Selling on FB Marketplace: Do You Need a Business License?

If you are a new vendor looking to make some additional money online, then selling on FB Marketplace can be a quick and straightforward method to get started. You don't even need a Facebook page; you can post for free using your existing Facebook account, reach local buyers, and establish your side hustle without needing a flashy website or physical store.

However, many new vendors wonder, do they need a business license for selling on FB Marketplace? The answer depends on what they are selling, how often they sell it, and where they live. Understanding these laws is essential if you want to convert your occasional listings into a consistent source of revenue.

Cleaning out the garage, selling thrift store bargains, or operating a home business, understanding the legal basics is essential. This step-by-step beginner’s guide will walk you through everything you need to know about business licenses, taxes, and staying compliant, so you can continue selling with confidence and grow your online business.

Understanding Facebook Marketplace

Selling the FB marketplace can be exciting for beginners who are starting their business on ecommerce platforms. Facebook Marketplace is a digital marketplace where users can set up to purchase, trade, and sell items with other people who are in their area.

Think of Facebook-meets-Gumtree. In this scenario, every payment is made outside the app, and is not considered to be legal, and is not the responsibility of Facebook. If you are looking for answers on how to sell on Facebook Marketplace for beginners and how to sell items on Facebook Marketplace, then this is the section for you.

You should know that selling on FB marketplace allows you with the following:

• Search for the items you want to buy
• Browse for local sales items by category and/or location, be it financial services
• Create item listings
• View previous and current transactions and messages under the ‘Your Items’ section
• Set custom bids for items
• Message buyers/sellers to arrange transactions

Please note that Facebook will not be involved in facilitating or managing any transactions. If there is a user, they are expected to do that between themselves.

Do I Need a Business License to Sell on Facebook?

It is worth checking the requirements for your state and/or country before getting started. If you are still unsure, consult a legal professional.

Therefore, it is better to check the requirements before selling on FB marketplace and see if they are as per the guidelines of your state and country. If you are confused even after that, you must consult a legal professional.

Pros of Selling on Facebook

The selling of FB marketplace comes with multiple advantages, which are listed below.

A vast number of people

As you know, there are billions of active users on Facebook, just like Amazon, and it keeps increasing every month. If you have a question about selling on FB Marketplace, then you need not worry, as you will get the best exposure for your products here. Facebook is known to be a quick and simple way of reaching out to your audience.

Direct contact

Shopping online is less interactive. The customer places an order with little or no dialogue, removing the personal touch of visiting the physical shop. Selling on FB Marketplace, however, offers more interaction. It enables open dialogue between buyers and sellers, providing users with the ability to ask questions, receive tips, and even seek assistance.

To enhance replies when listing items, ensure you post high-quality photos and respond or message back promptly. This establishes credibility and prompts more questions. For meet-up planners, clear communication and openness ensure a smooth, secure transaction. To not miss out on any sale opportunity, use a Facebook comment moderation tool.

Customization

From customizing your store to creating exciting on-brand stories on your Facebook page. Selling on FB Marketplace offers numerous options and places to input information, imagery, and captions, allowing you to make the space your own, honestly. This can be wonderful for branding and capturing an engaged audience.

Further network

The selling of FB marketplace helps small business owners to use the like, share, and comment buttons to reach their audience a bit faster than expected. When someone interacts with your post, it may appear in the network of their friends. They can also select some of the products and share on their profile or in their sell groups.

Cons of Selling on Facebook

If there are pros, then there will be cons as well for selling on FB marketplace.

Time-consuming

When you are operating a business, you must know that time is a valuable resource. If you are selling on fb marketplace, you would have to create a Facebook page, shop, and catalog, and many things can be a cumbersome process.

There can be cases where retailers may opt for outsourcing part or all of the process to a more experienced party. Another decent option can be to invest in a more cost-effective solution, like acquiring a feeding tool that can be used for in-house purposes.

Cost of advertising

To truly reach a wider audience, many retailers opt for running Facebook Ads to expand their reach. A large number of businesses consider selling on fb marketplace an investment and sometimes lose revenue in the process of building an audience and fostering lasting relationships with customers through Facebook groups.

Even in cases where the return on investment is immediate, a budget is still needed to run the ads, making it a little harder for startups or businesses with limited financial resources.

Lack of online checkout function (Marketplace)

While the absence of a checkout facility keeps selling on FB Marketplace personal and straightforward with minimal setup, it has some disadvantages compared to face-to-face transactions.

