Do You Need an LLC to Sell on Shopify

If you’re in the process of starting a Shopify store, you’re probably wondering whether you’ll need to form an LLC before getting your business up and running.

In our Do You Need an LLC to Sell on Shopify guide, we’ve broken down everything you need to know to get started, including the benefits of forming an LLC and the other considerations that you’ll need to take. 

Is an LLC Required for Your Shopify Store?

Quick answer: no, you technically don’t need an LLC to sell on Shopify.

In fact, you don’t even need to have a formal business entity, as you can register as an individual by using your personal name, address, and Social Security Number (SSN).

Having said that, while you don’t have to form an LLC to sell on Shopify, there are a number of reasons why you may want to, which we’ve outlined in the next section below.

Should You Form an LLC for Your Shopify Store?

Generally speaking, you are going to want to form an LLC for your Shopify store if you’re expected to either: a) generate significant revenue, b) be exposed to potential legal liability, or c) grow into a larger operation.

This can be the case if you are planning to:

• Sell products with potential health or safety risks (e.g. skincare items, supplements, children’s toys etc.)
• Hire employees or independent contractors to help with customer service, marketing, or fulfillment.
• Build business credit so you can qualify for loans or get better payment terms with suppliers.
• Attract investors or raise capital to grow your business.

This is because an LLC will help protect your personal finances, support your brand’s professional image, and prepare your store for sustainable growth.

It’s also worth noting that an LLC is extremely affordable to both create and maintain, and so it often comes at almost no opportunity cost. 

How to Form an LLC for Your Shopify Store

The exact steps you’ll need to take in order to form your LLC will ultimately depend on the state you choose to register in. 

Having said that, you will generally need to complete the following steps: 

• Choosing a Business Name: You will need to select a unique LLC name that complies with your state’s naming guidelines (e.g., no restricted words, a required legal identifier such as “LLC” or “Limited Liability Company,” etc.).
• Appointing a Registered Agent: You will need to designate a registered agent, which is a person or business authorized to receive legal documents and official notices on behalf of your LLC. This can be you or a third party — such as a professional registered agent service — but note that a physical address in the state where your LLC is registered will be needed.
• Filing Your LLC Articles of Organization: You will need to submit your LLC’s Articles of Organization (which some states refer to as a Certificate of Formation) to the Secretary of State. This will include your business name, address, registered agent, management structure, and business purpose (sometimes) — among other things. 
• Creating an Operating Agreement (If Required): You will also need to create an operating agreement, which is a document that outlines your LLC’s ownership structure, management roles, profit and loss distribution, and decision-making processes. Although almost always not required, it’s always recommended. 
• Obtaining an EIN (Employer Identification Number): You will need to obtain an EIN from the IRS, which serves as your LLC’s tax ID and is required for hiring employees, opening a business bank account, and filing taxes separately from your personal finances.
• Filing a BOI Report: The last step you’ll need to do is submit a Beneficial Ownership Information (BOI) Report to FinCEN, which serves as a disclosure of the individuals who own or control your LLC and must be filed within 30 days of formation.

Note: Due to a nationwide injunction issued on December 3, 2024, all BOI reporting requirements under the Corporate Transparency Act have been temporarily suspended. Therefore, until the Fifth Circuit Court of Appeals reaches a decision, you will not be legally obligated to submit a BOI report, though you may choose to do so voluntarily.

Select Your State

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• District of Columbia
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

Tip: If you’re unsure about which state to form your LLC in, you can have a look at our in-depth Best State to Form an LLC article. 

Other Factors to Consider 

Besides deciding whether to form an LLC, there are a number of other important factors that you’ll need to consider before starting your Shopify store, which we’ve broken down below.

Do You Need a Business License for Your Shopify Store?

Generally speaking, for most small-scale sellers and new Shopify store owners, a formal business license is not typically required to start selling — though this will depend on your location.

Having said that, it’s important to understand that Shopify is simply a platform that allows you to create and run your own online store, and therefore, whether you’ll need a business license or not will ultimately depend on the type of products you plan to sell and the state or local regulations that will apply to your business.

