In the video titled “Do You Need A Business License To Sell On Shopify?” by Kerry Egeler, he provides valuable advice based on his own experience and observations. The video addresses the common concern of whether a business license is required to sell on Shopify. Kerry advises entrepreneurs to just start their business without worrying too much about legalizing it or paying taxes initially. He emphasizes the importance of waiting until the business becomes consistent and successful before going through the process of legalizing it. Kerry also recommends using an app called TaxJar to automate the calculation and remittance of sales tax to the state. Overall, the video provides valuable insights for aspiring Shopify sellers.

Please note that I am not affiliated with Kerry Egeler or promoting any specific apps or platforms.

Do You Need A Business License To Sell On Shopify?

Overview of selling on Shopify

Selling on Shopify is a popular choice for entrepreneurs looking to start an online business. The platform offers a user-friendly interface and a wide range of features and tools to help you set up, manage, and grow your online store. With Shopify, you have the opportunity to reach a global customer base and tap into the rapidly growing e-commerce industry.

Starting a business without worrying about legalizing it

When it comes to starting a business on Shopify, many entrepreneurs wonder about the legal requirements and whether they need to obtain a business license. The good news is that you can actually start your business on Shopify without worrying about legalizing it right away. This allows you to focus on building and growing your business before diving into the legal and administrative aspects.

It is important to note that while you can start your business without legalizing it, there are implications to consider. Operating a business without the necessary licenses and permits can have legal and financial consequences in the long run. However, in the initial stages, it can be more beneficial to prioritize business growth and validation before investing time and resources into the legal process.

Obtaining a tax ID number

One important aspect of legalizing your business is obtaining a tax ID number, also known as an Employer Identification Number (EIN). A tax ID number is a unique identifier assigned by the Internal Revenue Service (IRS) to businesses for federal tax purposes.

Obtaining a tax ID number is an essential step in the process of legalizing your business. It allows you to separate your personal and business finances, comply with tax laws, and establish credibility with suppliers and customers. The good news is that obtaining a tax ID number is usually a quick and easy process, especially in certain states like Oklahoma.

In some states, you can obtain a tax ID number within a day or two, making it a straightforward and efficient process. It is important to check the specific requirements and procedures in your state, but overall, obtaining a tax ID number is not as daunting as it may seem.

Waiting until the business becomes consistent and successful

While obtaining a tax ID number is important, it may not be necessary to do so immediately when starting your business on Shopify. Waiting until your business becomes consistent and successful can be a strategic approach before going through the process of legalizing your business.

By waiting, you can ensure that your business is viable, profitable, and sustainable before investing time and resources into the legal and administrative aspects. This approach allows you to validate your business model, build a customer base, and generate consistent revenue before committing to the legal requirements.

The process of legalizing a business can be time-consuming and require a significant amount of effort. Waiting until your business is stable and successful can save you from potential complications and expenses if your business does not thrive in the long run.

Shopify’s requirement to incorporate

Shopify has certain requirements when it comes to incorporating your business. Once your sales reach a certain threshold or you have been operating for a specific period, Shopify may reach out and require you to incorporate your business.

Incorporating your business means registering it as a legal entity separate from yourself. This step provides added protection and credibility for your business, as well as compliance with legal and tax regulations. Incorporating your business also allows you to take advantage of certain tax benefits and deductions.

Shopify’s requirement to incorporate is a signal that your business has reached a certain level of success and volume. It is important to respond to Shopify’s prompt and complete the incorporation process within the given timeframe to ensure uninterrupted operation of your online store.

Collecting sales tax and incorporating

Collecting sales tax is another important aspect of legalizing your business on Shopify. Sales tax is a consumption tax imposed by state and local governments on the sale of goods and services. As an online seller, it is your responsibility to collect and remit sales tax to the appropriate authorities.

Incorporating your business is often a prerequisite to collecting sales tax. Once your business is incorporated, you can register for a sales tax permit in the states where you have a sales tax nexus, which is determined by various factors such as physical presence, economic activity, and customer location.

Collecting sales tax can be a complex process, especially when dealing with multiple states and varying tax rates. To streamline this process, you can use apps like TaxJar, which automates sales tax calculation and remittance. TaxJar integrates seamlessly with Shopify and ensures accurate and efficient sales tax management for your online store.

Notifying Shopify and providing a tax ID number

Once you have incorporated your business and obtained a tax ID number, it is important to notify Shopify and provide them with the necessary information. This includes your legal business name, tax ID number, and any other relevant documentation.

Notifying Shopify about the legalization of your business ensures compliance with their requirements and allows you to continue operating your online store without any disruptions. It also enables you to collect sales tax on each transaction and remit it to the appropriate authorities.

Providing a tax ID number to Shopify is a straightforward process that can be completed through the platform’s administrative settings. By doing so, you demonstrate your commitment to compliance and professionalism, setting a strong foundation for your online business.

Starting to collect sales tax

Once you have notified Shopify and provided a tax ID number, it is time to start collecting sales tax on each transaction. Shopify’s sales tax settings allow you to enable automatic sales tax calculation based on the customer’s location.

By collecting sales tax and remitting it promptly, you fulfill your obligations as an online seller and contribute to the local and state economies. It is essential to keep accurate records and track the sales tax that you collect to ensure compliance with tax regulations.

With the help of apps like TaxJar, the process of collecting and remitting sales tax becomes more efficient and streamlined. These apps automate the sales tax calculation process, saving you time and effort while ensuring accuracy and compliance.

Conclusion

In conclusion, starting a business on Shopify does not necessarily require immediate legalization or obtaining a business license. It is often more beneficial to focus on business growth and validation before investing time and resources into the legal and administrative aspects.

Obtaining a tax ID number is an important step in the process of legalizing your business, and it is usually a quick and straightforward process, especially in certain states. It is advisable to wait until your business becomes consistent and successful before going through the process of legalizing it.

Shopify may require you to incorporate your business once you reach a certain threshold of sales or have been operating for a specific period. Responding to Shopify’s prompt and incorporating your business within the given timeframe ensures uninterrupted operation of your online store.

Collecting sales tax is an essential aspect of legalizing your business, and incorporating your business often precedes the registration for a sales tax permit. Utilizing apps like TaxJar can streamline the sales tax calculation and remittance process, making it more efficient and accurate.

By notifying Shopify, providing a tax ID number, and starting to collect sales tax, you demonstrate your commitment to compliance and professionalism. These steps set a strong foundation for your online business and ensure that you fulfill your obligations as an online seller.

In summary, while it is not necessary to immediately obtain a business license to sell on Shopify, it is crucial to ultimately legalize your business and comply with tax regulations. Taking a strategic approach, monitoring your business’s success, and leveraging tools like TaxJar can help you navigate the legal and administrative aspects effectively.