I am planning to create a test website under different url than my original website. If I migrate files and database from the Original website to a Test website. Will paid extensions work ? I've been reading that extension can only work with one domain name (usually its the one for which you bough it for).
I cant make dev.originalsite.com for testing. I can only buy new domain under new hosting and migrate my files and databases, basically secondwebsite.com.
Do you think it will cause problem with extensions during migration ?
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Extensions will work or not is depends upon the type of license they provide. Many extensions are licenced for a single domain and if you try to install them on another domain it will give you "License Violation" error and will not work. While some extensions doesn't provide licenses of these kind and can work on any domain.
So you need to contact your extension providers to know if they will work or not.
What is the best way to avoid Lisence Violation errors ?
How to create a Test website? Maybe I should create a subdomain (test.mystore.com) rather than creating second domain (secondwebsite.com) and migrate files and Database.
To avoide License Violation errors you need to contact your extension providers to provide license as you are migrating your store from one domain to another domain.
I will prefre you create a Test website on your server mystore.com/test
This totally depends on which extensions you have. Most extension providers are not going to have any issues with you installing on a dev or staging server, but they will need to either give you a new license key or authorise your dev site.
I'd make a list of all extensions, drop them a line with your current domain and planned dev/staging domains, and wait to hear back from all of them before moving.