Safety is one of them. Transfers involve sharing one's location, often the seller's home, which means disclosing personal information to a stranger. Buyers also have to venture into unfamiliar places, often with cash in hand, which is a risky endeavor.

The other issue is reliance on local pickup. Without any option of online purchasing, buyers must go through the inconvenience of visiting to collect items. This will be inconvenient for those without access to transport, especially for bulk items or when the vendor is a distance away. Regarding looking at similar items or other Facebook Marketplace ads, this action may not be as convenient.

Related Article: A Beginner’s Guide to Small Business Marketing

Facebook’s Policies on Selling

If you are selling on FB marketplace, you need to be aware of the following policies, even if they are financial services. Below are some of those policies that you must be mindful of as entrepreneurs.

Merchant Policy

The first of the policies is the Merchant Policy. Its primary goal is to guide sellers who sell on Facebook Marketplace, have an online shop, or resell physical products on any Facebook platform.

The policy dictates how merchants should deliver and ship customers' orders, allowing them to offer a consistent shopping experience. It also helps sellers build improved relationships with customers by communicating clearly and consistently.

Additionally, it outlines the type of support that merchants should provide after a purchase, including refund instructions and assistance with other order-related issues.

Commerce Policy

After you have understood Merchants’ policies of Facebook online store, you also need to understand what Facebook Commerce Policies are.

Facebook, now Meta, has established several regulations governing the types of products that can be listed on Facebook and Instagram. Additionally, merchants are also informed about the local laws and regulations that apply to their businesses.

Commerce Product Merchant Agreement

Another policy of selling on FB marketplace is that merchants must be aware of the Commerce Product Merchant Agreement. It is an agreement policy that outlines the terms that apply when merchants interact with the products and services of Facebook.

Purchase Protection Policies

Facebook's Purchase Protection Policies are designed to add a layer of trust to purchases made through Facebook or Instagram. While things can still go wrong, the policies cover common buyer concerns and help merchants provide timely resolution.

For those selling on FB Marketplace, it is essential to understand how these policies can protect buyers and sellers alike. Whether it's arranging a meeting in a public place, confirming the sale price, or using the mobile app to conduct transactions, understanding that these safeguards are in place allows for a smooth and secure experience of selling on FB Marketplace.

Facebook Community Standards

Whether it is a business or a Facebook user, they are bound to post some content on either of the two Meta platforms. Facebook Community Standards are there to make sure that selling on FB Marketplace is a safe place for everyone. So, the policy applies to every user who is posting personal or business-related content on social media.

You may also like: Business Funding for Online Sellers on Shopify and Amazon

Conclusion

Selling on FB Marketplace can be a great way to start or grow a business, offering flexibility, local reach, and direct customer interaction. However, it’s essential to stay informed about Facebook’s policies, tax obligations, and safety measures, especially when dealing in person.

Be cautious of scams, verify buyers or sellers, and use public meet-up spots when possible. With the right approach, clear communication, and well-optimized Facebook Marketplace listings, you can build trust, stay compliant, and create a steady source of income in today’s competitive online marketplace.

FAQs About Selling on FB Marketplace

Does selling on Facebook marketplace count as a business?

Selling on FB marketplace is an activity that is considered a business if you are giving your entire time and effort to generate profit from the same. It can also be considered a business if your livelihood depends on these sales.

Can you sell online without being a registered business?

Most local governments want their business owners, along with those operating online, to legitimize their operations after getting a business license. Whether you are selling on a FB marketplace or operating an independent website, you should abide by the local laws of your state. This usually means you should have a business license.

Do you need a business account for Facebook Marketplace?

Selling on FB marketplace requires you to have a personal account on Facebook. Although U.S.-based business accounts with a Facebook Shop can also look after the marketplace listing with the help of their Commerce Manager dashboard.

Does selling things in the marketplace count as income?

Payment apps and online marketplaces may issue a Form 1099-K, which informs you and the IRS of the amount of money you get for selling things or providing a service. If you have made a profit through any of these activities on FB marketplace, it will be considered taxable income.

Can I list Facebook Marketplace as a business?

Facebook Marketplace provides businesses with a lot of opportunities for entrepreneurs who prefer one-on-one customer interaction when selling their products. Through a Facebook Marketplace account, businesses can post their products and services conveniently and provide them to a big group of potential buyers.

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