Licensing Requirements for Selling on Etsy
Selling on Etsy as a hobby doesn’t require a license. But if running commercially, you risk IRS investigation and fines if unlicensed. Determine if your Etsy shop is a business or hobby using IRS factors. It is crucial for sellers to obtain licenses and comply with tax laws to avoid consequences.
Business License and Permits
If you want to develop your Etsy store into a business, get necessary licenses. You may need a general business license, reseller’s permit, or home occupation permit depending on location, products sold, and revenue. Check municipal, county, state, and federal regulations for seller requirements.
Tax and Legal Obligations
If you sell taxable goods, a sales tax permit from your state is needed. Licenses needed vary for home-based or online businesses. An Employer Identification Number allows filing business taxes. Research your area’s requirements as local laws vary.
What Happens if I Sell on Etsy Without a Business License?
Local laws vary. Research your area’s requirements. Selling on Etsy without a business license can have serious financial implications. Some sellers operate an Etsy business without a license, which might be illegal. It is essential to obtain the proper licenses and comply with tax laws to avoid legal and financial consequences.