Business Licenses and Permits for Your Pokemon Card Business: Simple Legal Compliance Guide

After 10+ years running a Pokemon card business, I've learned this truth: legal compliance isn't complicated, but ignoring it is expensive. Most Pokemon sellers operate in legal gray areas unknowingly—risking fines, shutdowns, or worse.

Let me show you exactly what licenses, permits, and registrations you need (and don't need) to run a compliant Pokemon card business—without legal jargon or unnecessary complexity.

The Legal Reality: Most Pokemon Sellers Are Non-Compliant

Common Scenario:

New seller thinks: "I'm just selling cards from my collection. I don't need licenses or permits."

Reality: Once you're selling regularly for profit, you're operating a business—and businesses have legal requirements.

Why This Matters:

Platforms may suspend accounts for non-compliance
States can fine you for unpermitted business activity
Tax agencies can audit and penalize
You're personally liable without proper structure

The Good News: Getting compliant is simpler and cheaper than most think.

Do You Need a Business License? (The Threshold Question)

Short Answer: It depends on your revenue, location, and how you operate.

When You DON'T Need a Business License

Hobby Sales (Truly Selling Your Collection):

Selling cards from your personal collection
Infrequent sales (few per month)
Not actively sourcing inventory to resell
Minimal revenue (varies by location, typically under $500-1,000/year)

This is NOT a business—it's personal property sales.

When You DO Need a Business License

Business Operations:

Buying cards specifically to resell (not your collection)
Regular, ongoing sales (weekly/monthly)
Revenue exceeds threshold ($500-5,000+ depending on location)
Operating with profit intent
Marketing yourself as a business

If this describes you, you likely need licensing.

The Revenue Thresholds (General Guidelines)

Check your specific state/city, but common thresholds:

Under $500/year: Usually no license required (hobby)
$500-5,000/year: Gray area (check local requirements)
$5,000+/year: Definitely need business license

My Story: I operated without license for first 6 months (under $2,000 revenue). Once I hit $5,000 in sales, I registered. Completely legal progression.

Types of Business Structures (What to Choose)

Option 1: Sole Proprietorship (Simplest)

What It Is: You and the business are the same legal entity.

Pros:

Easiest to set up (minimal paperwork)
Cheapest ($0-100 depending on location)
Simple taxes (report on personal tax return)
Full control

Cons:

Personal liability (you're personally responsible for business debts/lawsuits)
Harder to get business loans
No separation between personal and business assets

Best For: Beginners, part-time sellers, under $25,000/year revenue

How to Set Up:

Choose business name (can be your personal name)
Register with your city/county (get business license)
Get sales tax permit (if required)
Open business bank account (optional but recommended)

Cost: $25-150 typically

Option 2: LLC (Limited Liability Company)

What It Is: Separate legal entity that protects your personal assets.

Pros:

Personal liability protection (business debts/lawsuits don't touch personal assets)
Professional credibility
Tax flexibility (can choose how you're taxed)
Easier to get business credit

Cons:

More expensive to set up ($50-500+ depending on state)
Annual fees ($0-800/year depending on state)
More paperwork (operating agreement, annual reports)
Requires separate business bank account

Best For: Serious sellers, $25,000+/year revenue, wanting liability protection

How to Set Up:

Choose business name and check availability
File Articles of Organization with state
Create operating agreement
Get EIN (Employer Identification Number) from IRS (free)
Open business bank account
Get business license and permits

Cost: $100-500 setup + $0-800/year ongoing (varies by state)

My Setup: I operated as sole proprietor for first 2 years, switched to LLC when revenue hit $30,000/year. Made sense for liability protection at that scale.

Option 3: Corporation (Rare for Small Sellers)

What It Is: Complex legal entity, separate from owner(s).

Best For: Very large operations, multiple owners, seeking investors

Most Pokemon sellers don't need this. Stick to sole proprietorship or LLC.

Step-by-Step: Getting Your Business License

Step 1: Determine Your Business Location

Where You Need License: Where you operate from (your home address typically)

Important: You need license in city AND county where you operate.

Step 2: Check Local Requirements

City Requirements:

Google: "[Your City] business license"
Visit city website or city hall
Ask: "I'm starting a home-based online sales business. What do I need?"

County Requirements:

Google: "[Your County] business license"
Often combined with city license, but sometimes separate

State Requirements:

Some states require state-level business registration
Google: "[Your State] business registration"

Step 3: Choose Your Business Name

Options:

Your Personal Name: "Richard Smith" (simplest, no DBA needed)
DBA (Doing Business As): "Break Check Barragan" (requires DBA filing)

DBA (Fictitious Business Name):

If you operate under a name other than your legal name
File with county clerk or state
Publish in local newspaper (some states require)
Cost: $10-100

Step 4: Apply for Business License

Application Process:

Visit city/county website or office
Complete application (business name, address, activity type)
Pay fee ($25-150 typically)
Receive license (immediate or within 1-2 weeks)

Information You'll Need:

Your name and address
Business name
Business activity (use "Online Retail Sales" or "Trading Card Sales")
Estimated annual revenue
Number of employees (usually 0)

Step 5: Display and Renew

Display: Some locations require business license displayed at business location (home office)

Renewal: Most licenses annual ($25-150/year)

Set Reminder: Renew on time to avoid penalties

Sales Tax Permit (Critical for Most Sellers)

Do You Need a Sales Tax Permit?

Yes, if:

You sell to buyers in your state
Your state has sales tax (45 states do)
You exceed state threshold (varies: $0-100,000/year)

No, if:

You only sell to out-of-state buyers
Your state has no sales tax (Alaska, Delaware, Montana, New Hampshire, Oregon)
You're below threshold and state exempts small sellers

Most Pokemon Sellers Need This.

