Do I need a license to start an online business? How do I proceed?

Depends on the business.

My sister wants to start a business online selling vases. Does she need a license to sell?

Yes if they are in business, they should have a business license.

This also depends on your locality, but generally, there is no need for a license to setup an Internet store.

If she is in the U.S. so much of this does depend on her location, how much she will be selling, if she will be selling from just a single website and whether she will be selling out of the boundaries of her home state or not.

It could be that the only "license" she might need would be the fees paid to purchase a domain name if she wants to be the owner of a domain. There are also plenty of sites where you can set up a website for free in order to sell things. There are also a whole bunch of classified sites where a person can place ads for free.

The Internet is still a highly unregulated territory. People sell and purchase things using it all of the time. If she is to be selling things from a single site, it would be best to be checking with the laws concerning licensure and taxes where she is living. The fees may be very minimal just to protect yourself from the government because of not following the rules.

I know a guy who made made his entire living for a number of months selling costume jewelry on eBay. He was shipping them to people all over the world. Did he have a license to sell things on eBay or via the Internet in general. No. Did the IRS know about his activities? No. Would the IRS have some definite interest and concern with his activities selling things on the Internet? You bet they would!

Best to be safe before being sorry!