In short
In the US, many cities, counties or states require a general business license, and states with sales tax usually require a seller's permit before you collect sales tax. You also need an EIN if you form an LLC or hire employees. In the UK, there is no general business license; sole traders register with HMRC for Self Assessment, and some activities need specific licenses.
What to check
- 1
Local business license
Check your city and county website. Home-based businesses may also need a home occupation permit.
- 2
Seller's permit / sales tax
If your state has sales tax and you sell taxable goods, register with the state tax agency before collecting tax.
- 3
EIN
Free from the IRS. Required for LLCs with employees and useful for opening a business bank account.
- 4
Special licenses
Food, cosmetics, alcohol, childcare and some services need extra permits or certifications.
Selling services instead of products
Services such as tutoring, cleaning or dog walking usually need the same general registration, and some (childcare, personal care, trades) need specific certifications. Your local small business office can tell you what applies.
FAQ
Do I need a license to sell on social media?
Selling via Instagram or TikTok is still a business activity. The same local rules apply.
Do I need a seller's permit for dropshipping?
In many states, yes, if you sell taxable goods to customers in that state. Rules on economic nexus vary.
Is this legal advice?
No. This is general information. Requirements differ by location, so check with your local authority or a professional.
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Editorial team 5minstore · Updated: November 1, 2026. General information, not legal or tax advice.