Do I Need Business License to Sell on Shopify?

If you’re considering starting a Shopify store, you might wonder: Do I need business license to sell on Shopify? The short answer is no; Shopify doesn’t require you to have a business license to create a store and start selling. 

Regardless of location, legal and marketing knowledge, anyone can create a Shopify store and start selling in minutes. 

However, depending on where you live and what you’re selling, you might need a license to comply with local laws.

The last thing you want is to build a successful online store but only to run into legal trouble later. So, let’s discuss when you might need a business license and how to get one if necessary.

Can You Sell on Shopify Without a Business License?

You can create a Shopify store and sell products without a business license. Shopify itself doesn’t ask for any legal paperwork when you sign up.

But here’s the catch: just because Shopify doesn’t require it doesn’t mean your state, city, or country won’t. Some local governments expect you to register your business, even if you’re selling from home.

If you’re running a small dropshipping store or testing an idea, you might not need to worry about it immediately. But if you plan to turn your store into a real business, it’s better to be legally prepared from the start.

What is a Business License?

A business license is a legal certificate or document issued by a Government agency that permits a business, corporation, or individual to operate within a specific jurisdiction (state, federal, or city). 

This license or certificate enables the business, corporation, or individual to operate and carry out their lawful business activities within the jurisdiction without any harassment or trouble from anyone or other relevant authorities. 

It also ensures that the business complies with state, city, or federal law and remits taxes to the appropriate authority. 

Choosing the Right Business Structure for Your Shopify Store

Before you apply for a business license, it helps to decide what type of business structure you want. This affects how you’re taxed, your personal liability, and how much paperwork you’ll deal with.

Your business structure also determines whether you need a business license or not. And how quickly you should get one. 

Here are the most common options:

1. Sole Proprietorship

This is the easiest and most common option for new Shopify store owners and most online business owners. You don’t need to file any paperwork to become a sole proprietor; it happens automatically when you start selling under your name.

For example, you probably don’t need a business license if you offer freelance writing and similar digital marketing services from home. But if you have a business name to legally secure, you may register and get a business license. 

• Pros: Simple setup, low cost, fewer legal requirements.
• Cons: No separation between personal and business assets means you’re personally liable for any debts or legal issues.

2. Limited Liability Company (LLC)

An LLC (Limited Liability Company) gives your business its legal identity, which helps protect your assets. If someone sues your business or you owe money, your personal property usually isn’t at risk.

• Pros: Limited liability protection, more credibility, easier business bank account opening.
• Cons: It costs more to set up and may have annual fees or state requirements.

3. Corporation (C Corp or S Corp)

Corporations are more complex and are usually used by larger businesses. You probably don’t need to go this route unless you plan to raise investment money or grow your Shopify store into a much bigger operation.

• Pros: Strong liability protection, better for raising money.
• Cons: Lots of paperwork, higher costs, and more complicated taxes.

4. Partnership

A general partnership might make sense if you’re starting your Shopify shop with someone else. You’ll share profits, losses, and responsibilities in this type of partnership.

• Pros: Simple setup for two or more people.
• Cons: Each partner is personally liable, even if the other makes a mistake.

Business Structure Comparison Table

Business Structure	Legal Protection	Tax Simplicity	Cost	Ideal For
Sole Proprietorship	❌ None – personal assets at risk	✅ Simple personal tax return	💲 Low or none	Beginners
LLC (Limited Liability Company)	✅ Yes – separates business and personal	✅ Pass-through taxation	💲💲 Moderate (varies by state)	Store owners needing protection and flexibility.
Corporation (C Corp or S Corp)	✅✅ Strong protection	Store owners needing protection and flexibility.	💲💲💲 High	Larger businesses or those seeking investors.
Partnership	❌ Limited – shared personal liability	✅ Simple (filed through partners)	💲 Low to moderate	Two or more people running a store together.

Which One Should You Choose?

If you’re just starting as an individual, you don’t need to worry about these licenses. You can begin your Shopify store and sell in the next few minutes. 

However, if you want to make your Shopify store official and register with relevant authorities, sole proprietorship is ideal for small businesses and solo entrepreneurs. 

