What License Is Needed For Drop Shipping?
Drop shipping businesses require a license or permit to operate in most jurisdictions. This article will discuss what type of license and permit is necessary to run a dropshipping business.
Sales Tax ID or Reseller Certificate
Most dropshipping businesses need a sales tax ID or reseller certificate from its state’s tax department. This license allows the business to buy products tax-free and then charge customers the applicable sales tax. Without this license, the business would be required to pay sales taxes on any products it purchased.
Local Sales Tax
In some jurisdictions, there may be local sales tax that needs to be collected. This tax is typically imposed by cities and counties and is in addition to the state sales tax. For example, a business located in California would need to obtain a local sales tax permit from the county in which it operates.
In addition to a sales tax ID or reseller certificate, a business license may be required in some jurisdictions. A business license is usually required for any business that sells goods or services. Depending on the jurisdiction, the license may be issued by the city or county, or by the state.
To operate a dropshipping business, you will need to obtain the following licenses and permits:
- Sales tax ID or reseller certificate from your state’s tax department
- Local sales tax permit from your county or city
- Business license from your city, county, or state
By obtaining the necessary licenses and permits, you can ensure that your dropshipping business is legal and compliant with all applicable laws.