For example, you should keep in mind that:

• Most states will require you to obtain a seller’s permit if you’re going to be selling products that are subject to sales tax.
• Some cities and counties will require you to obtain a general business license in order to legally operate within their jurisdiction, even if you run an online business.
• Some cities and counties may even require you to obtain a home occupation permit if you’re running your Shopify store from home.
• Your state or the federal government may require you to obtain additional business licenses or permits if you are planning to sell regulated products (e.g. alcohol, firearms, health-related items, etc) through your Shopify store.

Do You Need Business Insurance for Your Shopify Store?

Generally speaking, business insurance isn’t legally required for most Shopify stores, and there is no universal rule that mandates it for all online businesses.

Having said that, getting some sort of coverage is highly recommended, especially if:

• You will rely on third-party suppliers or fulfillment services, as delays or disruptions could impact your ability to fulfill orders.
• You will operate your Shopify store from home, since most homeowners’ insurance policies don’t cover business-related losses.
• You will store inventory in a warehouse or use a fulfillment center, where theft, fire, or damage could result in significant financial loss.
• You will run a dropshipping business, as you may still be held responsible for product defects or delivery issues.
• You will offer subscription-based products or services, as recurring billing models come with risks related to chargebacks, disputes, and cancellations.
• You will sell high-value or custom-made products, which may require coverage for lost, stolen, or damaged goods in transit.
• You will use third-party payment processors, as some may require certain types of insurance to mitigate fraud and chargeback risks.

Keep in mind that every business will face different risks, so if you’re unsure about what coverage makes sense for your Shopify store or want to learn more about how business insurance can protect you, we’ve broken down everything you need to know in our in-depth Business Insurance guide.

Do You Need a DBA (Doing Business As) Name for Your Shopify Store?

No, you don’t need to file a Doing Business As (DBA) name to run a Shopify store, and if you are operating under your own legal name (e.g., “Chris Smith”), there is generally no need to file one.

Having said that, you may want to file a DBA if you plan to operate under a business name that is different from your legal name (if you have formed an LLC, then you can choose to file a DBA if you want to operate under a different name than the one you registered with). 

Regardless, it’s important to understand that a DBA is not a trademark, and DBA regulations vary widely from state to state, so you’ll need to check with your state’s business filing office to determine what protections, if any, a DBA registration would provide in your jurisdiction.

Moreover, you should note that in many states, the cost of registering an LLC and obtaining a DBA are quite similar, and so if you’re choosing between the two, you might as well go with the LLC for the added liability protection.

Do You Need a Custom Domain Name for Your Shopify Store?

No, you don’t need a custom domain name to create your Shopify store, as Shopify currently provides a free subdomain (e.g., yourstore.myshopify.com) that you can use.

Having said that, if you want a branded web address that will look more professional and be easier for your customers to remember, then it is highly recommended that you opt for a custom domain (e.g., yourstore.com).

This can be done either directly through Shopify or via a third-party domain provider such as GoDaddy, Namecheap, or Google Domains.

Keep in mind that if you already own a domain, you can easily connect it to your Shopify store through your Shopify admin, and so there is no need to purchase a new one unless you are looking to rebrand.

Do You Need to Hire a Designer or Developer for Your Shopify Store?

No, you don’t need to hire a designer or developer to set up and customize your Shopify store, as the platform is sufficiently user-friendly and will allow you to to design, customize, and enhance your store without any coding experience.

That said, in certain cases where Shopify’s built-in tools aren’t enough for the level of customization you need, it may make sense to hire a designer or developer — which you can do either through Shopify’s Expert Marketplace or freelance platforms like Upwork and Fiverr.

For example, you may want to consider hiring a developer if:

• You need a fully customized Shopify theme tailored to your brand.
• You require advanced functionality that is not available through Shopify’s apps.
• You want to optimize your store’s user experience (UX) and conversion rates through custom coding.
• You are integrating complex third-party services that require API modifications.

Overall, it’s important to note that for most small and medium-sized stores, Shopify’s built-in tools and themes offer more than enough flexibility to create a functional, professional-looking store, so hiring external help isn’t typically recommended — at least in the early stages of launching your Shopify business.

Do You Need an LLC for Your Shopify Store FAQs