But if you plan to grow your brand into an enterprise business, an LLC is often the safest and most flexible option. It gives you legal protection without the complexity of a corporation.

When Do You Need a Business License for Your Shopify Store?

There are a few situations where you must get a business license for your Shopify web shop or any other online business to operate legally:

• You’re Selling Regulated Products – Certain items require legal approval before you can sell them. Examples include alcohol, CBD, tobacco, firearms, and health supplements. If your Shopify store sells any of these, check your local regulations.

• Your Local Government Requires It – Some states and cities require a business license for any commercial activity, even if it’s run from home. The rules vary, so check with your local business office.

• You Need to Collect Sales Tax – If your state has sales tax, you may need to register for a sales tax permit (also called a reseller permit or tax ID). This allows you to collect and pay sales tax to your state legally.

• You Want a Business Bank Account – Many banks won’t let you open a business bank account without official registration. Having a separate account for your business helps keep your finances organized and makes tax time easier.

• You Plan to Build a Long-Term Brand – If you’re serious about growing your store into an authentic brand, having a legal business structure (like an LLC or sole proprietorship) protects you from liability and makes your business look more professional.

Type of Business License You Might Need

Depending on your location and business model, you may need one or more of the following licenses to operate a Shopify store and other businesses successfully:

• General Business License – Many cities and counties require businesses to register, even if they operate solely online. This license gives you the legal authority to run your business within a specific jurisdiction. Fees and requirements vary based on location.

• Sales Tax Permit – If your state collects sales tax, you may need to apply for a sales tax permit. This allows you to charge and remit sales tax on products sold to customers within that state. Some states also require businesses to renew this permit annually.

• Home Business Permit – Local zoning laws or homeowner association rules may require a home business permit if you run your Shopify store from home. This is especially important if you store inventory, handle frequent shipments, or have customers visit your home.

• Industry-Specific Licenses – Some products require special permits due to safety or regulatory concerns. For example:

• Alcohol and Tobacco – Selling alcohol or tobacco products requires federal, state, and local permits.
• CBD and Hemp Products – Many states regulate CBD sales, and you may need specific licenses to operate legally.
• Medical Devices and Supplements – If you sell items related to health and wellness, you may need FDA or state health department approval.
• Firearms and Ammunition – Selling firearms online requires a Federal Firearms License (FFL) and compliance with strict legal regulations.

• DBA (Doing Business As) Registration – If your business name is different from your legal name, you may need to register a DBA (Doing Business As) with your local government. This is often required for branding purposes and helps protect your business identity. It also allows you to open a business bank account under your store’s name.

How to Get a Business License for a Shopify Store

If you’ve determined that you need a business license, here’s how to get one:

• Research Your Local Laws – Check your state’s business registration website. If you’re in the U.S., visit your state’s Secretary of State website. Other countries have similar departments. 
• Choose a Business Structure – Decide if you’ll operate as a sole proprietor, LLC, or corporation. An LLC offers legal protection but costs more to set up.
• Register Your Business Name – If you’re using a name other than your legal name, you may need a DBA (Doing Business As) registration.
• Apply for a Sales Tax Permit – If your state requires it, apply through your state’s tax department.
• Fill Out the Application – Business license applications are usually online through your local government’s website. Some may require a small fee.
• Keep Your Paperwork Updated – Some business licenses need annual renewals. Mark your calendar to stay compliant.

Pros and Cons of Getting a Business License

Pros

Keeps your business legally compliant.

Allows you to collect and pay sales tax properly.

Helps you open a business bank account.

Builds trust with suppliers and customers.

Cons

It may require fees and paperwork.

It might not be necessary for small sellers.

FAQs – Do I Need a Business License to Sell On Shopify?

Conclusion

Most small business owners or individuals don’t need a business license to start selling on Shopify.

However, depending on what you sell and where you live, you may need one to stay legally compliant. It’s always best to check your local laws, especially if you plan to grow your Shopify store into a long-term, global, or regional business.

Starting your online store should be exciting, not stressful. Do a little research upfront, and you’ll avoid legal headaches.