...

Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124

Do I Need an LLC or Business License to Sell on Amazon in 2023?

Do I Need an LLC or Business License to Sell on Amazon in 2023?

Do I Need an LLC or Business License to Sell on Amazon in 2023?

The answer is: it depends.

Amazon does not require sellers to have an LLC or business license. However, some states and localities do require sellers to have a business license. If you are selling products that are regulated by the government, you may also need a business license.

In this article, we will discuss the legal requirements for selling on Amazon in 2023 and help you decide whether you need to form an LLC or get a business license. We will also discuss the pros and cons of forming an LLC and getting a business license.

So whether you are a new seller or you are just starting to think about selling on Amazon, read on to learn what you need to do to stay compliant with the law.


Let’s first talk about ” Do you need a business license to sell on Amazon in 2023?”

Table of Contents

What is a business license?

First you must know what is a business license?

A business license is a permit that allows a business to operate in a particular location. The requirements for obtaining a business license vary from state to state and locality to locality.

Some states and localities require all businesses to obtain a business license, while others only require businesses that meet certain criteria to obtain a business license.


Do I Need Business License to Sell on Amazon FBA in 2023?

You may be wondering “Does my business need to be registered to sell on Amazon?” Here’s answer:

The requirement for a business license to sell on Amazon in 2023 can vary based on factors such as your location, business structure, and the products you intend to sell.

While Amazon itself may not explicitly demand a business license, your local and state government regulations may dictate otherwise.

It’s essential to research and comply with all applicable laws and consult with professionals if needed to ensure you meet the necessary legal requirements for your Amazon selling venture.


Factors to consider when deciding whether to get a business license

Here are the factors that sellers must consider when deciding whether to get a business license:

Amazon’s policy:

Amazon does not require sellers to have a business license, but they do require sellers to provide their legal name and taxpayer identification number (TIN).

This means that even if you are not required to have a business license, you should still register your business with Amazon so that you can comply with their seller policies.

Local laws and regulations:

Some states and localities require sellers to have a business license, even if they are selling on Amazon. You can check with your local government to find out if you need a business license.

The requirements for obtaining a business license vary from state to state and locality to locality. Some common requirements include:

  • Filing an application with the appropriate government agency.
  • Paying a fee.
  • Providing certain information, such as your legal name, taxpayer identification number, and business address.
  • Meeting certain requirements, such as having a physical location for your business.

Regulated products:

The specific products that are regulated by the government vary from state to state. Some common products that are regulated include:

  • Food
  • Drugs
  • Alcohol
  • Tobacco
  • Firearms
  • Hazardous materials

If you are selling any of these products, you should check with your local government to find out if you need a business license.

So, if you are selling these products, you may need a business license, even if you are selling them on Amazon.

The requirements for selling regulated products vary from state to state and product to product. Some common requirements include:

  • Obtaining a permit from the appropriate government agency.
  • Following certain safety regulations.
  • Labeling your products correctly.

Your business structure:

The type of business structure you choose may affect whether you need a business license.

For example, sole proprietorships typically do not need a business license, but corporations and LLCs may need one. This is because sole proprietorships are considered extensions of the individual owner, so the owner’s personal assets are at risk if the business is sued.

Corporations and LLCs, on the other hand, are separate legal entities from their owners, so the owners’ personal assets are not at risk in the event of a lawsuit.

Your sales volume:

If you are selling a large volume of products, you may be more likely to need a business license. This is because businesses that sell a large volume of products are more likely to be subject to government regulations.

Your risk tolerance:

If you are concerned about the risks of being sued, you may want to get a business license. A business license can help to protect your personal assets in the event of a lawsuit.


How to Obtain a Business License for selling on Amazon FBA in 2023

If you decide to get a business license, there are a few things you need to do:

  • Choose a business structure. There are several different types of business structures, such as sole proprietorship, partnership, LLC, and corporation. Each structure has its own advantages and disadvantages.
  • Register your business with the state. You can usually do this online or by mail.
  • Obtain a business license from your local government. You can usually find information on how to do this on the website of your local government.

It is important to note that the requirements for obtaining a business license vary from state to state and locality to locality.

It is always best to consult with an attorney or the appropriate government agency to make sure you are complying with all applicable laws and regulations.

To obtain a business license for selling on Amazon in 2023, you should follow these essential steps:

Step 1: Check with your local government to find out if you need a business license.

The first step is to check with your local government to find out if you need a business license. This will depend on your location and the products you are selling.

