Do You Need A Business License To Sell On Shopify?
No, Shopify does not require you to have a business license to create and run a store. You just need to sign up, set up your shop, and you can start selling without showing Shopify any legal documentation.
However, this doesn’t mean you’re legally exempt from needing a license. Whether you must get one depends on the following:
Your location (state/country laws)
The products you sell (regulated items require permits)
Whether you need to collect sales tax
If you want to register as an LLC or corporation
If your local government requires you to have a business license to sell online, then yes—you’ll need one for your Shopify store, even though Shopify itself won’t ask for it.
Lets dive into more details about each of these instances:
1. If Your Local or State Laws Require It
Most cities and states require online businesses to register and get a general business license—even if you run your store from home. This is key to ensuring your business is legal and can pay taxes.
2. If You Sell Restricted or Regulated Products
If you’re selling certain regulated items, you may also need special licenses or permits. Such products include:
Alcohol, tobacco, or vaping products
Supplements or health-related items
Firearms or ammunition
CBD or cannabis-related products
3. If You Need to Collect Sales Tax
If your business operates in a U.S. state that collects sales tax, then you may need a sales tax permit (also called a seller’s permit). This allows you to legally collect and pay sales tax on your products.
4. If You Want to Form an LLC or Corporation
Some Shopify sellers choose to form an LLC (Limited Liability Company) or corporation to protect personal assets and save on taxes. If you do this, you must register your business and obtain any necessary licenses.
5. If You Dropship on Shopify
Do you need a business license to dropship on Shopify? Well, not always…but it may also depend on your location. Keep in mind that:
Some states/countries require all businesses (including dropshipping) to register for a business license.
Some suppliers won’t work with you unless your business is registered.
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Do You Need an LLC to Sell on Shopify?
No, you do not need an LLC to start selling on Shopify. You can operate a Shopify store as a sole proprietor without forming a legal business entity.
However, it’s worth noting that forming an LLC (Limited Liability Company) comes with a bunch of benefits, such as:
Protects your personal assets from business debts
Makes your business look more professional
LLC can provide you with tax benefits
If you plan to scale your Shopify store after acquisition and make it your primary income source, then we strongly encourage you to consider getting an LLC.
What Happens If You Run a Shopify Store Without a Business License?
If you’re wondering what could happen to your online business if you run it without a business license, this is your part.
Operating a Shopify store without the proper licenses could have the following consequences:
Fines & Legal Penalties: If your city/state requires you to have a license for an online store, and you don’t have one, then you risk being slapped with fines.
Tax Issues: Yes, if you fail to register for a sales tax permit but you still collect sales tax, then you could land yourself in hot soup.
Suspended Payment Accounts: It’s also worth noting that some platforms like Shopify Payments, PayPal, or Stripe may ask for your business registration proof. If you don’t have it, they may end up freezing your funds.
Supplier Restrictions: You may come across some suppliers who don't work with unregistered businesses, thus limiting your product options.
To ensure you’re always on the safer side of the law, we advise you to always check your local laws and get licensed if required.
How to Get a Business License for Your Shopify Store
If you check your local laws and determine that you need a license to run your Shopify store, here are the exact steps to follow to obtain one:
Step 1: Choose Your Business Structure
The first step is to decide your business structure. Here, you’ll mainly need to choose between sole proprietorship, LLC, and corporation. Let’s briefly describe each of them below:
Sole Proprietorship: This is the easiest option to consider (but keep in mind that you’re personally liable for debts).
LLC (Limited Liability Company): As we mentioned earlier, an LLC protects your personal assets and offers tax benefits.
Corporation: This is the best for large businesses, but it’s more complex.
Step 2: Register Your Business Name
Is your store name different from your legal name? If yes, then you may need to register a DBA (Doing Business As) with your local government.
Step 3: Apply for a General Business License
Visit your city, county, or state government website to apply.
Step 4: Get a Seller’s Permit (If Needed)
If your state requires sales tax collection, be sure to apply for a seller’s permit or sales tax license.
Step 5: Obtain Special Permits (If Required)
Check if your products require industry-specific licenses (e.g., health permits for supplements).
FAQs About Shopify Business Licensing
Do You Need a Business License to Dropship on Shopify?
It depends on your location. Some states require all businesses (including dropshipping) to be registered, while others don’t. It’s best to check your local laws.
Do You Need a Business License for Shopify to Collect Sales Tax?
Yes, in most states, you need a sales tax permit if you collect sales tax from customers.
Do I Need an LLC to Sell on Shopify?
No, you can sell as a sole proprietor. However, an LLC can provide liability protection and tax benefits.
We Help You Buy / Build, Manage and Scale E-commerce Brands for an EXIT
E-commerce Simplified for Busy Individuals – We handle the buying, building, and scaling, so you can focus on what matters.
Growth-Focused Strategies – From sourcing to marketing, we drive growth and prepare you for a profitable exit.
Expertly Managed Exits – We build a high-value brand designed for a Lucrative exit.
Final Thoughts
While Shopify doesn’t require a business license, your state, country, or industry regulations might. If you’re unsure whether you need a business license, check with your local government or consult a legal expert. It’s always better to start on the right foot than deal with problems later.
If you're unsure about the licensing process or want expert guidance on how to get started owning a Shopify store, we’re here to help. Our team specializes in assisting entrepreneurs like you to own e-commerce businesses without necessarily starting from scratch.
We help you spot the best deals, conduct due diligence to ensure compliance, and scale up your store for success. If you’re ready to start your journey of owning a Shopify store, click here to learn more about how we can help you.
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