Do you need a license or to charge sales tax to sell online?

The short answer: there is no single license that everyone needs to sell online, and most first-time sellers need less paperwork than they fear. What you usually need is whatever your own city and state ask of any small business, plus a sales tax permit from your state if it has a sales tax. Collecting tax for other states only starts after your sales there pass a threshold most new stores are nowhere near.

Quick answer

• There is no nationwide "selling online" license. Licenses come from your city, county, and state, and for most small sellers the list is short.
• 45 states have a statewide sales tax. 5 do not: Alaska, Delaware, Montana, New Hampshire, and Oregon, though some Alaska towns charge a local one (Tax Foundation, 2026).
• If your state has a sales tax, you register for a sales tax permit with your state's tax office before you start collecting it at checkout.
• You collect for other states only after you pass their sales threshold, most often $100,000 a year in sales to that state (Sales Tax Institute, 2026).
• If you sell through a marketplace like Etsy or Amazon, laws in 43 states plus Washington DC make the marketplace collect and send in the sales tax on those orders, not you (Sales Tax Institute, 2026).

This guide explains the moving parts in plain words so you know exactly what to look up. The final word on your situation always comes from your own state and city, and their websites answer most of this in minutes.

Do you need a business license to sell online?

There is no special federal license for selling things on the internet. Federal licenses only exist for a short list of closely watched fields, like aviation, firearms, and broadcasting. If you are selling candles, shirts, art, or baked goods, the federal government does not license you.

The rules that do apply come from closer to home:

• A local business license. Many cities and counties ask every business based there, including one run from a kitchen table, to register and pay a small yearly fee. Search your city's name plus "business license" to see what yours asks.
• A home occupation permit. Some towns want to know you are running a business from your home. It is usually a form that says you will not have trucks idling outside or customers lining up at your door.
• A trade name registration. If you sell under a name that is not your own legal name, your state or county may ask you to register it. This is often called a DBA, short for "doing business as."
• Product-specific rules. A few products carry their own rules, food being the big one. Most states have cottage food laws that say what you can make in a home kitchen and sell, and what needs a commercial kitchen.

That is usually the whole list. One afternoon on your city's and state's websites tells you which of these apply to you.

What is a sales tax permit, and when do you need one?

Sales tax is a small percentage added to the price at checkout. The buyer pays it, you collect it, and you send it to the state. It never becomes your money, you are just the courier.

45 states have a statewide sales tax, and 5 do not: Alaska, Delaware, Montana, New Hampshire, and Oregon, though Alaska lets its towns charge local ones (Tax Foundation, 2026).

If your state has a sales tax and you are selling taxable goods, you register for a sales tax permit before you start collecting. Depending on the state it may be called a seller's permit, a sales tax license, or a certificate of registration, but it is the same idea: it tells the state you exist and sets you up to file. You register on your state tax office's website, and the state then tells you how often to file a return, which for a small new store is usually quarterly or yearly.

Two things surprise new sellers here. First, you register before collecting, not after, because collecting tax without a permit is itself against the rules in most states. Second, you file returns even for periods when you sold nothing, because a zero return is still a return.

Do you have to charge sales tax to buyers in other states?

This is the question that scares people, and the honest answer is: almost never at the start.

You always collect for your own state if it has a sales tax, because your business is physically there. Other states can only make you collect once you have a real connection to them, which the tax world calls nexus. Since a 2018 Supreme Court case called South Dakota v. Wayfair, that connection can be sales volume alone, and every state with a sales tax now has such a threshold (Sales Tax Institute, 2026).

The most common threshold is $100,000 in sales to that state in a year, and some big states set it higher, like New York and Texas at $500,000 (Sales Tax Institute, 2026).

Read that number again with your first year in mind. Crossing it means buyers in one single state sent you $100,000. A brand-new store selling $30 candles is nowhere near that in any state but its own. So the practical version of the rule is: collect at home, keep an eye on your sales by state as you grow, and add states when the numbers say so. Your store's checkout reports make that easy to watch.

What if you sell on a marketplace like Etsy or Amazon?

Here the law does most of the work for you. 43 states plus Washington DC have marketplace facilitator laws, which make the marketplace itself, not the individual seller, collect the sales tax and send it to the state on orders sold through it (Sales Tax Institute, 2026).

In plain words: on marketplace orders shipped to those states, the tax is handled above your head. That removes most of the sales tax chore for people who only sell on a marketplace.

Two catches keep it from being the whole answer. Your own state may still want you registered, since you are running a business there, and some states still expect a return from marketplace sellers even when the marketplace remitted the tax. And the moment you also sell from your own website, those orders are yours to handle, because the marketplace only covers its own. If you are weighing the two paths, our guide on selling on Etsy or Amazon versus your own online store walks through the trade honestly.

How do you actually set this up without getting overwhelmed?

Take it in order, one step at a time:

1. Check your city and county. Search "[your city] business license" and see what a home business must do. This is usually the quickest step.
2. Register with your state if it has a sales tax. Find your state tax office's website and register for the sales tax permit before your first taxable sale.
3. Turn on tax collection at checkout. Store checkouts can work out the right rate from the buyer's address once you tell them where you are registered, so you are not doing math per order. Our guide on how payments work on your website shows where checkout settings live.
4. Put your filing dates on a calendar. The state tells you when returns are due. A reminder the week before is all the system you need.
5. Keep every number in one place. Your store's order reports already track sales by state, which is exactly what you will need at filing time.

None of this has to be finished before you start building the store itself. Most sellers set up the website and the paperwork in the same couple of weeks, and our guide on setting up an online store for the first time covers the building half.

When should you ask a real person?

Most first stores never need to, but a few situations are worth an hour with an accountant or your state's small business help line: you sell food or anything else your state regulates, you are shipping large volumes into one other state, you sell digital products and your state's rules read unclear, or you are behind on returns and want to catch up cleanly. States also run free small business centers that answer exactly these questions, and they would rather help you get it right early than untangle it later.

The paperwork side of selling online is real, but it is a short list with clear answers, not a maze. Check your city, register with your state, let the checkout do the math, and get back to the part only you can do: making the thing people want to buy.