Do I Need a Business License to Sell on eBay? (2026 Guide)

February 18, 2026 · 15 min read

You've been flipping items on eBay for a few months. The money's decent. Then you see a Reddit post about someone getting fined for selling without a business license, and suddenly you're spiraling. Do you actually need a business license to sell on eBay?

The short answer: eBay itself doesn't require a business license. But your state, county, or city might — and the IRS definitely cares once you cross certain thresholds. Let's break down exactly what you need (and don't need) so you can sell confidently without worrying about legal surprises.

What eBay Requires vs. What the Law Requires

First, let's separate two different things that people constantly confuse:

• eBay's requirements: eBay lets anyone create an account and sell. No license needed. You can sell as a personal or business account. That's it.
• Legal requirements: Your local, state, and federal government may require various permits and licenses depending on how much you sell, what you sell, and where you live.

Just because eBay doesn't ask for a license doesn't mean you don't need one. And just because some random forum post says you need an LLC doesn't mean you actually do. The truth is somewhere in the middle.

When Casual Selling Becomes a Business

Selling your old PlayStation and some clothes from your closet? That's personal property disposal. The IRS doesn't consider that a business. But the line shifts when you start doing these things:

• Buying items specifically to resell them — sourcing from thrift stores, liquidation pallets, or wholesale
• Selling regularly and consistently — not just a one-time garage sale cleanup
• Treating it like a business — tracking expenses, keeping inventory, reinvesting profits
• Making a profit — or at least intending to make a profit over time

The IRS uses a "facts and circumstances" test. There's no magic number of sales that triggers it. But if you're sourcing inventory and selling regularly, you're running a business — even if it's a side hustle from your garage.

The 1099-K Threshold in 2026

Starting in 2026, platforms like eBay must send you a 1099-K if you receive $2,500 or more in gross payments. This doesn't mean you owe taxes on that amount — it just means the IRS knows about it.

Key points:

• The $2,500 threshold is gross payments — before fees, shipping, and returns
• You only owe taxes on your net profit (revenue minus COGS minus expenses)
• Even if you're below the threshold, you're technically supposed to report all income
• Getting a 1099-K doesn't mean you need a business license — they're separate issues

Types of Licenses and Permits You Might Need

1. General Business License

Many cities and counties require a general business license for anyone conducting business within their jurisdiction. This typically costs $50–$200/year and is straightforward to get. Check your city's website — search "[your city] business license application."

2. Sales Tax Permit (Seller's Permit)

If your state has sales tax, you likely need a seller's permit. The good news: eBay collects and remits sales tax on your behalf in all states that have it (marketplace facilitator laws). But some states still require you to have the permit on file even if the marketplace collects the tax.

States where you probably still want a seller's permit even with marketplace facilitator laws:

• California — required for resellers, also lets you buy wholesale tax-free
• Texas — required if you have a physical presence
• New York — Certificate of Authority needed
• Florida — especially if you sell at shows or flea markets too

3. DBA (Doing Business As) / Fictitious Name

If you're selling under a business name that isn't your legal name (like "VintageFlips" or "TechDeals"), most states require you to register a DBA. This costs $10–$100 depending on the state and is usually filed at the county level.

4. EIN (Employer Identification Number)

An EIN is a free tax ID number from the IRS. You don't technically need one as a sole proprietor with no employees, but it's useful for:

• Opening a business bank account
• Buying wholesale (suppliers often require it)
• Keeping your SSN off business forms
• Building business credit

Get one free at irs.gov in about 5 minutes.

5. Home Occupation Permit

If you're running your reselling business from home (and most of us are), some cities require a home occupation permit. This is especially true if you have significant inventory storage or regular package pickups. Check your local zoning ordinances.

LLC vs. Sole Proprietor: Which Do You Need?

This is the most over-debated topic in reselling forums. Here's the actual breakdown:

Sole Proprietorship (Default)

• Costs nothing to set up — you ARE one by default when you start selling
• All income goes on Schedule C of your personal tax return
• No liability protection — your personal assets are at risk
• Simple bookkeeping, no annual filings

LLC (Limited Liability Company)

• Costs $50–$500 to form depending on the state
• Some states charge annual fees ($0 in some, $800/year in California)
• Provides liability protection — personal assets are separated from business
• Looks more professional to wholesale suppliers
• Can choose how to be taxed (sole prop, S-corp, etc.)

