Do You Need an LLC or Business License to Sell on Whatnot?

"Do I need an LLC to sell on Whatnot?" is one of the first business questions new sellers ask, usually right after getting approved. The short answer is no, not generally. Whatnot lets individuals sell under their own name, and many sellers start as sole proprietors. But that is only part of the question. Depending on where you live and how much you sell, you may need a local business license, a sales tax permit or other registrations, whether or not you form an LLC.

This guide explains the differences between an LLC, a business license and a sales tax permit, when each tends to matter for Whatnot sellers, and how to set things up in a sensible order. It is general information, not legal or tax advice. Rules differ by country, state, county and city, so confirm requirements locally and speak with a qualified attorney, accountant or tax professional before making decisions.

LLC vs Business License vs Sales Tax Permit: What Each One Is

These three things are often lumped together, but they do completely different jobs.

Outside the US, the names and rules are different. UK sellers, for example, deal with HMRC registration for self-employment and VAT thresholds rather than LLCs and state permits. Canadian and European sellers have their own systems. See selling on Whatnot in the UK and selling on Whatnot in Canada for country context, and consult a local professional.

Do I Need an LLC to Sell on Whatnot?

Whatnot's seller application focuses on what you plan to sell, your experience, your inventory and other selling profiles, not on whether you have formed a company. You must be 18 or older. Review the full list in what you need to sell on Whatnot.

By default, if you sell as an individual in the US without forming any entity, you are generally treated as a sole proprietor. Your Whatnot profit is reported on your personal tax return. That is simple and costs nothing to set up, which is why so many sellers start this way.

Reasons sellers consider an LLC

• Liability separation. An LLC can help keep business debts and certain legal claims separate from your personal assets, provided you keep finances genuinely separate and follow your state's rules. It does not protect against everything, including your own negligence.
• Professional setup. Some wholesale suppliers prefer or require a registered business before opening an account. This can matter if you plan to source directly from distributors; see wholesale suppliers for Whatnot sellers.
• Bringing in partners. If you co-own the shop with someone, a formal structure and operating agreement can clarify who owns what.
• Hiring and scaling. As you add hosts, packers or moderators, a formal business structure can make payroll and contracts cleaner.

Reasons to wait

• Cost. Most US states charge a formation fee, and many charge recurring annual report fees or franchise taxes, which can be meaningful relative to a small side hustle's profit.
• Paperwork. Separate bank accounts, annual filings and record keeping are required to maintain the structure properly.
• Uncertainty. If you are still testing whether Whatnot works for you, it can make sense to prove profitability first.

Do I Need a Business License to Sell on Whatnot?

Local business licensing is where rules vary the most. Some cities and counties require every business operating within their borders to hold a general business license, including home-based online sellers. Others do not require one for small online sales. Some areas also have home-occupation permits that cover running a business from a residence, which can come with rules about customer visits, storage or signage.

How to find out what applies to you:

1. Check your city's website for "business license" or "business tax registration."
2. Check your county if you live in an unincorporated area.
3. Check your state, as some states have a statewide business license or registration.
4. Ask your local small business development center or chamber of commerce if the rules are unclear.
5. Review your lease or HOA rules if you rent or live in a managed community, since they may limit home businesses or inventory storage.

Fees and renewal schedules vary. Keep copies of any licenses with your business records.

Whatnot Sales Tax Permit: Do You Need One?

In the US, Whatnot generally acts as a marketplace facilitator. In states with marketplace facilitator laws, that means Whatnot collects sales tax from buyers on qualifying purchases and remits it to the state. That covers a lot of the sales tax burden for sales made on the platform. Read the full explanation in does Whatnot collect sales tax.

You might still need or want a state sales tax permit in situations like these:

• You sell outside Whatnot, such as at card shows, flea markets, through your own website or in person, where no marketplace is collecting tax for you.
• Your state requires marketplace sellers to register anyway, even if the marketplace remits the tax. Requirements differ by state.
• You want to buy inventory for resale tax-free. Many states let registered sellers provide a resale certificate to suppliers so they do not pay sales tax on goods they intend to resell. This can be a meaningful saving for sellers buying wholesale.

