Do You Need a Business License to Sell on Amazon? Everything You Need to Know

Launching an Amazon business offers tremendous potential, with over 300 million active customers. Many new sellers ask the critical question: Do you need a business license to sell on Amazon?

While Amazon itself doesn’t require a license to open a seller account, compliance with local, state, or federal laws is essential. 

Depending on your location and what you're selling, you may need specific permits or licenses. Ignoring these requirements can lead to costly legal or financial consequences down the line.

Find Out If You Need the Business License to Sell on Amazon

The short answer is that Amazon itself doesn't require sellers to have a business license to open an account. 

However, legitimate business operation almost always requires proper licensing, regardless of whether you're selling online or through brick-and-mortar channels.

Here's what you need to know:

1. Amazon's stance: Amazon requires sellers to "comply with all applicable laws and regulations," but doesn't directly verify business licensing during account setup.
2. Legal reality: Local, state, and federal regulations typically require business licenses for commercial activity, even for online sales.
3. Tax compliance: Without proper business registration, you'll face difficulties managing sales tax collection and potentially serious tax liabilities.

Most successful Amazon sellers operate as legitimate businesses with proper licensing—not just to stay legally compliant, but because it offers significant advantages for scalability, liability protection, and professional credibility.

Types of Business Licenses Amazon Sellers May Need

The specific licenses required vary based on:

• Your business structure
• Location
• Product categories
• Sales volume

General Business License

Most jurisdictions require a general business license or permit to operate legally. This is typically issued by your city or county government and may be called:

• Business Operating Permit
• General Business License 
• Business Tax Certificate

These licenses allow you to conduct business activities in your location and often require annual renewal with associated fees. They essentially register your business with local authorities for tax and regulatory purposes.

Seller's Permit/Sales Tax License

A seller's permit (sometimes called a sales tax permit or license) is crucial for Amazon sellers. This authorization:

• Allows you to collect sales tax from customers
• Requires you to remit those taxes to state authorities
• May require you to collect taxes in multiple states where you have nexus

Since the 2018 Supreme Court decision in South Dakota v. Wayfair, states can require online retailers to collect sales tax even without physical presence in their state. Amazon does collect and remit sales tax on your behalf in many states, but not all, and you remain ultimately responsible for compliance.

Professional/Specialty Licenses

Depending on what you sell, you may need additional specialty licenses:

• Food and beverages: Health department permits, FDA registration
• Cosmetics and skincare: FDA compliance for labeling and ingredients
• Electronics: FCC certifications
• Supplements: Special regulatory compliance for labeling and claims

Reseller's License

If you're sourcing products wholesale for resale on Amazon, a reseller's license (also called a reseller permit or certificate) is essential. This allows you to:

• Purchase products without paying sales tax from suppliers
• Document your tax-exempt status for wholesale purchases
• Legally collect and remit sales tax on final sales to customers

Home Occupation Permit

If you're running your Amazon business from home, some jurisdictions require a home occupation permit. This confirms your business activities:

• Comply with local zoning regulations
• Don't disrupt the residential nature of your neighborhood
• Meet specific restrictions on signage, traffic, inventory storage, etc.

Business Structures for Amazon Sellers

The business structure you choose affects licensing requirements, liability protection, and taxation:

Sole Proprietorship

The simplest structure requires minimal paperwork but offers no legal separation between you and your business.

Pros:

• Easy and inexpensive to establish
• Direct control of all aspects of the business
• Straightforward tax filing on your return

Cons:

• Unlimited personal liability for business debts
• More difficult to raise capital
• Less credibility with suppliers and customers

Limited Liability Company (LLC)

Pros:

• Separates personal assets from business liabilities
• Pass-through taxation (similar to sole proprietorship)
• More flexibility in management structure

Cons:

• Higher formation costs than a sole proprietorship
• More complex compliance requirements
• Annual reporting and fees in most states

Corporation

Pros:

• Strongest liability protection
• Easier to raise capital through stock sales
• Potential tax advantages for larger operations

Cons:

• The most complex and expensive structure
• Subject to double taxation (unless S-corp election)
• Significant regulatory compliance requirements

Most small to medium Amazon sellers find that an LLC provides the ideal balance of liability protection and operational simplicity.

Step-by-Step Guide to Getting Licensed for Amazon

1. Choose Your Business Structure

Consider consulting with a business attorney or accountant to determine the structure that best fits your goals and circumstances.

