If you’re thinking about selling digital products online—whether it’s eBooks, templates, online courses, music, or printables—you may be wondering whether you need a business licence to get started. The short answer is: it depends on where you live and how you plan to run your business.
What is a business licence?
A business licence is official permission from your local or national government to operate a business. It may also be referred to as a business permit, registration, or trader’s licence depending on the region. The purpose is often to ensure tax compliance, regulate industry standards, and track business activity.
Do digital product sellers need one?
Because digital products are sold online and don’t involve physical inventory or a storefront, many people assume they can skip formalities. But selling digital goods is still considered running a business, especially if you’re doing it regularly or for profit. This means you may need to register, even if you’re working from home.
Factors that affect whether you need a licence
Here are some factors that may determine whether you’re legally required to obtain a business licence:
- Your location: Rules vary greatly by country and even by local council. For example, in the UK, sole traders must register with HMRC, but may not need a specific licence unless their product falls into a regulated category.
- Your product type: Some digital products (like educational materials or downloadable art) may require fewer formalities than others (like financial services, medical resources, or regulated content).
- Your business structure: Selling as a sole trader, partnership or limited company each comes with different registration and licensing requirements.
- Revenue expectations: In some areas, there’s a threshold of income you can earn before registration is required.
What about taxes?
Even if you don’t need a specific business licence, you are almost always required to report your income and pay taxes. This includes self-employment taxes, VAT (in some countries), and digital goods tax if applicable. In the UK, for instance, you must register with HMRC as self-employed once your income from self-employment goes over £1,000 in a tax year.
Platforms and compliance
If you’re selling on platforms like Etsy, PUSH.fm, Shopify or Ko-fi, those platforms may not require proof of a business licence, but they often pass on tax obligations (such as VAT collection in the EU or sales tax in the US). You’re still responsible for declaring your earnings and complying with your local laws.
Selling digital products can be a flexible, low-cost way to earn money online, but it’s important to understand the legal side. While you may not need a formal licence in every case, registering your business and keeping your taxes in order will save you trouble in the long run.
If in doubt, check with your local authority or an accountant familiar with small digital businesses. A little paperwork early on can help you build a professional, trustworthy business that’s ready to grow.
