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Do I need an EIN to sell on Amazon?

In addition to possibly needing an EIN from the federal government, an Amazon seller should identify and file for any required state and local tax permits.

corpnet.com - Do I Need a Business License to Sell on Amazon? - CorpNet

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Entrepreneurs who want to sell their products through Amazon’s marketplace face many of the same opportunities and challenges as brick-and-mortar stores. Naturally, they have a lot of questions about launching and running an online business. It’s exciting to think of the possibilities but often daunting to figure out where to start, what to do, and where to turn for help and direction. One of the things these business owners want to know is, “Do I need a business license to sell on Amazon?” Regardless of whether an Amazon seller has formed an LLC or corporation or is operating as a sole proprietor, it may need certain licenses and permits to operate legally. I can’t emphasize enough how critical it is to make sure those requirements are met before a business actively begins selling its services online. Failure to comply with federal, state, and local rules can result in severe fines and penalties (including the possibility of forced closure).

Business Licenses and Permits Might Be Needed to Sell on Amazon

The requirements depend on a business’s location and industry. Attorneys, tax advisors, and accountants are excellent resources for guidance; the SBA’s website provides information, and CorpNet offers services to help business owners identify the business licenses and permits that apply to them. To give you a sense of some of the possible requirements, I’ve provided an overview of various types of licenses and permits below.

Federal Business Licenses

Business licenses required at the federal level cover 11 different industries, and various federal agencies issue them:

Agriculture – US Department of Agriculture

Alcoholic beverages – Alcohol and Tobacco Tax and Trade Bureau and the Local Alcohol Beverage Control Board

Firearms, ammunition, and explosives – Bureau of Alcohol, Tobacco, Firearms and Explosives

Fish and wildlife – US Fish and Wildlife Service

Maritime transportation – Federal Maritime Commission

Mining and drilling – Bureau of Safety and Environmental Enforcement

Nuclear energy – US Nuclear Regulatory Commission

Radio and television broadcasting – Federal Communications Commission

Transportation and logistics – US Department of Transportation

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Generally speaking, most Amazon sellers won’t find themselves in need of obtaining a federal license.

State and Local Business Licenses

States, counties, and cities oversee a broader range of activities than the federal government. Several examples include:

Restaurants and bars

Plumbing

Construction

Accounting

Legal

Medicine

Food production

In some local jurisdictions, a general business license may be required—even in the case of a home-based business that doesn’t have customers visiting its location. The licensing requirements (and their fees) will depend on the business activities carried out and the business location. Because the rules vary from state to state and municipality to municipality, Amazon sellers should check with the state and local jurisdictions to ensure they know which licenses and permits they must obtain to operate lawfully. Again, CorpNet can help identify this, as well. Also, because some licenses and permits may expire, it’s important to keep track of upcoming renewal due dates.

Tax Permits

In addition to possibly needing an EIN from the federal government, an Amazon seller should identify and file for any required state and local tax permits.

State Sales Tax

Amazon sellers need a sales tax ID and may need a sales tax permit to collect and pay sales tax. Unfortunately, the rules on state sales tax requirements on online sales a bit murky. Not all that long ago, many sellers didn’t collect and remit sales tax, but states are cracking down on that now. However, it’s foggy when determining which state’s sales tax applies to online orders.

According to Amazon’s website, customers ordering from Amazon sellers can expect that:

“The tax rate applied to your order will be the combined state and local rates of the address where your order is delivered to or fulfilled from. However, the destination of your order’s delivery will often determine if tax is applicable.” So it’s not crystal clear whether an Amazon seller must collect sales tax and remit it to the state where the product is delivered or the state where the product is shipped from. To cover all of the bases, Amazon sellers might potentially have to apply for a foreign qualification in each state where they conduct business and where they sell their products. That would ensure they have a tax nexus there and be authorized to collect and remit state sales tax. I encourage business owners to discuss this topic with an attorney and tax advisor to better understand what’s involved and the potential advantages and disadvantages.

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Other Tax Permits

Other tax permit requirements that an Amazon seller might face include income tax withholding, unemployment insurance tax, and local sales tax (I believe we can anticipate cities to push for this.).

How to Obtain Business Licenses and Permits

Whether you’re just beginning to research which licenses and permits are needed when operating a business that sells on Amazon or gearing up to apply for those requirements, you can make the process easier on yourself by enlisting CorpNet’s assistance. We offer three Business License Services to business owners in all 50 states: CorpNet’s Business License and Compliance Package (BLCP)™ – We identify which licenses, permits, and tax registrations you need. We also provide you with the applications that you will need to complete and submit. CorpNet’s Business License Preparation Service – We provide you with pre-filled, ready-to-file forms for the licenses, permits, and tax registrations you need. CorpNet’s Full Licensing Service – We determine the licenses, permits, and tax registrations you need, prepare the forms and submit the applications to the licensing authorities on your behalf. Also, CorpNet provides free compliance monitoring through our Compliance Portal . It gives you a secure and convenient way to always stay on top of your business license and permit renewal due dates. Contact us today for more information about how we can help you with all of your business registration and compliance needs.

corpnet.com - Do I Need a Business License to Sell on Amazon? - CorpNet

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