Our recommendation: If you're making under $1,000/month, stay as a sole proprietor. Get an EIN and a separate bank account, but skip the LLC for now. Once you're consistently making $3,000+/month, consider forming an LLC. If you're in California, wait even longer because of the $800 minimum franchise tax.

State-by-State Quick Reference

Requirements vary wildly by state. Here's a quick overview of the most common states for resellers:

• California: Seller's permit required (free). City business license likely required ($50-$150). LLC = $800/year minimum.
• Texas: No state income tax. Sales tax permit required. City business license varies.
• Florida: No state income tax. Seller's permit required. Local business tax receipt ($25-$50).
• New York: Certificate of Authority required. City license required in NYC. State income tax.
• Washington: Business license required ($19). No income tax but B&O tax applies.
• Oregon: No sales tax. Business license varies by city. Portland requires one.
• Nevada: State business license required ($200/year). No income tax.
• Ohio: Vendor's license required (free). City income tax in many cities.

For your specific state, search "[state] online seller business license requirements" or check your Secretary of State website.

What Happens If You Sell Without a License?

Let's address the fear factor. What actually happens if you've been selling without proper licenses?

• eBay won't shut you down. They don't verify business licenses.
• The IRS cares about taxes, not licenses. They want their cut of your profits regardless.
• State/local enforcement is rare for small sellers. Governments focus on large operations, brick-and-mortar stores, and obvious violations.
• The most likely consequence is a small fine if your city discovers you're operating without a business license. Usually $100-$500.
• The bigger risk is not reporting income and getting audited. That's where real penalties live.

That said, getting properly licensed is cheap and easy. There's no reason not to do it once you're making consistent money.

Step-by-Step: Getting Legal as an eBay Seller

Here's exactly what to do, in order:

1. Get an EIN — Free at irs.gov. Takes 5 minutes online.
2. Check your city's business license requirements — Search "[city name] business license." Apply online or in person.
3. Get a seller's permit — Go to your state's Department of Revenue or Tax Commission website. Usually free.
4. Open a separate bank account — Use your EIN. Keep business and personal money separate.
5. Start tracking everything — Income, expenses, mileage, supplies. From day one.
6. Consider an LLC — Once you're making $3K+/month consistently.

Total cost for steps 1-5: $0 to $200 depending on your location. Total time: 2-3 hours.

Common Myths Debunked

"I don't need to do anything until I make $20,000"

Wrong. The old 1099-K threshold was $20,000 + 200 transactions. It's now $2,500. And business license requirements have nothing to do with income thresholds — they're triggered by the activity itself.

"eBay handles all the taxes so I'm fine"

eBay handles sales tax collection. They don't handle your income tax. You still need to report your net profit on your tax return and pay self-employment tax (15.3%).

"I need an LLC before I can sell"

No. You can sell as a sole proprietor indefinitely. An LLC provides liability protection but it's not required to legally operate a reselling business.

"I can write off everything if I have a business license"

You can deduct legitimate business expenses whether or not you have a license. The deductions come from operating a business with profit intent, not from having a specific license.

How BundleLive Helps You Stay Organized

The hardest part of getting legal isn't the paperwork — it's keeping clean records afterward. When you're selling across eBay, Whatnot, Poshmark, and Mercari, tracking everything becomes a nightmare.

Bottom Line

Do you need a business license to sell on eBay? Technically, it depends on your location and volume. But here's the practical advice:

• Selling old personal items occasionally? You're fine. No license needed.
• Buying items to resell for profit regularly? Get an EIN, check local license requirements, and start tracking your income and expenses.
• Making $2,500+ per year in gross sales? You'll get a 1099-K. Make sure you're ready to file properly.
• Making $3,000+/month consistently? Consider an LLC for liability protection.

The whole process costs under $200 and takes an afternoon. Compare that to the stress of worrying about it — or the cost of an audit. Get it done, get back to sourcing, and focus on what you do best: finding great deals and turning them into profit.