What licenses do I need to trade legally?

I'm new to online selling.

I have drop shipped a few items and bought and sold items for profit.

Things have been going ok. I do all of my selling on eBay. I filled for a sole proprietorship and got a EIN number. Did I need to do that?

What licenses do I need to make my selling completely legal? Please help I don't want any legal trouble.

What state are you located in? Someone from your state will probably be able to give you a better answer.

In Illinois, the best way to stay out of legal trouble is by doing what you have already done. Get your business license/sales tax ID through your County Clerk's office. And you can use your personal social security number as a sole proprietor but I believe it is best to get an EIN from the federal government like you have done. It helps protect your SS# and also creates a line of distinction between business and personal stuff.

Hi Mathew and welcome to the forum,

As Michael has suggested, if you're in the US, then it's a good idea to check in with your local state authority to make sure you have everything required to trade legally within your state.

What state are you in?

Hi Matthew,

I agree with their statements. The sales tax Id is also called a Retail or Reseller's License, State Sales Tax Id, Tax Id, Resale Number, Resale Certificate, or Vendor's License.

All of these names are referring to one thing: A certificate issued for a small fee by your state (if you live in Canada or the US) that says you are registered to collect sales tax. You can usually get one from your State's website - just Google 'Your State + sales tax'.

Hence, you should be able to gather information from your local state.

This is just one of those that may be needed.

You can visit our FAQ page to know more.

Here is a link to get you started:

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fudjj wrote:Hi Mathew and welcome to the forum,

As Michael has suggested, if you're in the US, then it's a good idea to check in with your local state authority to make sure you have everything required to trade legally within your state.

What state are you in?

I am in South Carolina

Thanks all of you for your advice.

Hello,

I'm also new to all of this. I don't have licenses yet, as I've only been selling a few things from garage sales and around my house. I do want to make a bulk purchase ASAP though. Is there a limit/amount I can sell without getting into any legal trouble? Should I wait to make my bulk purchase until I get my licenses? Or does this rule vary by state as well?

Thanks,
Laura

Hi Laura and welcome to the forum,

That's actually quite an interesting question, at what point does an income become taxable. Selling a few things on eBay is fine, I doubt the tax department would come knocking looking for their slice of that. However, and this is the technical answer, any income derived from any avenue is usually taxable.

So the technical answer is that everything you make should be declared for taxation purposes, but if you did that, you may well be the only person on the planet to do so. So there really isn't any line in the sand as to when you do start keeping books, the simple answer is when you register a business really.

Can you buy in bulk without being a registered business, well that depends where you purchase your products from. Where a surplus supplier usually won't require any proof of trading, a wholesale supplier usually will. So if you wanted to buy wholesale, then that would be the time to set up your business.

I hope that helps at least a little lol

Thanks Marc! I didn't know that some wholesalers require proof.

Actually Laura, I should say all wholesalers will require proof that you are a business, surplus and dropship suppliers usually won't

Cheers

Matthew,

Along with the sales tax or resellers certificate frequently mentioned above, it is very likely you will need a Business License issued by the city you are operating in. In addition you may need a Fictitious Name Filing if you are using a business name other than your own name. The Business License and Fictitious Name Filing generally will be required to open a business banking account, which you surely want to have for tax purposes if nothing else. While there are fees associated with these filing, in general, they are nominal. In today's business environment it is wise to seek out professional help when starting a new business venture. A few dollars spent now may be far cheaper than hundreds of dollars in fines and fees in the future.

Hi, Matthew.

I would also add that if you register your fictitious name, to make sure what you would be selling reflects the name. My friend had issues with their wholesaler because the business name is associated with Computers and she was inquiring on household items. I would suggest a general sounding business name in case you plan to expand your line of products.