Do I Need a Business License to Sell on Shopify? (2026)

You’ve launched your new business. You have a solid idea and a detailed business plan. Your online store is up and running, or you’re about to sign a lease for a brick-and-mortar shop. Congrats!

Now you might be wondering about the official steps to keep your business moving forward. How do you pay the sales taxes you’re collecting? Which governing body do you need to register with? Do you need to register at all? 

The answers depend largely on your business type, business structure, and tax liabilities. Regulations vary by country, and this guide focuses on licensing requirements within the United States. 

Ahead, you’ll learn how to identify the types of businesses that require licenses, the combinations of licenses they might need, and how to obtain them.

What is a business license?

A business license is a certificate issued by a government agency that authorizes an individual or organization to operate within a specific geographic area, such as a city, county, state, or country. 

Business licenses serve several purposes:

1. They help governments track who’s doing business, enabling them to manage local taxes and fees properly.
2. They provide a way to enforce public health and safety rules, and encourage businesses to play fair and keep customers safe.
3. In certain industries, such as alcohol and tobacco sales, licenses promote compliance with legal standards. 

Governments or professional licensing authorities (such as a state bar association) can also issue licenses and permits for particular regulated professions, such as health care services or accounting. 

Do you need a business license to sell on Shopify?

Shopify doesn’t require a business license to open an online store. Due to government rules, you may need a business license depending on what you sell and where you operate. 

In the United States, requirements and fees vary across the local, state, and federal levels. Many online sellers will eventually need official paperwork, such as a local business license or a state seller’s permit for state tax, but there is no one-size-fits-all rule. 

Do you need a business license to dropship on Shopify?

Dropshipping is legal, but it’s not license-free by default. You still have to comply with tax laws, consumer protection expectations, and product safety responsibilities, even if a supplier fulfills orders. 

Note that, while you don’t hold inventory as a dropshipper, you do need a seller’s permit from your state to collect sales tax from customers. If your sales reach a certain threshold in a specific state, you may also be required to obtain a license in that state due to economic nexus laws. 

Do you need an LLC to sell on Shopify?

No, you don’t need to open a limited liability company (LLC) to sell on Shopify. An LLC is a business structure governed by individual states, not a Shopify prerequisite. 

You can start a sole proprietorship and then form an LLC later, as you move more inventory or hire employees. 

Here are the main types of business structures to consider:

• Partnerships. A general partnership is a business you run with one or more collaborators. As a pass-through business entity—where you and your partners pay income taxes on profits at the personal level—you may not need a business license to operate.
• LLCs. If you run a limited liability company (LLC) selling goods subject to sales tax, you will likely require a seller’s permit from your state’s tax authority.
• Corporations. C corps and S corps are relatively complex business structures that typically need a business license.

Types of business licenses

• Local business licenses and permits
• State business licenses and permits
• Federal business licenses and permits

In an ideal world, there’d be a single, general business license for all entrepreneurs. Unfortunately, that’s not the case.

The regulatory landscape in the United States is complex, with legal requirements at local, state, and federal levels. Your business may need to obtain a combination of licenses or permits, including:

Local business licenses and permits

Depending on your business and local government requirements, you may need specific licenses and permits from your village, town, city, or county. Even if you don’t have a storefront and sales happen online, local laws still apply. 

A home-based business may face fewer restrictions, but local zoning ordinances can still apply, so it’s worth checking local regulations with your planning or zoning office. 

While you likely won’t need all of the following, understanding the full picture helps ensure you don’t miss any crucial licensing requirements:

• Local business operating license. Your county or city government may require this to operate within its jurisdiction. Check with your city’s business office or use the US Small Business Administration (SBA)’s online directory to find the appropriate agency.
• Building permit. If you’re constructing or renovating a retail location or office space, you’ll likely need building or construction permits.
• Fire permit. Fire marshals issue these for businesses that use flammable materials or maintain spaces with certain occupancy limits.
• Health and cleanliness licenses. Food-service establishments, fitness facilities, hair salons, and other health-related businesses typically require inspection and permits from local health authorities.
• Zoning and land-use permits. If your business doesn’t fit the existing zoning for your location, you may need a special permit (for example, running a café in a residential zone).
• Signage permits. Some areas restrict the types of signs you can display. Check local regulations to avoid potential fines.
• Home-based business operating licenses. Some locations require home occupation permits, especially for businesses involving significant inventory storage, shipping, or customer foot traffic.

State business licenses and permits

Even if your business requires minimal local licensing, you’ll likely need some state-level permits:

• State business operating license. This allows state agencies to track business activities and levy taxes. Use the SBA’s state business license office locator tool to find your local agency.
• Seller’s permit. Necessary for collecting and paying sales tax, or for selling regulated goods like liquor, gasoline, or lottery tickets. Depending on the state, it may be called a sales tax permit or license, a vendor’s license, or even a Certificate of Authority, as in New York. 
• Occupational licenses. Required for professionals in regulated trades such as accounting, electrical work, contracting, real estate, cosmetology, and private investigation.

Federal business licenses and permits

Federal licenses aren’t standard for a typical Shopify store, and usually only apply when the business sells in a federally regulated category, such as:

• Agriculture. If your business imports or transports specific crops, animals, animal products, or biotechnology, you’ll need a permit from the US Department of Agriculture.
• Alcoholic beverages. If you manufacture, transport, wholesale, or import alcoholic beverages, obtain a permit from the US Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau.
• Fish and wildlife. Businesses that involve wild or commercial fisheries or wildlife must obtain specific licenses from the US Fish and Wildlife Service.
• Transportation and logistics. Although these certifications are a federal government requirement, states typically handle the certifications required for businesses that operate oversized vehicles or trucks. 

How to get a business license

The process for obtaining a business license varies depending on your needs, business structure, and business type, but the steps below apply in most cases. Consider timing as you plan, as some approvals can take longer than expected:

1. Register your business

Register your business with your state authority (usually the Secretary of State’s office) and obtain an employer identification number (EIN) from the Internal Revenue Service (IRS). It can be issued online in minutes, and there’s no fee when applying through the official IRS website. 

2. Gather necessary paperwork

Collect the documents you’ll need for federal, state, and local business licenses. Typically, this process requires proof of registration and an EIN. You may also need to provide information such as the business name and legal entity type, a business plan, a certificate of insurance, tax forms, professional certifications, and proof of zoning and land-use compliance. Having these documents ready will streamline the application process.

3. Acquire federal licenses or permits

Start the licensing process from the top down, as some state and local licenses require federal approval. When licensing does apply, approvals can involve multiple steps. For example, if your store sells alcohol, the Alcohol and Tobacco Tax and Trade Bureau (TTB) requires you to secure the appropriate permits and approvals before engaging in business. Application times vary depending on the type of alcohol business and filing. 

4. Secure state and local licenses and permits

After obtaining any necessary federal licenses, focus on state and local requirements. Begin with state licenses, then work your way down to county and city levels. State business offices can often guide you to the appropriate local governments and agencies.

5. Track and renew your licenses

Most business licenses require periodic renewal, with some requiring renewal annually. Keep track of expiration dates to avoid late-renewal fees or penalties. Most states and municipalities offer online renewal options, and some (like Oregon and Minnesota) provide email renewal notices and reminders if you keep a valid email address on file.