Do you want to know if you need a license to sell on eBay? If YES, here is everything you need to know about eBay’s sellers licenses and permits. Having eBay act as a third – party arbitrator means customers feel much safer going out on a limb and buying from you, even if they have never heard of your company before.
That translates into you having to work much less for each sale. You can put items up for auction to get a higher price. The option to set a reserve price ensures that you won’t sell something for a fraction of what it’s worth. For everything that doesn’t auction well (such as the majority of in-production items); you can use eBay’s fixed-price listings.
However, most beginning sellers who are serious about selling will choose either to become a sole proprietorship or a limited liability company (LLC). Many beginning eBay sellers wonder whether there is any point to this step, particularly when it leads to additional accounting complexity and the obligation to collect sales tax for local sales and similar issues. The fact is that in many local jurisdictions, you are legally obligated to obtain a license or register a business operated for profit.
Indeed there are also crucial disadvantages that you’ll suffer if you don’t register your business. You won’t be eligible for business banking accounts. You won’t be able to write off any business losses you experience on your taxes and you won’t be able to source directly from wholesalers at wholesale prices.
Legal Requirements for Selling on EBay
Table of Content
1. Licensure Laws
In most areas of the world that are eBay – capable, the law requires businesses to be registered or licensed in some way. To effectively be in business without having listed yourself as such may get you into various kinds of problems with the law, of which you can be fined or more.
2. Zoning Laws
Note that one of the reasons for the requirement that businesses be registered and licensed is often the fact that their governments zone many locales. To perform a commercial enterprise in an area such activity is forbidden can also get you into trouble. EBay businesses, despite what users think, are not transparent; neighbours will see, hear, and in many cases complain about increased trucking and shipment traffic if they grow as fast as some eBay businesses can.
3. Tax Laws
Another crucial reason why businesses should be registered and licensed is so that taxes can be collected. Once the government ascertains that you have been operating an unregistered business for a very long time, you could find yourself suddenly responsible for back taxes that you haven’t paid or collected. Although it all depends on how long you have been selling, this can total a lot of money.
4. Employment Laws
Once you employ the help of others to sell on eBay, you become subject to employment regulations in your local or state, whether or not you consider those that help you to be employees as such.
5. Liability, Insurance, or Consumer Protection Laws
Note that laws in various locales are designed to protect the general public, the neighbours of businesses, and parties that do business with businesses from various kinds of negligent action. All these laws may impose varying restrictions on the types of items that you can and can’t sell, how they must be handled or disclaimed, or even the types of support and warranty that you must provide for them. Penalties for violating such laws can in some cases be rather serious.
Once you decide to run an eBay business or suspect that you’re already running one without the proper permission or licensure, it is advisable you visit your local government offices immediately and ask to speak to someone about the possibility of registering or licensing a new business. Although you will likely be asked to pay a fee, and you may find yourself subject to various kinds of paperwork, but this result is better than finding yourself on the wrong lane of the law.