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Do You Need to Register a Dropshipping Business?

Do You Need to Register a Dropshipping Business?

Last modified: December 27, 2021

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Do you need to register a dropshipping business? This is a tough question that many people answer when they’re starting a new Shopify dropshipping business. And it can have more to do with the personal preference of the business owner rather than the legal requirement.

What are the Legal Responsibilities?

When you start running a new Shopify business, you can start thinking about the registration of that business. In some cases, and some countries/states, you might need to tell the local or national government responsible for tax that you’ve started a new business. If you’ve not been in business before, some will register you as a new business and issue you with ways to calculate and report earnings for tax purposes.

You might also need to register your dropshipping business if you sell internationally or you sell within certain areas because the government wants to keep records on who is trading. Though this is rather dependent on the local laws and you should contact your local Government business advice line to check with them.

Corporate Structure

Something that you should really consider is what business structure that you would like to operate under. For instance, those who are operating as sole traders have few registration requirements. They also have the easiest tax forms to complete. However, some businesses are large and require additional protection. For this, you might want to register your business as a Limited Liability Company (LLC). These companies are afforded better protection to the personal assets of the owner.

However, there is no legal requirement for the LLC. It is a personal choice. When you’re starting out you might want to try out the business first and see if there is any chance of success. Shopify gives you a 14-day trial and most stores make their first sale within two weeks to two months.

And some areas, like in the UK, allow you to delay your registration for three months after you’ve earned your first sale. Therefore, in some territories, you can establish your company, brand it and build it up and then start the registration period after the sales have started to come through.

In some areas, revenues under a certain amount are also not included. So if your business makes a couple of sales, but is not a complete success, then you can close it down without having to register it. This is harder if you’re an LLC as there is a lot of paperwork involved.

Final Word: Do You Need to Register a Dropshipping Business?

Do you need to register as a dropshipping business? There is nothing different about running a dropshipping business than any other. You don’t need to register the business unless you’re acting as a self-employed person and this can be easy to do as you just contact your local tax office. If your business becomes successful, you might want to create an LLC, but speak to your local tax accountant before taking that step.

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