Do You Need a Business License to Sell on Amazon?

Becoming an Amazon seller is quite the journey, but do you need a business license to sell on Amazon, or will you be able to operate without one?

In this article, we’ll explore what type of licenses and permits you might or might not need, as well as the role Wise Business can play in keeping your business and personal finances separate.

Receive payments like a local >>

Trustpilot: 4.3/5 average rating - Excellent¹
No minimum balance required and no monthly fees

Don't Pay Excess Fees! Use Wise Business and Get Paid Like a Local
Receive money from around the world in 9+ major global currencies, at the speed and cost of local payments. Get account details to receive USD, GBP, EUR and more and start getting paid like a local.
Wise helps Amazon businesses receive payments by simply adding their account details to their account
Most importantly, if you're sending international mass payouts, then Wise could help. We offer the mid-market exchange and transparent costs, which has attracted over 16 million users to hold, receive, and send money with Wise and save along the way

Do I need a business license to sell on Amazon?

Whether you need an Amazon business license depends on the local and state laws of where you live, as well as what you're selling. According to the Small Business Administration (SBA), most small businesses need a combination of licenses and permits from both federal and state agencies to run their business legally.²

While Amazon doesn't require a business license for you to become a seller (as most products sold there aren’t federally regulated), you're still responsible for obtaining any necessary licensing for your business. Typically, if you're selling goods within your own state, you may need a seller's permit or sales tax license. If you deal in certain regulated products like food or cosmetics, you could need a business license.

If you don’t apply for the necessary licenses, your Amazon store could face fines or even closure.

Why establishing a business account or an LLC might help

LLCs don’t have anything to do with business permits or licenses, but there can be benefits to forming this legal entity to own and operate your Amazon business.

• Easier financial management: By having a separate business bank account, you can clearly distinguish personal expenses from business-related ones, helping to manage your finances more accurately and efficiently.
• Limited liability protection: Forming an LLC provides you with limited liability protection. This means you won’t be personally responsible for business debts and liabilities, protecting your own assets in case of legal issues.
• Professional credibility: Having your business under an LLC can boost your professional credibility. It lets your customers know they are dealing with a legitimate business entity.

Do you need a seller's permit to sell on Amazon?

Seller’s permits are different from business licenses in that business licenses let you engage in business activities, while seller’s permits specifically let you sell goods.

Whether you need an Amazon seller's permit depends on the specifics of your business identity, location, and the type of products you're looking to sell.

As touched upon earlier, Amazon doesn’t explicitly require a seller's permit or business license to let you trade. But according to legal and tax obligations dictated by local, state, or federal laws, you might be required to have one.

Do you need a reseller’s license to sell on Amazon?

Obtaining a reseller's license for Amazon might not be a direct requirement, but it can be a legal requirement based on various factors such as your location, what you're selling, and who you're selling to.

A reseller's license allows you to buy goods wholesale from manufacturers or distributors without paying sales tax. Then, when you sell these goods, you collect sales tax from your customers, which you are responsible for remitting to your state's revenue department.

Operating without a reseller's license when it's required can result in significant fines and potential legal trouble. Plus, many wholesalers actually require a reseller's license for you to do business with them.³

So, if you plan to be an Amazon reseller – buying products in bulk and reselling them on Amazon – a reseller's license is a smart investment, both legally and for the growth of your online business.

See the Best Banks for Small Businesses >>

Do I need a sales tax permit to sell on Amazon?

A permit that’s often overlooked in the realm of Amazon selling is the sales tax permit, which can be mandated in certain cases.

A sales tax permit allows you to collect, report, and remit sales taxes on products sold to customers within your state. But within e-commerce, state lines blur, and things might get a bit complicated.⁴

If you're using Amazon's FBA service, where Amazon handles the storage and delivery of your products, these products are often stored in warehouses all over the country. When an item is sold from a warehouse in a state that imposes a sales tax, even if you or your business are not physically located there, you’ll likely be obligated to collect sales taxes because you’ve formed a bond with that state. This concept is referred to as 'nexus.'

When you form a sales tax nexus, you will probably need a sales tax permit for that particular state. Luckily, Amazon provides a report of where your inventory has been stored, which can help you figure out where you may be liable for sales taxes.

Amazon might collect and remit sales tax for you in some cases, but understanding your responsibilities as an Amazon seller will help you avoid issues with tax compliance.

Do I need a business account to sell on Amazon?

While starting your selling journey on Amazon as an individual might be convenient, you might want to think about setting up a designated business account sooner than later.

Amazon provides two types of selling plans: Individual and Professional. While Individual sellers can sell their goods without owning a business account, Professional sellers are recommended to have one due to the number of items they sell.

A separate business account for any ecommerce platform comes with a bunch of advantages. It gives you an extra layer of financial protection by keeping your personal finances apart from your business transactions, makes tracking income and expenses and calculating taxes simpler, and establishes you as a professional business.

While you technically can start selling on Amazon without a business account, setting one up could just provide you with a solid foundation for running your Amazon business.

How Wise helps you manage your business better

With online selling becoming increasingly global, managing multi-currency transactions is a big part of an Amazon seller's life. Wise Business’s low-cost business account is a fantastic go-to solution.

For a one-time fee, sellers can receive funds in 9+ different currencies, with no additional charges from Wise for incoming transactions. But where Wise truly excels is in its conversion rates. Whether you're transferring funds or making purchases across currencies, Wise promises the mid-market exchange rate, resulting in big savings.

By striking a balance between cost-effectiveness and efficiency, Wise simplifies and improves the process of running an international online business – which makes all the difference.

Some other features Wise Business users love
Account Software Integration: QuickBooks, FreshBooks, Xero, Sage, and Wave
Batch payments offer the chance to send up to 1000 invoices in a single click
The Most International Account: Hold 40+ currencies at once
Transparency: Wise Business is trying to get rid of all your business account fees
The Wise API gives businesses the chance to automate and schedule mass payments
Most importantly, if you're sending international mass payouts, then Wise could help. We offer the mid-market exchange and transparent costs, which has attracted over 16 million users to hold, receive, and send money with Wise and save along the way

Receive payments like a local >>

Learn More:

Amazon Pay Review for US Businesses

---

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks.

Sources:

1. https://www.trustpilot.com/review/wise.com
2. https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits
3. https://smallbusiness.chron.com/everything-need-getting-wholesale-license-12921.html
4. https://quickbooks.intuit.com/r/taxes/when-to-update-or-cancel-your-sales-tax-license-or-certificate/