Do I need a business licence to sell online?

Website building entrepreneur

Ecommerce sales are increasing steadily, and now consist of almost half of all retail sales in the UK. Are you thinking that setting up a small online shop could be a good way to make some extra money, but not sure about whether you will need a licence to do so? We take a look at the necessary licences you’ll need for general sales, selling alcohol or restricted goods, and selling products abroad. 

If you’re new to ecommerce, you’ll need a website builder that has ecommerce capability; Go Sitebuilder is one of the few that has an online shop platform within its software, so it’s easy and simple to set up without getting bogged down in unnecessary details.

General selling online

In many cases you can trade without a business licence in the UK, but you must make sure that you are properly registered with HMRC; you can follow the steps to set up your business here. This is a compulsory step in owning a business, and should be done no more than three months after you start trading. 

For selling general goods online within the UK, then you don’t need a licence but you do need to follow a certain set of rules. These rules include listing the steps involved in placing an order and giving the total delivery cost. There are multiple rules that need to be considered though, which are available on the government’s Online and Distance Selling page.

Selling restricted goods

If you are looking to sell restricted goods such as alcohol, however, you will have to apply for and get multiple licences to do so. 

  1. Personal licence. This requires taking the BIIAB Level 2 Award for Personal Licence Holders from an accredited provider, and then applying for a personal licence on the government website. The award training only lasts one day and costs around £100, whereas the personal licence application can take up to three weeks and costs £37. 
  2. Premises licence. You’ll need to apply for this licence from your local authority or council. It can be fixed to any commercial property, like a warehouse or a shop floor, but it is unlikely that you will be granted a premises licence for your home, as it is a domestic dwelling. A small building on your land that is separate from your house, however, could be given a licence, but you’ll have to get planning permission that allows it to operate as a commercial premises. The cost of this licence is based on the value of your business premises, and will be charged annually.

The other thing to bear in mind is that it is illegal to sell alcohol to anyone under 18. This is almost impossible to check over the internet however, but all you need to do is show that you took “all reasonable steps” to verify the person’s age. Make sure you put adequate age verification measures in place to ensure your customers are under 18.

Selling online to other countries

Opening up your online commerce website to an international audience may seem daunting. However, US customers spend £12.5 billion on UK goods and services online every year, so your small company could grow sales and revenue by exporting your products across the pond. 

There are complications to this though. Your products will require documentation and will be subject to both customs duty and sales tax when they arrive in the US. This Trade Commission Database will help you work out the duty rates you’ll need to pay, and speak to a customs agent at the place where your products will arrive for more information.

Tax is also complex in the US. There is no VAT in the US, but many states have their own sales tax that apply to out-of-state businesses. The government’s page on exporting products to the US explains what state uses which sales tax. 

If you’re exporting goods to the EU, you might need a special licence depending on what sector your product falls in. Then you need to fill in a proforma invoice, where you only need to charge VAT if you’d do the same for customers in the UK. The invoice and any other necessary paperwork must travel with the product when you send it. Don’t forget to keep copies of commercial invoices and customs paperwork! 

It may seem like there are countless hoops to jump through and licences to get if you are selling products online, but this is only really true if you are selling restricted goods or exporting your products to another country. The most important step for any small business owner is to make sure your business is correctly registered with the government so you don’t accidentally end up flouting the law!

Start selling your products online now with a new website. Go Sitebuilder has a super-simple ecommerce platform that allows you to upload, price, and publish products to sell in seconds! We have a 14-day free trial so you can see how to make a stylish and professional-looking website in moments, so try us out today!