2. Register Your Business Name

• File a DBA ("doing business as") if operating under a name different from your legal name.
• Check name availability through your state's business registry
• Consider trademark protection for your brand

3. Register for Federal Tax ID (EIN)

An Employer Identification Number (EIN) from the IRS:

• Identifies your business for tax purposes
• Allows you to open business bank accounts
• It is required for most business structures except sole proprietorships with no employees.

You can apply for an EIN online through the IRS website at no cost.

4. Obtain State and Local Business Licenses

Research requirements in your specific location, which typically include:

• State business registration
• City/county business license
• Seller's permit/sales tax license

Each state has different requirements, so check with your state's department of revenue and local business licensing office.

5. Apply for Specialty Permits

Based on your product category, you may need additional permits or registrations. 

6. Set Up Sales Tax Collection

While Amazon handles some sales tax collection through Marketplace Facilitator laws, you should:

• Register for sales tax permits in states where required
• Understand your obligations beyond Amazon's automatic collection
• Consider tax compliance software for multi-state selling

7. Open a Business Bank Account

Separating business and personal finances is essential for:

• Clean accounting and tax preparation
• Establishing business credibility
• Maintaining liability protection (especially for LLCs and corporations)

Consequences of Selling Without Proper Licensing

Operating an Amazon business without the required licenses carries significant risks:

Legal Penalties

• Fines and penalties from state and local authorities
• Potential business closure orders
• Back taxes plus interest and penalties

Amazon Account Risks

Amazon may suspend seller accounts for regulatory non-compliance. While they don't actively verify business licenses during registration, they can request this documentation during account reviews or if issues arise.

Tax Complications

Without proper business registration:

• You'll struggle to properly collect and remit sales tax
• You may face personal liability for business tax obligations
• You'll miss legitimate business deductions

Limited Business Growth

Proper licensing enables:

• Business bank accounts and credit cards
• Access to wholesale supplier relationships
• Ability to raise capital from investors

Consider Using Amazon's FBA Program

Many sellers don't realize that using Fulfillment by Amazon (FBA) can create additional licensing requirements. 

When you use FBA, your inventory is stored in Amazon's warehouses across multiple states, potentially creating "nexus" in those states that requires you to register for sales tax permits.

However, most states now have Marketplace Facilitator laws requiring Amazon to collect and remit sales tax on your behalf. While this simplifies tax collection, it doesn't eliminate your responsibility to register in states where you have nexus.

Special Considerations for International Sellers

If you're outside the US but selling to US customers on Amazon:

1. US Business Entity: Consider forming a US-based LLC for simplified banking and tax management.
2. Tax ID Requirements: You'll need an EIN from the IRS, which requires applying for an ITIN (Individual Taxpayer Identification Number) if you don't have a Social Security Number.
3. VAT/GST Compliance: If selling in European or other international Amazon marketplaces, you'll need to comply with Value Added Tax (VAT) or Goods and Services Tax (GST) requirements.
4. Import Regulations: Understand customs duties, import restrictions, and product compliance requirements for cross-border selling.

Building a Compliant Amazon Business for Long-Term Success

Approaching your Amazon business with proper licensing from the start positions you for sustainable growth. 

While getting fully licensed might seem daunting initially, the process is manageable when broken down into steps, and the peace of mind and legal protection are invaluable.

Look at business licensing not as a bureaucratic hurdle but as the foundation for building a legitimate, scalable business asset. 

Just as you would research how to get permission to sell branded products, understanding licensing requirements is part of your professional due diligence.

Remember that licensing needs evolve as your business grows. What works for a starter Amazon business might need reevaluation as you expand into new product categories, add sales channels beyond Amazon, or reach customers in different states or countries.

Insider’s Edge: Forming Your LLC in Business-Friendly States

Many top Amazon sellers form their LLCs in states like Wyoming or Delaware—even if they live elsewhere. 

These states offer no corporate income tax, low filing fees, and stronger privacy protections, giving you a leaner legal structure from day one.

While you may still need to register as a foreign entity in your home state, the long-term benefits, like easier investor onboarding and improved brand credibility, can far outweigh the extra step. 

This strategy isn’t widely known among beginners, but it’s a smart move for serious sellers.

Turning Your Amazon Store into a Serious Business

Building a compliant Amazon business lays the groundwork for long-term growth and legal protection. Skipping licenses may seem easier, but it risks fines, tax issues, and account suspension down the line.

Register your business, secure the right permits, and set up solid accounting early. This upfront effort helps turn your side hustle into a credible, scalable Amazon brand.

Ready to take your Amazon business to the next level with professional products and hassle-free fulfillment? Your properly licensed and professionally managed Amazon business awaits!