License Requirements for Remote Businesses and Employees Amid Covid-19
With the impact of the COVID-19 pandemic, many are adjusting to life in quarantine by pursuing entrepreneurial endeavors from home. It is important to note, however, that starting a home-based business online, as well as working remotely, means various licensing requirements must be met.
The compliance needs of home-based businesses vary. For instance, some jurisdictions require a home occupation permit in order to operate a business out of the home — even if sales are strictly made online. Other jurisdictions may require both a home occupation permit and a business license due to revenue generation within city or county limits. Furthermore, there may be sales tax nexus in accordance with the South Dakota v. Wayfair decision, which established remote seller nexus in nearly all states.1
The South Dakota v. Wayfair decision means states now have varying thresholds when it comes to what each considers an economic nexus or remote seller nexus. Illinois, for example, expanded its nexus in January of 2020 to include “marketplace facilitators” and defines a marketplace as “a physical or electronic place, forum, platform, application, or other method by which a marketplace seller sells or offers to sell tangible personal property.” This description intends to include ecommerce platforms, which broadens the number of potential licensees to an online audience. This shift to online services has also had an impact on consumerism.
With many “stay at home” orders still in effect, avoiding unnecessary trips to the store has become a priority. As a result, consumers are shopping online for their essential needs. With ecommerce filling the void left by in-person shopping, many individuals are setting up online marketplaces through Amazon or other online platforms like Etsy to offer their services. Another shift due to the pandemic’s “stay at home” orders include working from home. All of these shifts have an effect on licensing requirements. For example, there may be unforeseen corporate licensing requirements based on the presence of now-remote W2 employees. In most cases remote W2 employees do not incur a business license liability for a company located outside of the jurisdiction, but there are some jurisdictions that do require a local license based on this presence.
LicenseLogix offers a service that is particularly helpful in narrowing down the appropriate and necessary licenses for your business needs: Business License Research. LLX’s Business License Research determines your business licensing requirements at the federal, state, county, and city level. The packet includes fees and application instructions to obtain those licenses in the most expedient manner possible. Additionally, LicenseLogix is equipped with Service teams that are familiar with a diverse array of industries and can execute filing submissions on your behalf.
Let LicenseLogix assist your business through complex business transitions. Contact us today for a free quote!