Whatever your reasons for wanting to start a business online, you’re probably not doing it for the chance to fill out forms and pay registration fees.
However, getting the permits and licenses you need when you’re just starting out keeps your young business on the right side of the law, makes it possible to open a business bank account, and makes recordkeeping and tax prep easier.
What licenses and permits does your new online business need? The answer depends on your location and what you’re selling.
In this article we’ll look at the licenses and permits you may need to get at the local, state, and federal levels.
The best way to use this info is to read through the whole list and make a note of what your business needs before you get started. Most new business owners don’t need every permit or license mentioned here, but you don’t want to operate without a necessary permit and risk penalties later.
Local DBA Registration and Business Permits
What you may need: Depending on local ordinances, you may need a business permit from your city or county, even if you run your business from your home.
In some places, business owners must also file a DBA (“doing business as”) form with the city or county (or sometimes the state). Even if a DBA isn’t mandatory where you live, you’ll still need one for banking. Typically, a DBA requires a small fee, a notarized form that you can download from the city or county, and an in-person signature.
Where to learn more:
Your city or county clerk’s office should have permit and DBA information online. If you can’t find it or you’re unclear on exactly what you need, give them a call to double-check.
State Business Name Registrations, Tax Permits, and Business Permits
What you may need: In some areas, you may need to file your DBA form with the state. If your business is structured as a limited-liability partnership or a corporation, you may have to register your entity name, and your state may require that your entity name be unique.
For example, in Texas a new business can’t register an entity name that’s already on file, to prevent recordkeeping mix-ups. Beyond the business-name basics, you will almost certainly need a state tax identification number and a sales tax permit.
You may also need a business permit from a state agency. Each state has its own rules. For example, Texas doesn’t require most businesses to get a permit from the state. However, if your online store sells items that are regulated by a state agency (food or live plants, for example), you may need one.
Where to learn more:
Check out your state’s department of licensing and regulation website for a list of businesses that need specialized permits. For your DBA, entity name registration, and tax ID and permit specifics, check with your state controller’s (or comptroller’s) office.
Federal Trademarks, Employer Identification Numbers, and Permits
What you may need: Business names can be trademarked, which means two things for you. First, you should double check before you commit to a business name to make sure it’s not already trademarked by someone else. Using someone else’s trademark can get you sued and cost you a lot of money and time redoing your company name.
Next, consider trademarking your business name if it’s available so no one else can use it and mess with your brand or confuse your customers. This may not be possible right away if you’re starting on a shoestring budget, because trademark application fees range from $225 to $400. But it’s worth keeping on your to-do list as your business grows, to protect your brand.
You’ll also need an employee identification number (EIN) from the IRS so you can file business tax returns. You’ll have to show your EIN at your local bank or credit union to prove that you’re eligible to open a business account.
Just as your state may have extra permit requirements for online sellers of things like plants and food, some federal agencies require permits for businesses that export certain products, including alcohol, plants and seeds, some items made with wildlife products (like puka shells, coral, and some types of feathers), and firearms.
Where to learn more:
You can search the US Patent and Trademark Office database to see if another business has already trademarked the name you want to use. The USPTO’s trademark basics portal includes a video explaining trademark registration in detail for small business owners. The IRS lets you apply for your EIN online and receive it immediately. If you sell products that are regulated at the federal level, check with those departments to find out what forms you’ll need to submit.
One more registration…
Once you have your business name registered and maybe trademarked, go ahead and register your domain name. This will lock it down while you finish applying for the other documents you need to do business online.
After you file your DBA and other paperwork, you’ll probably get a lot of unsolicited marketing mail addressed to your business. To keep the same thing from happening to your email inbox after you register your domain name, make sure your personal data stays private. Otherwise anyone can look up your phone number and email address in the global WHOIS database of domain name registrations. New business websites are also sometimes targeted by hackers, who assume these small operations don’t have good protection against malware, viruses, and other threats.
You can secure your website and your customers’ information against viruses, malware, hackers, and spam with HostGator’s Security and Privacy Bundle, including SiteLock, CodeGuard, domain privacy, and an included SSL. Your contact information stays private, and your site is scanned and backed up automatically to protect your new business.
Casey Kelly-Barton is an Austin-based freelancer who enjoys writing about business development and marketing, e-commerce payments and fraud prevention, and travel.