You can usually find this information on the website of your local government or by contacting your local Small Business Administration (SBA) office.

Do you need a Business License to sell on Amazon in California? 

Step 2: Find out the requirements for obtaining a business license.

If you are required to have a business license, you will need to find out the requirements for obtaining one. The requirements will vary from state to state and locality to locality. Some common requirements include:

  • Filing an application with the appropriate government agency.
  • Paying a fee.
  • Providing certain information, such as your legal name, taxpayer identification number (TIN), and business address.
  • Meeting certain requirements, such as having a physical location for your business.

Step 3: Gather the required documentation.

The required documentation will vary depending on the requirements of your local government. Some common documents include:

  • A completed application form
  • A copy of your driver’s license or other government-issued ID
  • A copy of your taxpayer identification number (TIN)
  • A copy of your business plan
  • A copy of your lease agreement (if applicable)

Step 4: Submit the application and documentation to the appropriate government agency.

Once you have gathered the required documentation, you can submit your application to the appropriate government agency. The agency will review your application and documentation and notify you of their decision.

Step 5: Pay the required fees.

If your application is approved, you will need to pay the required fees. The fees will vary depending on the state or locality where you are obtaining your license.

Step 6: Wait for the approval of your business license.

The approval process can take some time, so be patient. Once your business license is approved, you will be able to start selling on Amazon.

Additional things to keep in mind:

  • The specific requirements for obtaining a business license will vary depending on the products you are selling. Some products, such as food and drugs, may require additional licenses or permits.
  • If you are selling on Amazon as a sole proprietorship, you may not be required to have a business license. However, it is still a good idea to get one, as it can help you protect your personal assets in the event of a lawsuit.
  • Once you have obtained a business license, you will need to renew it periodically. The renewal requirements will vary depending on the state or locality where you obtained your license.

Do you need Business Lisence for Amazon Dropshipping

The need for a business license for Amazon dropshipping depends on a few factors, such as the location of your business, the type of products you are selling, and the amount of sales you are generating.

In general, you do not need a business license to start dropshipping on Amazon. However, there are some states that require businesses to have a business license, even if they are dropshipping.

You may also need a business license if you are selling products that are regulated by the government, such as food or alcohol.

Additionally, if you are generating a certain amount of sales, you may need to obtain a business license. The amount of sales that triggers the need for a business license varies from state to state.


The Pros and Cons of Having a Business License

Here are the pros and cons of having a business license

Pros of having a business license:

  • Compliance with local laws and regulations. A business license can help you ensure that you are complying with all applicable local laws and regulations. This is important because failing to comply with the law can result in fines, penalties, or even imprisonment.
  • Ability to open a wholesale account. Some wholesalers require sellers to have a business license in order to open an account. This is because wholesalers need to be sure that they are dealing with a legitimate business.
  • Increased credibility and professionalism. Having a business license can give your business a more professional image. This can help you attract more customers and partners.

Cons of having a business license:

  • Cost of obtaining and renewing the license. There are costs associated with obtaining and renewing a business license. The fees will vary depending on the location and type of business.
  • Time and effort required to obtain the license. It can take time and effort to obtain a business license. You will need to gather the required documentation and complete the application process.
  • Potential for legal liability. If you do not comply with the terms of your business license, you may be liable for legal action. This could include fines, penalties, or even imprisonment.


Ultimately, the decision of whether or not to obtain a business license is up to you. However, the pros of having a business license outweigh the cons in most cases.

If you are serious about running an Amazon business, it is a good idea to get a business license.

But how to apply for business license if you are located in country other than US? The process of applying for a business license if you are located in another country will vary depending on the country’s laws and regulations.

  • The specific requirements for obtaining a business license will vary depending on the country you are located in and the products you are selling.
  • It is important to do your research and understand the requirements in your area before you apply for a business license.
  • You may need to hire an attorney or accountant to help you with the application process.
  • The cost of obtaining a business license will vary depending on the country you are located in.

Do you need a Business License to sell on Amazon in California? 

No, you don’t need a business license to sell on Amazon in California in most cases.

In California, a business license is required if you are selling goods or services that are subject to state regulation, such as food, alcohol, or tobacco. However, selling most products on Amazon does not require a business license in California.

However, there are some exceptions. For example, if you are selling products that are considered to be a “calling” or a “profession,” such as legal, medical, or accounting services, you may need a business license.

You may also need a business license if you are selling products that are considered to be “hazardous,” such as chemicals or flammable materials.