Check your state revenue department's website, which usually explains marketplace seller obligations and resale certificates. If you sell in multiple channels or states, a tax professional can help you understand where you have obligations.

How Do I Set Up an LLC for My Whatnot Business?

If you and your advisor decide an LLC makes sense, the general US process looks like this. Details vary by state.

1. Choose a name that meets your state's naming rules and is not already registered. Search your state's business database.
2. Choose a registered agent, a person or service with a physical address in the state who accepts legal documents on the LLC's behalf. You can often serve as your own.
3. File formation documents, often called articles of organization, with your state and pay the filing fee.
4. Create an operating agreement describing ownership and how the business is run. Some states require it; it is wise to have one regardless, especially with partners.
5. Get an EIN from the IRS if needed. It is free directly from the IRS, and many banks ask for one to open a business account.
6. Open a business bank account and route all Whatnot payouts and business expenses through it.
7. Register for state taxes and local licenses as required.
8. Update your Whatnot account with the business's tax and payout details if appropriate. The process for changing account and tax information can change, so check Whatnot's help center or contact support.
9. Calendar your ongoing obligations, such as annual reports and license renewals.

You can file yourself, use a formation service or hire an attorney. Paid services are convenient but not required in most states.

Do not forget insurance

An LLC is not a substitute for insurance. If you store valuable inventory at home, such as graded cards, sealed product, sneakers or coins, check whether your homeowner's or renter's policy covers business inventory. Many personal policies limit or exclude business property. A local insurance agent can explain options such as a home-business endorsement or a small business policy. It is also worth understanding how shipping protection works for high-value packages; see lost or damaged Whatnot packages.

Taxes Apply Either Way

Whatever structure you choose, profit from selling on Whatnot is taxable income in the US. Whether or not you receive a 1099-K does not change that. After the 2025 federal law change, the federal 1099-K reporting threshold for platforms like Whatnot is commonly reported as more than $20,000 and more than 200 transactions in a year, though some states have lower thresholds. The Whatnot 1099 and taxes guide covers this in more detail.

Practical steps that help regardless of structure:

• Keep receipts for inventory, supplies, equipment and other expenses.
• Track cost of goods sold for every item, not just total spending.
• Set aside a portion of each payout for taxes.
• Use a separate bank account for business money.

The Whatnot bookkeeping guide shows how to set up records that make tax time far less painful.

A Sensible Order of Operations for New Sellers

If you are just starting, here is a general sequence many small sellers follow. Adapt it with professional input for your location.

1. Start selling as an individual while you test your niche, keeping careful records from day one.
2. Check local license requirements right away, since some apply from your first sale.
3. Open a separate bank account for business activity, even as a sole proprietor.
4. Look into a sales tax permit if you sell outside Whatnot or want resale certificates for wholesale buying.
5. Revisit structure once the business is consistently profitable or when you add partners, staff or significant inventory risk. That is often the point at which an LLC conversation with an advisor becomes more relevant.

Planning the rest of the business? The guide on how to start a Whatnot business covers budgets and launch planning, and the playbook on scaling a Whatnot business covers what changes when you hire help.

Bottom Line

You generally do not need an LLC to sell on Whatnot, and many sellers start without one. What you may need, depending on location and how you sell, is a local business license and possibly a sales tax permit. An LLC becomes worth discussing with a professional once your shop is profitable, you take on partners or staff, or you want more formal separation between your business and personal finances.

Next, get your records in order with Whatnot bookkeeping, and review the full guide to making money on Whatnot. If you would like structured help with the sourcing and business side of reselling before you formalize anything, consider the free Marketplace SuperHeroes workshop, which is aimed at beginners and costs nothing to attend.