What You Need to Legally Run an Online Business: Licenses, Permits, & Bonds Explained

Written by Staff Writer | May 29, 2025

What You Need to Legally Run an Online Business: Licenses, Permits, and Bonds Explained

Over 65% of the world’s population is active on the internet, and the average user spends 6 hours and 38 minutes online per day. This engagement presents an enormous opportunity for entrepreneurs. In fact, the global eCommerce market is on track to surpass $8 trillion by 2027.

Running a successful online business takes more than an attractive website and a compelling product offer. To many entrepreneurs’ surprise, you must also satisfy various legal and regulatory requirements, including securing the right business licenses, permits, and surety bonds.

Below, we’ll break down each of these prerequisites and discuss who needs them. After that, we’ll explain how BOSS Bonds can simplify the compliance process for aspiring online business owners.

Business Licenses: The Starting Point

Whether online or brick-and-mortar, most businesses need a general business license to operate legally. This license is typically issued by your city, county, or state. It serves as your official approval to operate commercially in that jurisdiction.

Some states require statewide business licenses for all business types, while others leave licensing to their local governments.

Note: Just because your business doesn’t have a physical storefront doesn’t mean you can skip the licensing process. If you’re running a business from home, you may still need a home occupation permit or local business license.

Which Online Business Types Need Licenses?

Some common online businesses that need licenses include:

eCommerce sellers – Many states require eCommerce sellers to obtain a seller’s permit or sales tax license, even if they don’t have a physical storefront.
Limited liability companies (LLCs) – When you form an LLC or corporation, you typically need to register with your state’s Secretary of State and secure a business license.
Online consultants – Online consultants, coaches, and some freelancers may need general business licenses, as well as professional or occupational licenses.

Before launching your online business, check your state’s business registration portal or your city’s business office to see what’s required.

Permits: Industry-Specific Requirements

Along with general business licenses, some online businesses also need permits, depending on the specific products or services they offer. While these requirements can vary notably by industry and location, a few common examples include:

Sales tax permits – If you sell goods online and have a nexus in states with sales tax obligations, you’ll likely need a sales tax permit. This permit allows you to collect sales tax from customers and remit it to the appropriate tax authority.
Health permits – If your business deals with food, dietary supplements, cosmetics, or other types of regulated goods, you may need a health permit or food license.
Transportation permits – If your business ships freight, hazardous materials, or oversized goods, you may be required to secure transportation permits from federal, state, or local transportation authorities.

Failing to obtain the necessary permit can lead to fines, product recalls, or even business shutdowns. If you’re not sure what your permit requirements are, you can find out by contacting your local city or county office.

Surety Bonds: An Often-Overlooked Requirement

Most aspiring online business owners know that they need licenses and permits to operate legally. However, surety bonds are a lesser-known (and often misunderstood) compliance requirement.

What Is a Surety Bond?

Surety bonds are often confused for a type of insurance; however, they function quite differently. While insurance policies protect you, surety bonds are designed to protect those impacted by your online business.

These bonds do so by creating a legal agreement between the following three parties:

Principal – You, the business owner
Obligee – The government agency requiring the bond
Surety – The surety provider who guarantees your compliance

If your online business falls short of its legal or contractual obligations—whether that’s failing to pay vendors, refunding customers, or adhering to licensing rules—the obligee can file a claim with your surety company to cover the damages. After that, you must repay your surety company.

Industries That Often Require Surety Bonds

Surety bond requirements vary notably by industry. Some online business owners that often need to secure surety bonds include:

Freight brokers – All freight brokers are required to carry a $75,000 BMC-84 freight broker bond to operate legally in the United States.
Auto dealers – Many states require auto dealers to get bonded before selling vehicles, even if their sales primarily take place online.
Tax preparers or payroll providers – Some states require tax preparers and payroll providers to obtain surety bonds to protect consumers against potential errors or fraud.
E-commerce sellers – In some states, online sellers who collect sales tax must secure a surety bond during the permitting process.

Additionally, some regulatory agencies may require you to get a surety bond to obtain or renew your business license. This requirement helps ensure that you’ll operate ethically and fulfill your legal obligations. If you don’t purchase the right bond in advance, your application may be denied.

Learn More: The Ultimate Guide to Getting an Auto Dealer License and Staying Compliant

How BOSS Bonds Helps You Stay Compliant

Navigating the surety bonding process can be confusing, particularly if you’re trying to balance building an online brand, attracting customers, and managing inventory. Luckily, BOSS Bonds can help ease your compliance burdens.

As an experienced surety bond provider, we specialize in helping small business owners like you get bonded quickly and affordably. Here’s how we make that process simple and stress-free:

Fast, online applications – With BOSS Bonds, you can apply for your surety bond in minutes through our secure online platform, eliminating the need to visit an office or wade through piles of paperwork.
Licensed in all 50 states – No matter where your business is based, we can help you secure the surety bonds you need. Our team is familiar with state-specific bonding requirements and is licensed in every state.
Expert support – Not sure which bond you need? No problem! Our friendly team can walk you through the bonding process and make sure you get the right coverage.
Quick approvals and competitive rates – We know that you want to get your business up and running as quickly and cost-effectively as possible. Luckily, many of our bonds are approved instantly. Better yet, we work with top-rated surety providers to ensure you get the best available rate.
Ongoing guidance – Your compliance requirements don’t end when you get your surety bond—you may need to renew it periodically, update your coverage as your business evolves, and stay abreast of new requirements. BOSS Bonds can help you satisfy these requirements, offering proactive support and expertise every step of the way.

Get Bonded Fast and Build Your Online Business with BOSS Bonds

Starting an online business is an exciting endeavor. But as you now know, forgoing the necessary licenses, permits, or surety bonds can have costly consequences.

Staying compliant isn’t just about avoiding fines—it also builds trust with customers and partners, helping you establish a positive reputation and pave a strong foundation for your long-term success.

Not sure if you need a surety bond for your online business? Contact BOSS Bonds today and we’ll help you figure it out fast!