If you are unsure whether or not you need a business license to sell on Amazon in California, you should consult with an attorney or accountant.

Here are some additional things to keep in mind:

  • You may need to obtain a seller’s permit from the California Department of Tax and Fee Administration (CDTFA). A seller’s permit is a license that allows you to sell goods or services in California.
  • You may need to collect sales tax on your sales. The amount of sales tax you collect will vary depending on the type of products you are selling and the location of your customers.
  • You may need to comply with other laws and regulations, such as the California Consumer Privacy Act (CCPA).

If you are planning to sell on Amazon in California, you should research the applicable laws and regulations to make sure that you are in compliance.

Is a California seller’s permit the same as a business license?

No, a California seller’s permit is not the same as a business license.

A seller’s permit is typically required for businesses that sell tangible goods. A business license may be required for businesses that sell services, or for businesses that sell both goods and services.

To sell goods or services in California, you must have a seller’s permit. However, you may not need a business license, depending on the type of business you are operating.

For example, if you are a sole proprietorship and you are selling products online, you may not need a business license. However, if you are a corporation or a partnership, you will need a business license.

The requirements for obtaining a seller’s permit and a business license vary depending on the type of business you are operating.

You can find more information about seller’s permits and business licenses on the website of the California Department of Tax and Fee Administration (CDTFA).


Do you need a business license to sell on Kindle Direct Publishing? 

No, you do not need a business license to sell on Kindle Direct Publishing (KDP). KDP is a self-publishing platform that allows authors to publish their books directly to Amazon.com. As a self-publishing platform, KDP does not require authors to have a business license.

However, there are some cases where you may need a business license to sell on KDP. For example, if you are selling books that are subject to government regulation, such as textbooks or medical books, you may need a business license.

You may also need a business license if you are selling books in a brick-and-mortar store.

If you are unsure whether or not you need a business license to sell on KDP, you should consult with an attorney or accountant. They can help you assess your individual circumstances and recommend the best course of action.


Do You Need A Sales Tax Permit To Sell On Amazon?

A sales tax permit is a license that allows you to collect sales tax on goods or services sold in a particular state. Sales tax is a tax that is imposed on the sale of goods and services. The amount of sales tax collected varies from state to state.

Whether or not you need a sales tax permit to sell on Amazon depends on where you are located and what you are selling.

In general, you need to collect sales tax on sales made to customers in the states where you have nexus.

What is Nexus?

Nexus is a legal concept that means that you have a sufficient connection to a state to be required to collect sales tax there.

There are a few ways to establish nexus. One way is to have a physical presence in the state, such as a store or warehouse. Another way to establish nexus is to have sales in the state that exceed a certain threshold. The threshold varies from state to state.

If you are selling on Amazon, you may have nexus in multiple states. This is because Amazon has warehouses in many states, and it may be considered to have nexus in those states even if you do not have a physical presence there.

To find out if you need a sales tax permit to sell on Amazon, you should consult with an accountant or attorney who is familiar with the laws of the states where you are selling.

Amazon may collect sales tax on your behalf in some states. This is called marketplace facilitator tax.

You may still need to file a sales tax return and pay sales tax to the state even if Amazon collects sales tax on your behalf.

Also Read:

How to start an Ecommerce Business on Amazon in 2023

15 Best Dropshipping suppliers for Amazon 2023


Do I need an LLC to sell on Amazon in 2023?

What is an LLC?

An LLC, or limited liability company, is a type of business entity that provides its owners with limited liability protection. This means that the owners’ personal assets are protected from the debts and liabilities of the business.

LLCs are popular among small businesses because they offer a good balance of liability protection and flexibility.

Do I need an LLC to sell on Amazon in 2023?

In 2023, you do not necessarily need an LLC (Limited Liability Company) to sell on Amazon. Amazon allows individuals to sell on their platform without requiring them to establish an LLC or any formal business structure.

Many sellers start on Amazon as individuals, and it’s a straightforward way to begin selling products.

However, it’s important to note that whether you should form an LLC or another type of business entity depends on your specific circumstances and business goals.

While an LLC can provide liability protection and certain tax benefits, it also involves additional paperwork and fees.

Some sellers choose to establish an LLC once their Amazon business grows or when they want to protect personal assets.


When Should I Consider Forming an LLC for Amazon business?

The decision of whether or not to form an LLC or get a business license is a personal one. There is no right or wrong answer, and the best decision for you will depend on your individual circumstances.

