A dropshipping business does not need a physical location for you to operate. It’s a type of business that you can run from anywhere in the world. Yet, it does not exempt you from complying with the legalities required by the government where you reside. You must have everything on ready, not just your store and dropshipping products to sell, but the required legal documents as well. You must have a business license before you launch your dropshipping business. By abiding with the local laws in your state or country, you can ensure that you’re conducting business legally.
Whether you will be selling products from your home in the US or anywhere in the world, you’re required to comply with the law. A business license is only one of the legal documents that you need to acquire before launching a dropshipping business. Depending on the products that you choose to sell and your business structure, you might need additional licensing and federal permits too.
A business license serves as proof that the government allows you to operate in a specific location. It is issued by the state or city government office where you choose to run your business regardless if it’s an online or as a brick-and-mortar store. The government requires the procurement of permits and licenses so they can monitor what goes on in your business.
How do you get a business license for your dropshipping store in the US?
Obtaining a business license in the US involves the following:
- Registration of the business name. You can find different business structures to choose in the US Small Business Administration website.
- Acquisition of an Employer Identification Number (EIN). The IRS issues an EIN to distinguish a business entity. You’ll need it whether you have employees or not to keep your business and personal taxes separate.
- Registration with state labor agencies. Depending on your state, you will be required to register with the state workers’ compensation and unemployment departments regardless if you have employees or not.
- Issuance of sales tax permit. Sales tax permit or seller’s permit is required in states that collect sales tax for selling products and services. With a dropshipping business that does not own an inventory and operates in a virtual office, the sales tax permit may not be required. To be certain about this, check the secretary of state’s website.
- Compliance to online business laws. Read and understand eCommerce taxes and regulations for small business in the US to ensure that you are not violating online business laws. Visit the websites of the US Small Business Administration, the Federal Trade Commission (FTC), and the United States Patent and Trademark Office (USPTO) for more info.
How do you get a business license for your dropshipping store if you’re based outside the US?
Every country has its laws applicable to online businesses. A business license is required to all businesses in the US but might not be mandatory in your country. To know what are the laws in your country that you have to comply with, consult the appropriate government offices in your area.
When you have all the necessary permits and licenses applicable to your type of business specifically a business license, it will make your dropshipping business look more credible. Abiding with the law will give you the confidence that your dropshipping business is operating legally. With all legalities taken care of, you can focus on your efforts to achieve your business goals. Acquire a business license for your dropshipping store and make it a priority.
DISCLAIMER: The above content is for informational purposes only and should not be taken as professional legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.