Do you need a business license to sell on Etsy?

Do you need a business license to sell on Etsy?

Amy Beardsley
By Amy Beardsley
Oct 20, 2023
5 min read

Entrepreneurs love Etsy because it’s quick and simple. Its millions of active sellers can set up shop with little or no startup costs, inventory or previous retail experience, and the site comes with a built-in customer base.

Still, every retailer needs to ask the right legal, tax, insurance and operations questions to keep their business legit. Jump ahead to learn:

How to sell on Etsy

The beauty of Etsy is that anyone with an account can sell digital and physical products, from wall art you can print at home to handmade jewelry and vintage goods.

However, starting a business on Etsy is just that — starting a business. And starting a business comes with legal implications. For example, you may need to obtain business licenses and permits to sell your goods on Etsy.

If you aren’t familiar with local, state or federal business laws, you might turn to Etsy for guidance. However, you’ll quickly discover the platform offers little help. Etsy doesn’t require sellers to have a business license.

But here’s where things get tricky: Just because Etsy doesn’t require a business license doesn’t mean that you don’t need or shouldn’t get one.

Do you need a business license to sell on Etsy?

Unfortunately, there isn’t a clear-cut answer. It depends on:

  • Where you live. Some jurisdictions have stricter regulations than others. For example, California requires you to register and get a permit to sell online, even if your sales are temporary.
  • What you’re selling. The type of product you sell can determine whether you need a business license. For example, it’s likely different licenses and permits are needed if you’re selling digital printable planners versus handmade leather wallets.
  • How much you sell. Some states don’t require you to have a business license unless you reach a certain sales threshold. For example, Oklahoma requires a seller’s permit if your taxable sales reach $10,000.

Many Etsy owners operate their small businesses from their homes. Home-based Etsy sellers aren’t exempt from business license regulations. Your county or local jurisdiction may require a home occupation permit or certification of occupancy for your home-based business to be legal.

Some sellers treat their store as a hobby rather than a job. In some locations, hobbyists may not need a business license or permit. Otherwise, the same considerations may apply based on location, products and sales volume.

Laws can vary from state to state, making it confusing to know if you need licenses or permits. The best course of action is to find your local Small Business Administration (SBA) office and inquire about local licensing requirements.

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Laws and legalities of selling on Etsy

In addition to a business license, your retail business may need to comply with other legal requirements. For example, you cannot sell copyrighted material on Etsy — it’s illegal and against Etsy policy. Some sellers believe crediting the original creator can avoid copyright infringement on Etsy. But that isn’t the case. The only exception is if you have the creator or copyright holder’s permission.

Other legal considerations for selling on Etsy include:

  • Etsy sales tax. You may have to collect sales tax even if your sales are online only. Remember that states can have different laws for collecting Etsy taxes on physical goods versus digital products.
  • Business names. States or local governments can require you to register a Doing Business As (DBA) if your store name differs from your legal name.
  • Federal tax ID. Also called an Employer Identification Number (EIN), you may need a federal tax ID for your Etsy business.
  • Selling food on Etsy. You can sell food on Etsy, but be aware of the many government regulations on making, packaging and selling food.

How to protect your Etsy store with business insurance for ecommerce

You don’t need business insurance to open a store on Etsy. Etsy doesn’t require it to sell. But think about this: Anytime you sell products to people, you put yourself — and your finances — at risk.

If you didn’t read Etsy’s terms of service, you might not know that you agree to release the platform of any liability — and place it squarely on your shoulders. Something as small as scented soaps could cause a harmful rash and potentially trigger a lawsuit. Without business insurance to protect you, you’re financially responsible.

Ecommerce liability insurance can help. If you or one of your products causes an injury, illness or other damage, general liability insurance and professional liability insurance coverage can help protect your personal assets.

How NEXT helps protect your Etsy ecommerce business

If you have an Etsy shop or you’re thinking of starting one, small business insurance can help protect your store and finances.

At NEXT, insurance is simple and affordable. Our ecommerce insurance can help cover some financial losses such as medical payments if a customer gets hurt, and protection if a competitor claims you stole their ideas.

Our application process lets you review your policy options, purchase coverage and get your certificate of insurance in less than 10 minutes.

Start a free instant quote with NEXT today.

Amy Beardsley
About the author

Amy Beardsley, insurance expert and contributing writer at NEXT Insurance, is a content marketing writer who specializes in small business coverage. Leveraging her background in the legal field, Amy brings a deep understanding of laws, regulations, and compliance requirements to her work. As a content marketing writer since 2016, she has contributed to publications like Legal & General, Berkshire Hathaway Specialty Insurance, Insurify, and NerdWallet. Her work has also appeared in CNBC, Kiplinger, and US News. When she’s not writing, Amy enjoys playing cards with her family and experimenting with new recipes.

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* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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