Last updated on 5th October 2023 at 13:51 by Alex Nicholas
For those who want to start an online business with Shopify in the UK, one question that may arise is whether or not they need a business license to actually sell on the e-commerce platform.
And the short and quick answer is no, Shopify doesn't require you to have a business license to sell with them.
But whilst online businesses may seem less regulated than traditional retail brick-and-mortar ones, there are still basic rules to follow and information you must show on your website if you own a limited company. For example, it's a requirement for you to show your Ltd company number somewhere on your site.
You will also need to provide Shopify with your Ltd company details if your company is limited liability.
Do you need a license to sell restricted goods?
This is where things get a little more complicated because there are some goods and industries that do require the merchant to provide documentation, for example:
- If you sell physical goods in Europe, Canada or the US, you probably will need to obtain some form of license, just as you do if you're in the EU and selling goods in the UK.
- If you sell digital products you'll need to make sure that you understand the VAT MOSS rules. However, Shopify handles this well for you to be honest.
- If you sell alcohol, food or health-related products you might need to get a permit license in some countries, and in some instances, you might also need government approval.
- The same goes for medical products as these are heavily regulated for obvious reasons.
- In many countries, you might now be required to register for VAT before you start trading so make sure you employ an accountant that understands the rules and regulations of selling in jurisdictions other than your own.
Requirements to sell on Shopify in the UK?
In the UK you will need to make sure that you inform the tax authorities (HMRC) of your business, including the type of business it is, i.e. sole trader, limited company etc.
You must also have a bank account that is tied to your limited company (if that's what you set up) as a legal requirement. A standard personal bank account is not acceptable.
Unfortunately, there will be a small fee attached to the bank account and you will also need to provide proof of ownership when you set it up, but these things are straightforward and only need to be completed once. The responsibilities for this are down to the owners/directors.
Although these things aren't strictly related to selling on Shopify, it is still important to get these things right from the beginning and shouldn't be seen as a disadvantage of selling online.
Selling in the US from the UK
In general, a business license is a document that allows the government to monitor the sale of specific goods or services in a particular location. Business licenses are issued on a city, county, state, or federal level if you're in the US, and they help the government keep track of the number of businesses operating in a given area.
While Shopify does not require sellers to have a business license, there are some scenarios where it is necessary. For example, if you use the Shopify payment gateway or earn over $20,000 per month through selling on Shopify, you will need a business license in the US.
The cost of a business license varies depending on the location, and it can range from $50 to $400. You may also need to pay additional fees for document production and processing. Renewing a license may require paying the same amount as when it was initially granted. The process of obtaining a business license varies depending on the specific case but generally involves determining the legal structure of your business, describing your business activities in detail, obtaining a sales tax license, and securing necessary permits and inspections.
To get a business license, it is best to research the specific requirements for your business and location. The U.S. Small Business Administration website can provide a step-by-step guide to the process of obtaining a business license. In conclusion, while most Shopify sellers do not need a business license, it is important to understand the rules and regulations in your area and to obtain the necessary licenses and permits if required.