Last Updated | June 8, 2021
Overview: How Do You Need a Business License to Dropship On Shopify?
With the rising entrepreneurial spirits, everyone is trying to launch their own business and get rich overnight. While overnight wealth is not possible, eCommerce has created a new arena for people who want to launch their own businesses on digital platforms. For this purpose, dropshipping via Shopify has become the ultimate pathway.
However, recently there have been talks about the legality of dropshipping in various countries, like Canada, the USA, and the UK. Similarly, the to-be dropshipping sellers are contemplating the Shopify store business license and asking if they need one. So, with this article, we are sharing everything you’ve to know about the Shopify business licenses. Are you ready to earn some buck (legally)?
What Is Shopify Dropshipping Business License?
The business license is the permission that allows the owners to start and run the business in a specific county, city, state, or country that grants the license. It’s a sort of permit that that shows that the company is operating with the approval of the respective state or country. The most intriguing fact is that the government agencies have the liberty to issue a fine or shut down the business that doesn’t have a business license.
On the other hand, keep in mind that having a business license applies to specific businesses since not every business requires a license. Based on the business type, you are likely to need federal, local, state, or country licenses (or maybe no license at all). It largely depends on where you are operating from and it will determine the type of license needed. In addition, it will impact where you need to get the license from.
The business licenses allow the Shopify store or eCommerce businesses to do business in the state, county, or city. In some cases, the Shopify store owners do need a license to ensure legal operation. For the most part, a license is needed when you are selling regulated products, such as firearms or medication. On the contrary, if you have a home business and selling through Shopify, you don’t necessarily need a license.
That being said, it’s a better choice to have necessary licenses if you are likely to make higher profits and revenues. This is because higher profits demand you to pay federal taxes or state taxes. Not to forget, you might need a license if you want to collect sales tax from the customers on the behalf of your state or country. The business licenses require annual renewal. Also, eCommerce licenses are quite similar to licenses granted to brick and mortar businesses.
As far as registration and regulations for business licenses are concerned, it depends on the place, so it’s best to get in touch with City Hall or check the Secretary of State website to apply for the license. You might have to pay a fee to obtain the license (the fee is small, by the way). Also, if your product or business needs a license, make sure that you renew it annually to save yourself from fines.
What Are Shopify Dropshipping City Business Licenses?
The city business licenses are generally issued by the city zoning department of the city planning department, so you can understand if your business needs a local business license. It is essential to check for the city business license if you need to set up a home office (yes, some cities even regulate the home offices) or leases a commercial place. Whatever your plans are, make sure to contact your city planning department to determine the need for a license.
What Are Shopify Dropshipping County Business Licenses?
Sure, your town or city doesn’t need a business license but your county might demand a business license. For checking the need for a county business license, you’ve to check with the county clerk to see what kind of license you need according to the type of your business.
What Are Shopify Dropshipping State Business Licenses?
The states often demand the businesses to obtain the licenses, depending on the profession and product. This is because they want to protect the safety and health of the state residents. Generally, you need a state business license if you are going to sell automotive machines, electrical parts, medical supplies, or plumbing supplies. In addition, you have to have a state business license if you want to sell alcoholic beverages to your customers.
How Much Money Can You Make Dropshipping On Shopify?
To be honest, there is no specific sum that you can make by dropshipping on Shopify because it varies according to what you are selling and the popularity of your store. To illustrate, some Shopify drop shippers are making $100,000 annually since they have a successful store. However, if you want to hit this benchmark or higher, you have to build a brand and choose reliable suppliers. With the pandemic, dropshipping stores have experienced higher profits.
According to stats, people in the U.S. have seen positive Google trends regarding dropshipping. It wouldn’t be wrong to say that dropshipping is an apt way of earning a decent amount of money but it’s a long-term kick. That’s because if you want to make hefty money in a short span of time, dropshipping is not a suitable occupation for you. It’s pretty obvious that building a reliable Shopify dropshipping store requires you to invest money, time, and effort.
Why Do You Need a Business License for Shopify UK?
