Business

Mamapreneur 101: Frequently Asked Questions About Business Licenses

Mamapreneurs often wonder if they really need a business license to conduct their business. Last week I addressed whether or not you need a business license and the answer is in almost all cases “Yes, you do.” But there are some other frequently asked questions about business licenses that I want to address today.

 

Mamapreneur 101: Frequently Asked Questions About Business Licenses

 

Do I need a business license to sell on Etsy?

Yes. Etsy does not require you to have a business license to comply with their terms of service, but your local governing agencies typically require you to have a business license to do business in their jurisdiction. So even if you are only selling on Etsy and never in your city, you will likely be required by your local government to have a business license.

 

Do I need a business if I resell my own stuff (examples: eBay, Poshmark, etc)?

Reselling your own property for a loss potentially means that you don’t need a business license. But that changes if you start making a profit on your sales, purchase items with the sole intent to sell it on the platform, or resell property for a profit. In that case, you will typically need a business license.

 

Do I need a business license if I am only selling online?

Yes. While you may or may not need to set up sales tax reporting if you are only selling online, your local government most likely requires you to have a business license when you are operating a business in their jurisdiction whether or not you are selling in person to those in the area.

Mamapreneur 101: Frequently Asked Questions About Business Licenses

 

How much do business licenses usually cost?

Business license fees are determined by each governing authority so the cost can vary. Typical costs are usually no less than $50. Some areas have a flat business license fee regardless of what type of business you are running. Others will charge based on your revenue and the type of business you’re operating.

 

How soon should I get a business license when I start a business?

A business license is generally required as soon as you start selling products so it’s ideal that you purchase a business license within the month that you start your business. If you wait to purchase a license you might be responsible for fees back to the original start date of your business.

 

Do I need a business license to sell as part of a market or trade show?

For markets in the area where you live, you will most likely be required to have a business license. For markets and shows outside of your normally licensed area, you should check with the market organizer to find out the requirements. Sometimes these types of events procure a license for all out of area shops and include part of the cost of the license in your application fee for the show. Organizers will be able to answer those questions, and if they can’t then you shouldn’t be partnering with the organization because you can’t be sure that they are operating legally.

 

I don’t sell products but only provide a service, do I need a business license?

Yes, no matter what you’re selling, if you’re operating a business you need a business license. [Sales tax may be a different issue but that’s for another day.]

 

How long does a business license usually last?

In general, a business license will typically be good through the remainder of the governing body’s operating year and then will need to be renewed annually.

 

How long does it usually take to get a business license?

The actual process of getting a license will vary based on your location but, when I went down to my city offices, it only took about 15 minutes.

 

Do I need a Federal Employer Identification Number to get a business license?

If you are a sole proprietor then you won’t need an EIN to get a business license because you will be running your business off of your social security number. If you are a different type of entity, you are mostly likely required to have an EIN for operation which would make it required for a business license.

 

I conduct business in several cities, do I have to get a business license in each city?

Yes, if you have a physical place of business (brick and mortar store) or run a business in multiple municipalities regularly, then you will likely need a business license in each of those areas.


Mamapreneur 101: Frequently Asked Questions About Business LicensesHow could the city find my business if I only sell online?

Governing entities use multiple resources to find businesses that are not abiding by their laws. If you have identified yourself anywhere online (social media, Etsy, Facebook profile, etc.), it would be very easy for them to find your business and notify you that you are not in compliance. Most governing bodies don’t have the time, manpower, or money to search out every small business but, if they happen to run across yours, you could be in trouble. If that’s the case, not only may you be liable for back licenses fees but your could also be required to pay penalties and they could deny your request to get a business license.

 

Must I have a business license if I’m not turning a profit?

Yes, you’re running a business even if you’re not turning a profit so you will need a business license.

 

If I have multiple businesses but they are all run from one address, do I need a separate business license for each business?

You should check with your local governing agency but in some cases you might be able to only have one business license and be operating multiple DBAs (“doing business as” businesses) from the one business license.

 

 

 

 

** Please remember that I am not a financial or legal advisor. All information that I offer is based on my own experience and is not to be taken as a replacement for consulting a financial or legal professional. Remember that all advice, articles, and education that you see online pertains to a specific type of business in a specific environment and you should always consult with someone familiar with the laws, guidelines, and best practices of your industry as well as being familiar with your individual company and area.

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Thanks for sharing!

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