The short answer
There's no single federal "internet business license" in the United States. Whether you need a license depends on where you're based and what you sell. The U.S. Small Business Administration (SBA) explains that most businesses need some combination of licenses and permits from federal, state and local agencies, and that the rules vary by location and industry (SBA: Apply for licenses and permits).
So the real question isn't "do online stores need a license?" It's "what does my city, county and state require for my products?" Here's how to answer it.
This guide is general information, not legal or tax advice. Rules change and differ by state and city, so confirm with your local agencies.
The four registrations most new sellers check first
| Registration | Who issues it | When you typically need it |
|---|---|---|
| General business license | Your city or county | Many localities require one for any business, including home-based ones |
| Sales tax permit (seller's permit) | Your state's revenue or tax department | If you sell taxable goods in a state that collects sales tax |
| DBA / assumed name | Your state or county | If you sell under a brand name instead of your legal name |
| EIN (Employer Identification Number) | IRS | If you hire employees, form certain entities, or want a tax ID separate from your SSN |
1. A general business license (local)
Many cities and counties ask every business operating within their limits to register, even if you work from your kitchen table and only sell online. Search for "[your city] business license" on your city or county government website. If you're home-based, also ask about home occupation permits and zoning rules; the SBA notes that zoning is usually controlled locally (SBA: Pick your business location).
2. A state sales tax permit
If your state has a sales tax and you sell taxable products, you'll usually need to register with the state before collecting tax. The SBA lists state tax registration as a standard launch step (SBA: Get federal and state tax ID numbers). Sales tax for online sellers has its own wrinkles (like selling into other states), which we'll cover in a dedicated guide.
3. A DBA if you use a brand name
If your legal name is "Jordan Lee" but your store is called "Lee & Pine Candles," many states require you to register that name as a "doing business as" (DBA) or assumed name. The SBA explains when and where to register a business name (SBA: Register your business).
4. An EIN from the IRS
An EIN is a federal tax ID. Not every sole proprietor needs one, but you do if you hire employees or form certain business structures, and many sellers get one anyway so they don't hand out their Social Security number. It's free directly from the IRS (IRS: Get an EIN). Be wary of third-party sites that charge for it.
When you need a federal license
You only need a federal license or permit if your business activity is regulated by a federal agency. The SBA gives examples such as alcohol, firearms, agriculture products, aviation, and fish and wildlife products (SBA: Apply for licenses and permits). If you're selling t-shirts, candles, art prints or phone accessories, a federal license is unlikely to apply, but some product categories (like food, cosmetics or supplements) can carry extra state or federal rules, so check before you list them.
Does your business structure change anything?
Your structure (sole proprietorship, LLC, corporation) affects registration, taxes and personal liability. Many beginners start as sole proprietors, which the IRS describes as someone who owns an unincorporated business by themselves (IRS: Sole proprietorships). Forming an LLC means registering with your state, usually for a fee. Compare options with the SBA's business structure guide.
A simple checklist before your first sale
- Decide your business name and structure.
- Register a DBA if your store name differs from your legal name.
- Get an EIN from the IRS if you need one (it's free).
- Check your city and county for a business license or home occupation permit.
- Register for a sales tax permit with your state if you sell taxable goods.
- Confirm any product-specific rules for what you sell.
- Open a separate bank account to keep business money apart.
Most of these take an afternoon online. Your local Small Business Development Center or SBA office can help for free if you get stuck.
Getting the store itself ready
Paperwork is only half of launching. Once you've checked your registrations, you'll want a clean store, a way to get paid and a plan for shipping:
- How to start an online store with no experience
- How to accept payments on your online store
- How to set up shipping for a small online store
Newcomer builds your store, product pages and SEO for you, so you can spend your time on the parts only you can do. Start your free trial.
Questions, answered.
Do I need a business license to sell online from home?
Often yes. Many US cities and counties require a general business license or home occupation permit for any business, including home-based online stores. Check your city or county government website.
Is there a federal license for online businesses?
No. There is no general federal license for selling online. You only need a federal license if you sell or do something a federal agency regulates, such as alcohol or firearms.
Do I need an EIN to sell online?
Not always. Sole proprietors without employees can often use their Social Security number, but you need an EIN if you hire employees or form certain entities. An EIN is free from the IRS.
Do I need a sales tax permit for an online store?
If you sell taxable products and your state collects sales tax, you usually need to register with your state's tax agency before you start collecting sales tax.
Do I need an LLC to sell online?
No. You can sell as a sole proprietor. An LLC can separate personal and business liability but requires state registration and fees, so compare structures before deciding.