industry, location, and business type. Opportunities include federal programs, state initiatives, and private grants supporting startups, research, and minority-owned businesses.

What Is a Stock Corporation in California – General Requirements?

A stock corporation in California raises capital by selling shares, granting investors ownership and voting rights while maintaining limited liability. These corporations, classified as C or S, follow specific legal steps, including filing Articles of Incorporation and drafting corporate bylaws.

Is a Contract Valid Only if It Is in Written Form?

A contract can be legally binding whether written or verbal, but some agreements, such as real estate deals, require written documentation. A valid contract must include clear terms, mutual agreement, legal capacity, consideration, and intent to create enforceable obligations.

What Is a Cash Receipt and Why It Matters for Business Transactions

A cash receipt records the exchange of cash during a transaction, detailing the amount, parties involved, and purchase specifics. Maintaining accurate cash receipts supports tax reporting, financial management, and dispute resolution while ensuring compliance with audits.