Here are some factors to consider when making your decision:

  • The type of business you are running
  • The size of your business
  • Your personal financial situation
  • The laws of the state where you are located
  • Your risk tolerance

If you are unsure whether or not you need an LLC or a business license, you should consult with an attorney or accountant.


The Process of Forming an LLC for your Amazon Business

Here are the steps involved in forming an LLC in more detail:

Choose a name for your LLC

Your LLC name must be unique and cannot be the same as the name of any other business entity in the state where you are forming your LLC.

You can check the availability of a business name by searching the Secretary of State’s website.

File the Articles of Organization with the Secretary of State


The Articles of Organization is a legal document that establishes your LLC. It must include certain information, such as the name of your LLC, the address of your principal office, and the names and addresses of your LLC’s members.

Choose a registered agent

A registered agent is a person or business entity that is authorized to receive legal documents on behalf of your LLC. You must appoint a registered agent in the state where you are forming your LLC.

Get an EIN

An EIN, or Employer Identification Number, is a unique identification number that is assigned to businesses by the Internal Revenue Service (IRS).

You will need an EIN if you plan to hire employees or if you want to open a business bank account.

Open a business bank account

It is a good idea to open a separate business bank account for your LLC. This will help you keep your personal and business finances separate.

Get business insurance

Business insurance can protect your business from financial losses in the event of a lawsuit, property damage, or other unexpected events.

There are many different types of business insurance available, so you should consult with an insurance agent to choose the right policies for your business.

Here are some additional things to keep in mind when forming an LLC:

  • The process of forming an LLC can take a few weeks.
  • You should keep your LLC’s records in a safe place.
  • You should update your LLC’s records if there are any changes, such as a change in address or a change in the members of your LLC.

The Benefits of Using a Professional to Help You Form an LLC

Choose the right business structure for your needs: A professional can help you choose the right business structure for your needs based on your individual circumstances.

File the necessary paperwork correctly: A professional can help you file the necessary paperwork correctly to avoid making costly mistakes.

Avoid making costly mistakes: A professional can help you avoid making costly mistakes that could jeopardize your business.

Provide you with ongoing legal and tax advice: A professional can provide you with ongoing legal and tax advice to help you keep your business compliant with the law.

If you are not sure whether or not you should form an LLC, or if you are not comfortable forming an LLC yourself, you should consult with a professional. A professional can help you assess your individual circumstances and recommend the best business structure for you.

The Costs of Forming an LLC

Filing fees: The filing fees vary from state to state. In general, the filing fees range from \$50 to \$200.

Registered agent fees: A registered agent is a person or business entity that is authorized to receive legal documents on behalf of your LLC. The registered agent fees also vary from state to state. In general, the registered agent fees range from \$50 to \$100 per year.

EIN fees: Internal Revenue Service (IRS) charges EIN fees. The EIN fees are \$27.

Business bank account fees: The business bank account fees vary from bank to bank. In general, the business bank account fees range from \$5 to \$25 per month.

Business insurance fees: The business insurance fees vary depending on the type of business and the amount of coverage you need. In general, the business insurance fees range from \$100 to \$1,000 per year.


The Pros and Cons of Forming an LLC for your Amazon Business

If you are considering forming an LLC, you should carefully weigh the pros and cons to decide if it is the right business structure for you.

Let’s discuss some Pros and Cons of forming an LLC for your Amazon business:

Pros of forming an LLC:

Here are some advantages of forming an LLC for your Amazon business in 2023:

Limited liability protection

Limited liability protection is one of the main benefits of forming an LLC. This means that the owners’ personal assets are not at risk if the business is sued or goes bankrupt.

For example, if your LLC is sued and loses, the creditors cannot go after your personal assets, such as your home or car.

However, there are some exceptions to limited liability protection. For example, if you personally guarantee a loan for your LLC, then your personal assets could be at risk if the loan is not repaid.

Credibility and professionalism

Having an LLC can give your business a more professional image. This can help you attract more customers and partners.

When you do business with an LLC, you know that the business is a separate legal entity from its owners. This can give you peace of mind and make you more likely to trust the business.

Ease of raising capital

It can be easier to raise capital for an LLC than for a sole proprietorship or partnership. This is because investors are more likely to trust an LLC because of the limited liability protection it offers.

When you are looking to raise capital, you will be more likely to get investors if you have an LLC.

Separate taxation

An LLC is a separate legal entity from its owners. This means that the LLC’s profits and losses are taxed separately from the owners’ personal income. This can be a benefit for businesses that are growing or changing rapidly.