Some dropshipping store enthusiasts keep asking if they need a Shopify business license UK. It’s safe to say that in the majority of cases, the dropshipping store businesses can trade in the UK without a business license but you have to be registered with HMRC. Registering with HMRC is essential for starting a business. When you first start trading or operating, you have to register with HMRC within three months.
For general goods, there is no need for a license but there are certain rules set by the British government that must be followed. These regulations generally imply when you are placing orders with suppliers and vendors and delivery costs. You can aware of the rules through the UK government’s website (you can check the online and distance selling page in case of eCommerce stores). However, you do need a license if you are likely to sell restricted goods like alcohol.
In case you are likely to sell alcohol, you have to have a personal license and a premises license. To begin with, the personal license demands you have the BIIAB level 2 award from the certified provider and apply for the license on the UK government website. It can cost around £100 while the application process can be of three weeks. As far as the premises license is concerned, it’s only needed when you have to set up a store, so ask your city’s government for more details on this.
In case you want to sell online from the UK to other countries, you need documentation and have to pay sales tax and customs duty. For this purpose, you have to check the trade commission database because it helps calculate the duty rates. Also, we suggest that you talk to the customs agent about the place where you will send the products. In particular, if you are likely to send products to Europe, you have a special license, depending on the product sector.
As far as the legalities are concerned, dropshipping is completely legal in the UK since it’s only a business modem. The best thing is to register the online drop shipping or Shopify store in the UK if you want to be safe from legal issues. There are different business structures in the UK, such as partnership, sole trader, and limited company, so ask the registration authorities.
How Do You Need a Business License for Shopify California?
When it comes down to dropshipping, you have to consider the business license California if you are likely to operate from California. Before we talk about the business license, let us tell you that you can depend on Folio3 Shopify wholesale App development in the USA for shaping a perfect Shopify store or an eCommerce store. Coming back to the point, you need to have the Doing Business As the name and the resale permit.
In addition, you’ve to buy the spot in your local newspaper and run the four-week-long announcement on the DBA name. The licensing requirements differ according to different parts of California. For instance, you don’t need a standard business license if you are from LA and aren’t going to sell the restricted products. In case you are wondering about attaining the resale or seller’s permit, we have the information for that as well.
The business owners can get the seller’s permit by mail without paying any fee (even if there is any fee, it will be minimal). For getting the seller’s permit, you have to submit the application with revenue, state of residence, Federal Tax ID number, and address of HQ to the state revenue department. However, before you submit this application, you need to have the location finalized. To summarize, you do need the seller’s permit but the requirement differs from the state’s regulations.
How Do You Need a Business License for Shopify Canada?
The Shopify business license Canada is important because Canada actually has tight regulations regarding business operations. For this purpose, you need to talk to the small business centers and/or the local chamber of commerce to obtain the license. There are free resources available in Canada. While it’s not mandatory to have a business license, it’s suggested to have one, so you don’t get fined during the tax season. So, do get a license if you want to run a Shopify store in Canada.
How It Is Possible to Start Shopify Dropshipping Without A Business License?
To begin with, you don’t need a business license or permit to start dropshipping on Shopify since starting such businesses is extremely easy. You can simply open the Shopify website, sign up for the account, enter the bank account details, social security number, and start selling your products. However, there are various complications involved, so it is best to have a license if you want to operate on Shopify. In particular, you need the business license for Shopify dropshipping for the following reasons;
- Liability –when you want to operate the business, you can get the business license since it helps reduce the liabilities. This is because S Corp and LLC registration will limit the liability for products that are sold through online eCommerce stores. Keep in mind that you must consider liability, irrespective of what you are selling. In addition, you can manage the liability if you work with legit suppliers and sell legit products
- Legitimacy & Simplicity –before you launch your Shopify dropshipping store, you have to consider legitimacy and simplicity in front of the suppliers. For instance, if you want to develop a trusting and meaningful relationship with the suppliers, you have to get yourself a business license. This is because when you have the business license, you appear legitimate in front of the suppliers
- Taxes –believe it or not, you need to keep in mind that taxes are the biggest expense for any business owner. That being said, if you want to maximize the tax write-offs, you can get a business license. It’s safe to say that business licenses are a necessity if you want to operate a serious business
Why Do I Need a Business License to Sell Digital Goods On Shopify?
