Hello out there – it’s been a while! Have you ever asked yourself a question that made you feel like you opened Pandora’s box? I did, and my mind has been spinning since. “Do I need a license to sell things at home?” was challenging to find reliable answers to – even after specifying “what things” and “in which state.” There were various scenarios (for example, large businesses and small businesses, in-state sales and out-of-state sales, selling temporarily and at additional locations), terms, and publications. It was easy to forget to ask, “Wait, does this part apply to me?”
What if I just want to sell our used belongings at a garage sale more than twice a year, or food from our kitchen, or things I create on the Internet? If a permit is required, does it cover my license needs? Here, I share my explanations of licenses often needed to sell things from home and how they may apply to the activities above. Ultimately, license requirements depend on the selling activity and location, so one should check with their state and city or county.
A business license (also referred to as a business tax certificate, business tax registration, or home occupation permit) is often needed to sell things from home regularly. A potential seller should check with the city or county in which they will be selling, and if required for the activity, register and pay business taxes. An unincorporated area that does not govern business may not require a license. Incorporated cities govern business but within state limitations. A potential seller should contact the county if selling in an unincorporated area or the city if selling in an incorporated city.
A seller’s permit (also referred to as a state license or sales & use permit) is often needed to sell things from home. A potential seller should check with the state in which they will be selling and if required for the activity, register and pay sales and use taxes. For example, California requires a seller’s permit when a person is “engaged in business” and sells or leases three or more “tangible personal property” within a year in the state.
“Engaged in business” minimally means there is a physical place of business (such as an office, storage, or distribution site) or a person who does business (such as sells, takes orders, or delivers). Tangible personal property refers to goods, merchandise, or physical items that can be touched and used. Examples include (but are not limited to) antiques, clothes, furniture, gifts, home goods, jewelry, machinery, toys, and hot foods. Each item sold counts as one sale, whether sold for resale or retail and in one or multiple transactions.
A seller’s permit may not be needed to sell used items through a garage, yard, or estate sale at the state level, but another permit may be required at the local level. For example, a seller’s permit is generally not required by California unless a person is engaged in business or holding more than two sales per year. However, a garage, yard, or estate sale permit may be required by the city or county. If selling for no longer than three months, a temporary seller’s permit is available.
Cottage foods are non-perishable foods, such as baked goods, that are prepared and sold from a registered or permitted private home kitchen or cottage food operation (CFO). In California, a business license may be required by the city or county in addition to a CFO registration or permit from the local environmental health agency.
A seller’s permit may also be required if cottage foods will be eaten at the selling location or if tangible personal property, such as food crates or equipment, will be sold or leased. A permit for each additional selling location, such as a market or food swap, is required. For more information on cottage foods, see this post and search online for your state and city or county.
For California, a business license may be required to sell taxable creations, such as arts and crafts, by the city or county. A seller’s permit is required if selling online through a personal business website or an internet auction house or shopping platform – unless all sales are through an internet auction house or shopping platform that is operated or owned by a marketplace facilitator registered with the state.
Obtaining a Business License or a Seller’s Permit
In California, a general business license may be obtained by contacting the local Treasurer & Tax Collector’s Office, Finance Department, or Planning Department and applying online, and may cost $50-100. A seller’s permit may be obtained through the state Department of Tax and Fee Administration and by applying online. It is free – unless a security deposit is requested based on the business and anticipated sales. Temporary permits are also free.
A business license, seller’s permit, or their equivalents are licenses often needed to sell things from home. However, requirements differ by selling activity, state, and city or county, and additional licenses may be required. It is best to search online for your state, city or county, and business, and contact your local tax offices and planning department for license needs. A state, such as California, may have an online assistance tool that allows potential sellers to search for requirements based on city or county and business and contact issuing agencies. If selling online, internet auction houses, shopping platforms, or marketplace facilitators may have additional resources.