For example, if your LLC is profitable, you can choose to have the profits taxed at the LLC level or at the owner level.

If you choose to have the profits taxed at the LLC level, then you will not have to pay self-employment taxes on those profits.

Flexibility

LLCs offer a lot of flexibility in terms taxes and management. This can be a benefit for businesses that are growing or changing rapidly.

For example, you can choose to have your LLC taxed as a sole proprietorship, partnership, or corporation.

Cons of forming an LLC:

Now take a look at some cons of forming an LLC for your Amazon business in 2023

Additional cost and paperwork

Forming an LLC can involve additional cost and paperwork. This is because you will need to file paperwork with the state and keep certain records.

The cost of forming an LLC varies from state to state. However, the basic costs include filing fees, registered agent fees, and EIN fees.

The paperwork involved in forming an LLC can also be complex. You will need to file articles of organization with the state, and you may also need to file other documents, such as an operating agreement.

More complex to manage

LLCs can be more complex to manage than other business structures. This is because you will need to keep track of the LLC’s finances and make sure that it complies with all applicable laws and regulations.

For example, you will need to file annual reports with the state and keep minutes of the LLC’s meetings.

Potential for double taxation

In some cases, the profits of an LLC may be taxed twice, once at the LLC level and again at the owner level. This is known as double taxation.

Double taxation can occur if you choose to have your LLC taxed as a corporation.

The following table outlines the different types of licenses and permits that may be required for selling on Amazon in 2023.

We made the following table that outlines the different types of licenses and permits that may be required for selling on Amazon in 2023 for your convenience and better understanding.

RequirementWhen RequiredWho IssuesCostProtection OfferedMandatory for All Amazon Sellers?
Business licenseNot required by Amazon, but may be required by your state or local government.Local governmentVaries by locationProtects your business from liability.No
Seller permitNot required by Amazon, but may be required by your state or local government if you sell taxable products.State governmentVaries by locationAllows you to collect sales tax on the products you sell.No
LLCNot required by Amazon, but can offer some liability protection for your business.State governmentVaries by locationProtects your personal assets from liability.No
Sales taxRequired in most states if you sell taxable products.State governmentVaries by locationCollected by the seller and remitted to the state government.Yes

Also Read:

Top 5 methods to make money on Amazon

Conclusion: Do I Need an LLC or Business License to Sell on Amazon in 2023?

In conclusion, you don’t need an LLC or business license to sell on Amazon in 2023.

The need for an LLC or business license to sell on Amazon in 2023 depends on a few factors, such as the location of your business, the type of products you are selling, and the amount of sales you are generating.

In general, you do not need an LLC or business license to sell on Amazon in 2023, but it is always best to check with your local authorities to be sure.

If you decide to form an LLC or obtain a business license, there are a few things you need to do.

First, you need to file the necessary paperwork with your state.

Second, you need to get an EIN (Employer Identification Number) from the IRS.

Third, you need to open a business bank account.

Forming an LLC or obtaining a business license can be a helpful way to protect your personal assets and comply with the law. However, it is important to weigh the costs and benefits before making a decision.


Frequently Asked Questions

Do I need a registered business to sell in Amazon as Non US citizen?

No, you do not need a registered business to sell on Amazon as a non-US citizen. You can sell on Amazon as an individual, but there are some benefits to registering a business.

  • Limited liability protection
  • Credibility and professionalism
  • Ease of raising capital

If you are planning to sell on Amazon for the long term, it is a good idea to register a business. This will give you more legal protection and make it easier to raise capital.

Why is Amazon asking for business license?

Yes, Amazon may ask for a business license if you are selling products on their platform. The need for a business license depends on a few factors, such as the location of your business, the type of products you are selling, and the amount of sales you are generating.

Here are some of the reasons why Amazon may ask for a business license:

  • To comply with local laws and regulations
  • To verify your identity
  • To protect their customers

If Amazon asks for a business license, you should provide them with a copy of your business license. You can also contact Amazon customer support for more information.


Zara
Zara

I am Zara, a driven and passionate blogger with a deep love for writing and a strong desire to connect with my readers. I am always on the lookout for the latest trends and news in fashion, beauty, entertainment and daily life tips. I love to share my knowledge with others. I am always looking for new ways to learn and grow, and I am committed to providing my readers with the most accurate and up-to-date information.
Join me on this journey of knowledge and exploration!

Articles: 194

Leave a Reply

Seraphinite AcceleratorOptimized by Seraphinite Accelerator
Turns on site high speed to be attractive for people and search engines.