First, the question is, “do you need a business license to sell digital goods on Shopify?” In that case, you do need a business license to sell digital goods on Shopify. This is because even if you want to operate an online business, it doesn’t exclude you from legal requirements and documentation (yes, the business license is one of them). This is because you don’t want any heavy fine only because you didn’t file for the business license.
Keep in mind that every state and city has distinctive requirements for license obtaining. In the case of local governments, you have to have a license for every business, inclusive of digital goods. On top of everything, if you want to sell the digital goods on Shopify temporarily, you can opt for the temporary seller’s permit (the permit only lasts for ninety days).
What Is the Easiest Dropshipping Business to Start On Shopify?
When it comes down to starting the dropshipping business on Shopify, you have to choose the right product if you intend on making sufficient profits and revenues. In addition, the products must be chosen according to the targeted audience. However, there are some dropshipping businesses that are the easiest to start on Shopify. In the section below, we are sharing some easy dropshipping products that you can sell through a dropshipping store on Shopify, such as;
- Power tools – these products have been in higher demand for around five years and they will keep rising
- Tech supplies – with the increase in tech popularity and utilization, the technological supplies are high in demand and are easier to access supply, and source
- Lifestyle – we have seen various dropshipping stores make a six-figure income by selling the lifestyle products, so get some of those and start making profits right away
- Beauty product – well, who doesn’t like to look attractive? That being said, beauty products are the easiest to sell through dropshipping because the demand is high
In addition to these products, the demand for gaming headsets, Bluetooth speakers, smartwatches, muslin watches, wooden watches, teeth whitening kits, hair growth serums, USB charging docks, baby carriers, portable smoothie blenders, organic teas, security cameras, and anti-aging cream is high. That being said, these products will be easy to sell.
Why Do I Need a Tax ID to Sell On Shopify Dropshipping In The USA?
The Tax ID is essential because it helps with tax purposes (you have to pay the taxes on annual basis). For the most part, the Tax ID is pretty easy to attain.
How Do You Need an LLC for A Shopify Dropshipping Store?
You don’t really need the LLC for selling online stuff on Shopify. In addition, you don’t need the LLC for Etsy, Amazon, and eBay dropshipping. The business owners can form the LLC anytime but it’s best to form one as soon as possible. This is because it helps in moderating success for eCommerce businesses.
What Qualifications Do You Need To Start A Business With Shopify In The USA?
If you want to start a business with Shopify in the USA, you need to have the Tax ID and seller’s permit. In the case of a business license, you have to consult the state business requirements.
Do You Need A Resale License For Dropshipping On Shopify?
Yes, you do need a resale license if you want to operate as a reseller. Keep in mind that the resale license is different from the conventional business license.
Do You Need A Reseller’s License To Sell On Shopify?
You only need the reseller’s license if you want to become a reseller on Shopify. However, if you want to simply sell on Shopify, Shopify doesn’t demand a business license. Keep in mind that a business license depends on your country, state, city, or county.
Do You Need To Register A Shopify Dropshipping Business?
Yes and no, it depends on your location. It is not mandatory to have a registration of your Shopify dropshipping business but it’s best to have one. This is because if you want to build a brand, it’s best to register the dropshipping business.
Do Folio3 offer Shopify eCommerce migration services in the USA?
Yes. Folio3 is a leading Shopify migration company in the USA, offering comprehensive, reliable, and affordable migration services. Our migration services follow a proven methodology to ensure minimum business disruption and optimum results for the clients.
Folio3 is one of the top-rated and highly recommended Shopify eCommerce website design, development and Shopify integration companies in the USA. The company is known for its robust expertise, extensive experience, and highly qualified team of developers, and designers that ensure innovative and custom Shopify eCommerce solutions.