If you sell on eBay as your Home-Based Business, do you have a business license to conduct business? I got an email from a reader who is selling on eBay and it sounded like she was doing fairly well in her niche market. But she said she did not have a business license and wondered if she should. eBay doesn’t require sellers to have a business license, but there are several good reasons why anyone doing any serious selling there should have one.
Business Bank Accounts – Having a legitimate business will allow you to have business bank accounts. I posted about why this is important in Bank Accounts for a Home-Based Business.
Protection from Liability – In today’s litigious society, almost everything you may sell has some potential liability. To protect yourself from legal damages and judgments, a Limited Liability Company (LLC) or a Corporation structure can help you out here. I also have a more in depth post about The Limited Liability Company.
Wholesale Purchases – You may run into a few wholesale suppliers who will sell products to you without a business license, but the vast majority of them will require a business license before they will allow you to buy product from them.
Tax Advantages – There are numerous tax advantages to running a business in general and many of them can be applied to a home-based business. Your accountant can advise you on this specific issue. Unless you have a legitimate licensed business however, these advantages will not be available to you.
Growing the Business – If you ever want to grow your business outside of eBay, you won’t get very far without a business licenses. The business license is a basic requirement for things like merchant accounts and payment gateways just to name two.
If you’re a hobbyist selling on eBay occasionally, that’s one thing. But if you are serious about your home-based business on eBay, then it should be treated like a real business and legitimized with a business license.