To get paid on Etsy, you need to connect your bank account to your Etsy shop so that you can receive payments. You’ll also need to add a debit or credit card to your account to pay your bills from Etsy. From the How you’ll get paid page, fill out your personal information.
According to Etsy’s seller policies, a business license is not required to sell on their platform. However, this does not mean that sellers are exempt from obtaining necessary licenses and permits from municipal, county, state, or federal agencies regulating businesses. Whether a seller needs a business license to sell on Etsy depends on the laws and regulations that apply to their specific situation.
You must check your local laws and regulations to determine licenses and permits you need to sell on Etsy. You can check with your local government to determine what licenses and permits you need to sell on Etsy.
An Employer Identification Number (EIN) allows businesses to file taxes with the IRS or other regulatory bodies. If you operate your Etsy business as a sole proprietor, you only need your Social Security Number (SSN) for tax identification purposes. However, you may need an EIN if you’re registering a partnership or LLC.
You’ll need to follow the law based on your location and research whether you need a business license to sell before you start, or you could be opening yourself up to some hefty fines.
If you are experimenting with Etsy for the first time by listing some of your artwork or crafts for sale in an effort to offset the cost of your hobby, you probably won’t need a business license to sell on Etsy. If you are willing to turn your hobby into a business, but you fail to consistently turn a profit, you also probably won’t need a business license for Etsy. Of course, these qualifying conditions are subjective, so if you are in doubt, it may be wise to consult a tax or business law professional with questions.
Here’s what prospective sellers need to know about whether they need a business license to become an Etsy seller and the potential consequences of noncompliance.
Etsy’s seller policies do not require you to have a business license to sell on their platform. Your Etsy shop is either a business or a hobby. Whether you need a license or not depends on your state or county laws.
The fact that your Etsy store is purely a hobby frees you up from acquiring an Etsy business license. However, it’ll be a legal requirement if you are selling on Etsy as a business. You might not need a formal business license if you’re running your Etsy shop as a hobbyist or a small-scale venture. However, if your Etsy store evolves into a substantial source of income, it’s wise to explore the licensing requirements in your state.
If you sell on Etsy as a business and not just as a hobby, you will likely need to obtain a business license or other permits. These licenses help ensure that you operate legally and meet any necessary tax obligations.
Determining If You Need a Business License
Factors like level of profit, sales volume, time devoted, and intentions determine if a shop is a hobby or business. Using IRS criteria, sellers can evaluate if their shop requires a license.
If Etsy sales start turning a profit, it’s wise to get a business license. This adds legitimacy, enables proper tax payment, and avoids legal issues. Consequences for selling without a required license range from IRS fines to being shut down.
Licenses that may be required include:
- A general business license
- Home occupation permit
- Reseller’s permit
- Employer Identification Number (EIN)
Special permits related to production of certain items like food may also be needed.
While Etsy itself doesn’t require a license, sellers must still follow regulations where they live and operate. Checking municipal and state laws ensures an Etsy shop meets requirements. Navigating compliance helps sellers focus on growing their business without legal worries.
Is Selling on Etsy Considered a Business?
Etsy is an online marketplace that allows people to sell handmade and vintage items. If an Etsy shop is just a hobby, a license is generally not needed. But if the shop is operating as a business with the goal of making a profit, a license may be required. The requirements vary widely based on the jurisdiction.
In summary, while Etsy itself does not require a business license, an Etsy seller is still responsible for following regulations based on where they live and operate. Checking municipal and state laws can ensure your Etsy shop meets all requirements.