How to Get Sales Tax Permit

Step 1: Register with State

Google: "[Your State] sales tax permit" or "seller's permit"
Register online (free in most states)
Receive permit number (usually immediate)

Step 2: Understand Collection Requirements

Collect sales tax from buyers in your state
Rate varies by location (state + county + city)
Most platforms (eBay, Mercari) auto-collect and remit (easier)

Step 3: File Sales Tax Returns

Frequency depends on volume (monthly, quarterly, or annual)
Report sales and remit collected tax
Due dates vary by state

Pro Tip: Platforms like eBay and Mercari handle sales tax automatically in most states. You just need the permit on file.

Federal Requirements

EIN (Employer Identification Number)

What It Is: Business tax ID number (like Social Security Number for businesses)

Who Needs It:

LLCs (required)
Sole proprietors with employees (required)
Sole proprietors without employees (optional but recommended)

Why Get It Even If Optional:

Protects your SSN (don't give SSN to every platform)
Required for business bank account
Professional credibility
Free and easy to get

How to Get EIN:

Visit IRS.gov
Search "Apply for EIN"
Complete online application (10 minutes)
Receive EIN immediately

Cost: FREE

Business Bank Account

Legally Required? No (for sole proprietors), Yes (for LLCs)

Should You Get One Anyway? YES.

Why:

Separates business and personal finances (critical for taxes)
Professionalism
Easier bookkeeping
Required for platforms like PayPal Business
Liability protection (shows separation for LLC)

How to Open:

Choose bank (any bank works; I use local credit union)
Bring: Business license, EIN letter, ID, initial deposit
Open account (free or low-fee business checking)

Zoning and Home-Based Business Considerations

Can You Run Pokemon Business from Home?

Usually Yes, with considerations:

Check Zoning:

Google: "[Your City] zoning regulations home business"
Most cities allow home-based businesses with restrictions

Common Restrictions:

No retail walk-in traffic (online-only is fine)
No employees (or limited number)
No excessive vehicle traffic
No signage visible from street
Percentage of home used for business (usually under 25%)

Pokemon Card Business: Almost always compliant (online sales, no customers visiting, no signage)

Homeowners Association (HOA) Rules

If You Live in HOA:

Check HOA rules (some prohibit home businesses)
Usually if there's no visible activity, no issue
Don't advertise your home address publicly

Platform-Specific Requirements

eBay Business Requirements

If You Sell on eBay:

No specific business license required to start
Must provide tax info (SSN or EIN)
Must collect sales tax (eBay handles this)
High-volume sellers: May need additional verification

Mercari Business Requirements

If You Sell on Mercari:

Same as eBay (no license required to start)
Provide tax info
Sales tax handled by platform

TCGPlayer Business Requirements

If You Sell on TCGPlayer:

Seller application process
May request business info for high-volume sellers
Sales tax handled by platform

Bottom Line: Platforms don't require business license to start, but YOU still need to comply with local/state laws.

Costs Summary: What Will This Actually Cost?

Minimum Viable Compliance (Sole Proprietorship)

Year 1:

Business license: $25-150
Sales tax permit: FREE
EIN: FREE
DBA (if needed): $10-100
Total: $35-250

Annual Ongoing:

Business license renewal: $25-150/year
Total: $25-150/year

LLC Route

Year 1:

LLC formation: $100-500
Business license: $25-150
Sales tax permit: FREE
EIN: FREE
Business bank account: $0-50 setup
Total: $125-700

Annual Ongoing:

LLC annual fee: $0-800 (varies by state)
Business license renewal: $25-150
Bank account fees: $0-120/year
Total: $25-1,070/year (varies widely by state)

California is most expensive (800/year LLC fee). Many states are $50/year or less.

Common Questions and Misconceptions

Q: "Can't I just fly under the radar?"

A: You could, but risks:

Platforms may suspend account
State can fine you retroactively
Tax issues compound
No legal protections
Professional buyers check for compliance

Getting licensed is cheap insurance.

Q: "I only make $200/month. Do I really need this?"

A: Check your local threshold. Under $500-1,000/year? Probably not. Over? Probably yes. When in doubt, get licensed—it's inexpensive peace of mind.

Q: "Will registering a business raise my taxes?"

A: You owe the same taxes whether registered or not. Registration just formalizes what you should already be doing (reporting income). Plus you can deduct business expenses, which lowers taxes.

Q: "What if I get audited?"

A: If you're properly licensed, collecting sales tax, and reporting income accurately, audits are no big deal. Records + compliance = no problems.

When to Upgrade Your Business Structure

Start with Sole Proprietorship if:

Under $10,000/year revenue
Part-time operation
Low liability risk

Upgrade to LLC when:

$25,000+/year revenue
Full-time or serious part-time
Want liability protection
Inventory value exceeds $10,000

My Progression: Sole proprietor Years 1-2 → LLC Year 3. Perfect timing based on growth.

Action Steps

This week: Calculate your annual Pokemon revenue (estimate if new)
This week: Research your city/county business license requirements
This week: Check if you need sales tax permit in your state
This month: If above thresholds, get business license and sales tax permit
This month: Apply for EIN (free, takes 10 minutes)
This month: Open business bank account
Ongoing: Keep licenses renewed, file sales tax returns on time

Ready to Get Legally Compliant?

This is Module 5.1 of Week 5 in the Pokemon Business Startup Course.

Complete course includes:

State-by-state licensing guides
Business structure decision flowchart
Step-by-step registration checklists
Compliance calendar and reminders
Legal forms and templates
Attorney-reviewed guidance

Enroll in the Pokemon Business Startup Course →

Module 5.1 of Week 5 - Pokemon Business Startup Course