Registering an online business usually means stacking a few separate filings rather than completing one master form: a business structure with your state (or defaulting into a sole proprietorship), a federal tax ID, sales tax accounts in the states where your sales cross a threshold, and whatever local license or industry permit your city or product category requires. Which of those apply to you depends on how you’re set up, what you sell, and where your customers live.
Pick a Business Structure First
If you’re the only owner and you haven’t filed anything with your state, you’re already a sole proprietor. Nothing to register, nothing to pay. The catch is that there’s no legal wall between you and the business. If the business owes money or gets sued, your personal bank accounts, car, and home are reachable.
A Limited Liability Company puts that wall up. You create one by filing articles of organization with your state’s Secretary of State, usually through an online portal, and designating a registered agent with a physical address in the state who can receive legal documents during business hours. You can be your own agent, or hire a service. Filing fees run from about $35 to $500 depending on the state.
One thing that catches new owners off guard: forming an LLC doesn’t change how you’re taxed by default. A single-member LLC is taxed the same as a sole proprietorship, and you’ll owe self-employment tax of 15.3% on net earnings — 12.4% for Social Security and 2.9% for Medicare.1Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The point of the LLC is liability protection, not a tax break.
Register a Business Name Only If You Need One
Your business already has a legal name. For a sole proprietor, it’s your full personal name. For an LLC, it’s the name on the articles of organization. If you operate under that name, you don’t need to register anything else.
If you want to sell under a brand name instead, you register a DBA, short for “Doing Business As.” If Jane Doe runs a shop called Mountain View Crafts, she files that name as a DBA. An LLC can do the same when its brand differs from its formal entity name. You typically file with a county clerk or state office, fees are usually under $100, and some jurisdictions require you to publish a notice in a local newspaper.2U.S. Small Business Administration. Register Your Business A few states don’t require DBA registration at all.
A DBA is just a name on file. It doesn’t create a new legal entity, and it doesn’t give you any liability protection.
Get an Employer Identification Number
An EIN is a nine-digit tax ID assigned by the IRS. You need one if you hire employees, operate as a partnership or multi-member LLC, or file certain business tax returns.3Internal Revenue Service. Employer Identification Number Sole proprietors who aren’t strictly required to have one often get an EIN anyway so they can open a business bank account without handing a bank their Social Security number.
Applying is free and takes about ten minutes through the IRS online application at IRS.gov/EIN. Your EIN is issued immediately at the end of the interview.3Internal Revenue Service. Employer Identification Number You can also apply by fax or mail with Form SS-4, but the online method is faster and the IRS recommends it.4Internal Revenue Service. Instructions for Form SS-4 Keep the confirmation letter. Banks and licensing agencies will ask for it.
Register for Sales Tax in Every State Where You Cross the Threshold
This is where online sellers get tripped up more than anywhere else. If you sell physical products or certain digital goods, you probably need to collect sales tax, and not just in your home state.
In South Dakota v. Wayfair, the Supreme Court ruled that states can require out-of-state sellers to collect and remit sales tax even without any physical presence in the state. The old rule had limited that power to sellers with a warehouse, office, or employees in-state. The Court called that rule “unsound and incorrect” and struck it down.5Supreme Court of the United States. South Dakota v. Wayfair, Inc., et al. (Opinion)
What replaced it is called economic nexus. Once your sales into a state cross that state’s threshold, you have to register with its tax authority and start collecting from customers there. The South Dakota law upheld in Wayfair set the threshold at $100,000 in sales or 200 separate transactions in the current or prior calendar year.5Supreme Court of the United States. South Dakota v. Wayfair, Inc., et al. (Opinion) Every state with a sales tax has since adopted its own version.
Most states use the $100,000 revenue threshold, and many have dropped the 200-transaction test. A handful set the bar higher: California and Texas use $500,000, while Mississippi and Alabama use $250,000. Five states have no sales tax: Alaska (though some local jurisdictions tax sales), Delaware, Montana, New Hampshire, and Oregon.
If you sell on Amazon, Etsy, or a similar marketplace, the platform handles collection in most states under “marketplace facilitator” laws. Confirm that your platform covers every state where you have customers before assuming you’re done. A growing online business can trigger registration in dozens of states, and many sellers use sales tax software to track thresholds and automate filings. States are increasingly auditing online sellers, and back taxes plus penalties add up fast.
Local Licenses, Product Permits, and Home-Based Zoning
Many cities and counties require a general operating license to do business within their jurisdiction, separate from any LLC or DBA filing. Fees range from about $25 to several hundred dollars. Your city or county clerk’s office can tell you what applies.
Certain products and services carry their own licensing regardless of whether you’re selling online. Food products typically need health department permits. Cosmetics, supplements, and alcohol each have their own regulatory frameworks. Professional services like accounting, financial advising, counseling, and real estate require state board licensing, and that obligation doesn’t disappear because you deliver the service over video.
If you work from home, check your local zoning rules. Many municipalities treat a home-based business as a “home occupation” and require a permit. The usual restrictions are no exterior signage beyond a small placard, no customer traffic that disrupts neighbors, and no outdoor inventory storage. A purely online operation will meet most home occupation rules without trouble, but reading the ordinance before a neighbor complains is the smart move.
Keep the Registration Alive
Registration isn’t a one-time event. Most states require LLCs and corporations to file an annual or biennial report with the Secretary of State to stay in good standing. It’s a short form confirming your address, registered agent, and members, plus a fee. Annual report fees run from $0 in some states to several hundred dollars in others, with most under $100.
Missing these filings matters. States first charge late fees, then flag your business as not in good standing, and eventually move to administratively dissolve the LLC. Dissolution doesn’t wipe out your debts, but it does strip the liability protection that was the whole reason you formed the LLC. You can usually reinstate by filing the overdue reports and paying back fees, but the gap in coverage can be costly if a lawsuit or creditor claim lands during that window.
Sole proprietors have lighter upkeep since there’s no state entity to maintain. If you registered a DBA, check whether your jurisdiction requires periodic renewal. Some counties require renewal every five years or so, and a lapsed registration can let someone else claim the name.
Beneficial Ownership Reporting If You Formed Domestically
The Corporate Transparency Act initially required most small businesses to file beneficial ownership information with FinCEN. As of March 2025, FinCEN issued an interim final rule exempting all entities created in the United States from the reporting requirement.6FinCEN. Beneficial Ownership Information Reporting Only foreign-formed entities registered to do business in a U.S. state currently have to file. If you formed your LLC or corporation domestically, there’s no BOI filing to do under the current rule. The area has been subject to ongoing litigation and rulemaking, so check FinCEN’s site periodically.