Selling on Amazon has become one of the most attractive ways to start an online business, whether you’re looking to bring about side income or build a full-fledged eCommerce authority. However, before diving into product sourcing and shipping coordination, many new sellers ask an important question: Do you need a business license to sell on Amazon? The answer is not always clear-cut; it depends on a number of variables, including what you are offering, where you are, and how you intend to run your company. To help you understand the conscience, here is a breakdown.
What Is a Business License?
A business license is a government-expressed permit that allows you to operate your business within a specific authority. It can vary depending on your city, county, or state and is often appropriate for regulatory, tax, or safety arguments.
Amazon’s Requirements
Amazon does not lack a business license to open a basic seller account. You can start selling as a respective or sole proprietor using your personal name and Social Security number (SSN). However, if you choose to register as a experienced seller or achieve as a formal business entity (like an LLC or corporation), a
Amazon may require
- A Tax Identification Number (TIN) or EIN
- Legal business name and address
- Bank account for receiving payments
When a Business License Might Be Necessary
Although Amazon doesn’t authorisauthorizeess license, you may still need one established on your local laws and the nature of your business.
Consider the following scenarios:
1. Local and State Regulations
Many cities or states require a business license—even for online businesses.
This is exclusively true if you:
- Store supply at home or in a warehouse
- Operate under a business name (DBA)
- Hire employees
- Sell products that are coordinated (e.g., alcohol, minerals, medical devices)
2. Sales Tax Collection
If your state requires sales tax assemblage, you may need a sales tax permit or seller’s permit—not automatically the same as a business license, but often required by tax authorities.
3. Creating a Legal Business Entity
If you form an LLC or association for liability protection or tax convenience, you’ll typically need to register your business and obtain a license or authorization depending on your jurisdiction.
Does Amazon Require a Business License?
Short Answer: No, not always.
Amazon does not require sellers to have a business license to create a seller account or start program products. You can begin selling as a particular individual without registering a formal business. This makes it easier for new sellers to test the waters before establishing an LLC or obtaining licenses.
However, there are exceptions and additional considerations that might make getting a business license necessary or beneficial.
Selling as an Individual vs. a Business
Amazon offers two types of seller accounts:
- Individual Seller Account : Best for casual sellers. You don’t need a business license to open this type of account. However, you are limited in features and must pay $0.99 per item sold (instead of a flat monthly fee).
- Professional Seller Account : Intended for vendors with larger sales volumes or those establishing a brand. Each month, it costs $39.99. Although opening a professional account on Amazon does not require a business license, depending on your region, tax regulations, or product type, Amazon may ask for extra business documentation.
If you’re selling handmade goods infrequently or offloading household items, a license consistently isn’t necessary. But if you’re starting a long-term business exclusively under a brand name, it’s wise to characterize your operation.
Types of Licenses and When You Might Need Them
Even if Amazon doesn’t require a business license conscientiously, you may be required to obtain one based on local, state, or associated regulations.
A. Business License
Many cities and counties require an accustomed business license to operate legally—even if you’re performing from home. Check with your local community.
B. Sales Tax Permit/Reseller Certificate
If you’re based in a state that collects sales tax, you may need a sales tax permit. Amazon may collect and consign sales tax for you, but you’re still responsible for compliance and registration in your home state.
C. Home Occupation Permit
If you’re running your Amazon store from home, some jurisdictions require a home activity permit to legally operate a business from a residential address.
D. Industry-Specific Licenses
Certain products (e.g., food, cosmetics, medical devices, alcohol) may require special licenses or certifications before you’re legally allowed to sell them on Amazon or anywhere else.
Benefits of Having a Business License
Even if it’s not appropriate by Amazon, there are clear conveniences to performing with a business license:
- Credibility and professionalism with customers and suppliers
- Access to wholesale suppliers, many of whom require a business license
- Legal insurance and structure, especially if you form an LLC or enterprise
- Tax benefits, including deductions for business reparations
- Easier access to business banking, financing, and credit
Amazon’s Identity Verification Process
While Amazon may not absolutely ask for a business license, they do require existence authentication when setting up a seller account.
This typically includes:
- Valid government-issued ID
- Bank account and credit card information
- Tax identification number (SSN or EIN)
In some cases, exclusively with international sellers or new accounts, Amazon may ask for business authentication to verify the justice of your operations.
Do You Need Business Insurance to Sell on Amazon?
Yes—if you have an efficient efficientSeller account and generate over $10,000 in sales per month, Amazon requires you to carry Economic General Liability Insurance (EGLI).
Even if you’re under that threshold, insurance is actively approved to protect against:
- Product liability claims
- Customer injuries or property damage
- Shipping issues and losses
Some common policy types include:
- General Liability Insurance
- Product Liability Insurance
- E-commerce Seller Insurance
Sales Tax and Amazon Marketplace Facilitator Laws
According to “Marketplace Facilitator” rules, Amazon collects and remits sales tax on behalf of sellers in the majority of U.S. states as of 2023. In your home state or any location where you have a “nexus” (such as an office or warehouse), you could still need to apply for a sales tax permit.
Choosing the Right Business Structure
While you can sell as a sole proprietor, many Amazon sellers choose to form a legal business entity such as an LLC (Limited Liability Company) or corporation.
Each structure comes with pros and cons:
- Sole Proprietorship: Accessible to set up, but no legal disengagement between you and your business.
- LLC: Offers personal obligation protection and pass-through taxation. Ideal for small businesses.
- Corporation (C-Corp or S-Corp): More complex, advisable for larger businesses or those searching for investment.
Setting up an LLC may require a business license or registration, depending on your state.
Category-Specific Restrictions on Amazon
Amazon administer the sale of certain product categories more closely than others. Some categories may require pre-approval, certifications, or business authentication:
- Health and Personal Care
- Grocery & Gourmet Food
- Toys & Games (seasonal approval)
- Jewelry, Watches, and Fine Art
- Hazardous Materials (Hazmat)
Amazon’s Verification Process: What to Expect
When you sign up as a seller, Amazon may require you to verify your existence and business minutiae.
Be prepared to provide:
- Valid government-issued ID
- Tax identification number (SSN or EIN)
- Utility bills or bank statements
- Business licenses (for certain categories)
This is part of Amazon’s effort to forestall fraud and assure buyers.
International Sellers: Do You Need a License?
If you’re selling on Amazon U.S. from another country, you don’t necessarily need a U.S. business license, but you will need:
- A U.S.-based bank account or a currency exchange partner
- A valid tax ID from your home country
- Compliance with U.S. product and import regulations
Amazon’s Global Selling program guides international sellers.
How to Apply for a Business License
Usually, you can apply online via the business website of your state, county, or city. It is usually a straightforward procedure that includes:
Selecting your company structure
- Putting your company name on file
- A minor cost (which varies depending on the area)
- Making an application for any necessary permits
In order to receive an Employer Identification Number (EIN), which might be useful even if you are a sole proprietor, you might also wish to register your company with the IRS.
Final Thoughts
While a business license is not compulsory to start selling on Amazon, it’s an important part of building an appropriate, scalable, and protected business. Take the time to research your clear-cut requirements and set up your business the right way from the start. Selling on Amazon is easy, but consecutively long-term requires smart, legal authority.
Quick Checklist for New Amazon Sellers
Choose your company’s structure (sole proprietorship, LLC, etc.).
Choose between an Individual or Professional seller account.
Examine the requirements for state and municipal business licenses.If necessary, apply for a sales tax permit.
Check for category/product restrictions on Amazon.
Obtain liability insurance if needed.
Complete Amazon’s identity verification process.