The path to becoming an Amazon seller is long and winding, but is a business license necessary to sell on Amazon, or can you start without one?
Are you selling on Amazon without a business license?
Whether or not you need a business license to sell on Amazon depends on the rules of your home state and municipality. The Small Business Administration (SBA) states that to operate lawfully, most small firms will require several different types of permissions and licenses from various levels of government.
Although Amazon does not require a business license for you to become a seller (because most products sold there are not controlled by the federal government), you are still responsible for acquiring any licensing your firm may require. A seller’s permit or sales tax license may be required before you can legally sell products within your state. A business license may be required if the company sells food or cosmetics which are heavily regulated.
If you don’t apply for the proper licenses, your Amazon store could face fines or shutdown.
Does Amazon require a special license for selling?
If you want to run a business, you’ll need a business license. If you’re going to sell items, however, you’ll need a seller’s permission.
Whether or not you need a seller’s permit to sell on Amazon depends on the nature of your business, where you do business and the types of things you intend to offer.
A seller’s permit from Amazon may be required depending on the kind of your business, where you do business and the goods you plan to sell.
A seller’s permit or business license is optional to conduct business on Amazon, as was mentioned earlier. However, you may need one to comply with legal and tax requirements imposed by your municipality, state, or the federal government.
Does Amazon need you to have a reseller’s license?
Although Amazon does not explicitly require a reseller’s license, you may be required to obtain one depending on where you are, what you are selling, and to whom you are selling it.
With a valid reseller’s permit, you can avoid paying sales tax when purchasing bulk from manufacturers and wholesalers. When you sell these items, you must charge your consumer’s sales tax and spend that money to your state’s tax agency.
Then, when you profit from the sale of these items, you must collect sales tax from your consumers and submit it to the appropriate state agency.
If you sell products without the proper reseller’s license, you could face heavy fines and even legal repercussions. To add insult to injury, many wholesalers insist on seeing your reseller’s license before doing business with you.
Therefore, a reseller’s license is a wise investment, both legally and for developing your online business, if you plan to be an Amazon reseller (purchasing things in bulk and reselling them on Amazon).
Do I need a sales tax permit to sell on Amazon?
When selling on Amazon, a sales tax authorization may be required by law but is commonly disregarded.
If you sell items to customers in your state, you’ll need a sales tax permit to legally collect, report, and remit sales taxes. However, when it comes to e-commerce, state lines tend to blur, and things can get tricky.
Products being kept and sent by Amazon as part of its FBA service may be located in any number of Amazon warehouses nationwide. Even if you and your company aren’t physically situated in a jurisdiction that requires sales tax collection, you may still be required to collect sales taxes when products are sent from a warehouse in that state. The term “nexus” is used to describe this association.
If you establish a sales tax nexus in a state, you will likely be required to obtain a sales tax license from that state. Fortunately, Amazon offers a report detailing the locations where your stock has been kept so you can ascertain whether or not any sales taxes are due.
While Amazon may handle sales tax collection and remittance in some circumstances, it is still your responsibility as an Amazon seller to ensure tax compliance.
Can I sell on Amazon without a business account?
While opening a personal Amazon seller account might get you started quickly, it’s best to consider creating a separate company account as soon as possible.
There are two different ways to sell on Amazon: as an individual and as a business. Professional sellers are strongly advised to have a business account due to the volume of items they sell, while Individual sellers are not required to have one.
There are many benefits to using an e-commerce platform specifically designed for businesses. Separating your business and personal finances provides an added layer of security, simplifies record-keeping and tax preparation, and lends credibility to your venture.
Even though you can begin selling immediately without a business account, it is recommended that you create one, as it will serve as the backbone of your Amazon business.
