{"id":5171,"date":"2021-08-19T12:45:44","date_gmt":"2021-08-19T17:45:44","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/do-you-need-a-business-license-to-sell-on-etsy.html"},"modified":"2026-04-03T13:38:00","modified_gmt":"2026-04-03T18:38:00","slug":"do-you-need-a-business-license-to-sell-on-etsy","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/do-you-need-a-business-license-to-sell-on-etsy.html","title":{"rendered":"Do You Need a Business License To Sell on Etsy?"},"content":{"rendered":"\n
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Do You Need a Business License To Sell on Etsy?<\/h1>\n\n
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\n By Catherine Hodder, Esq.<\/a> | Legally reviewed by Jordan Walker, J.D.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

A seller may need a business license<\/span> to sell on Etsy if their ecommerce<\/span> activity is considered a profit-seeking business versus a personal hobby. Sellers who are in business may need to register for a business license<\/span>, collect <\/span>sales tax<\/span>, and follow state laws<\/span> and local regulations<\/span>.<\/em><\/strong><\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

If you have creative talent and want to sell items online, Etsy is a great tool.<\/p>\n

Etsy is an online platform primarily used by sellers of handmade goods<\/span> or specialty items. It is a popular way for sellers to connect with customers looking for unique crafts, craft supplies<\/span>, and products.<\/p>\n

In 2025, over 5.5 million sellers were using Etsy. So if you are looking to become a seller on Etsy, you are in good company.<\/p>\n

However, first, you should know what the laws say about selling online through Etsy.<\/p>\n

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Do You Need a Business License<\/span> To Sell On Etsy?<\/h2>\n

Etsy\u2019s seller policies<\/span><\/a>\u00a0do not require you to have a business license<\/span><\/a> to sell on their platform. So there is no \u201cEtsy <\/span>Business<\/span> License<\/span><\/em>.\u201d However, the inquiry doesn\u2019t end there. A seller of goods on Etsy may need a license or permit from municipal, county, state, or federal agencies regulating businesses.<\/p>\n

Your Etsy shop<\/span> is either a business or a hobby. If you have a business, you need a business license<\/span><\/a>. If you are engaging in a hobby, you don\u2019t.<\/p>\n

Therefore, the first thing to do is figure out if your Etsy shop<\/span> is a business or a hobby.<\/p>\n

Do You Have a Business?<\/h3>\n

The IRS<\/span> has\u00a0nine factors in determining if your activity is a hobby or a business<\/a>. For example, they look at the time and effort you spend on the activity. They also consider if you operate the activity like a business and depend on the income for your livelihood.<\/p>\n

If you profit from your activity in at least three of the most recent five tax years, the IRS<\/span> considers that a business. Or, if you intend to engage in a profit-making venture, you have a business.<\/p>\n

The advantage of having a business is that you can write off business expenses from your Etsy profits. But the drawback is that you need to apply for a business license<\/span><\/a>.<\/p>\n

Do You Have a Hobby?<\/h3>\n

If your Etsy activity is a hobby, you do not need a business license<\/span>. However, keep in mind that despite the classification, you still pay taxes on any income. So, unfortunately, any money generated from your Etsy store<\/span> is taxable. Under the Tax Cuts and Jobs Act<\/a>, for tax years 2018 through 2025, you must report all income from a hobby and you cannot deduct any expenses from income you generate from the hobby.<\/p>\n

Applying For a Business License<\/span><\/h2>\n

Business license<\/span> requirements<\/span> vary by jurisdiction for a home-based or online business<\/span>. To get a business license<\/span>, you complete an application for a business license<\/span> and pay a license fee. You will then pay a fee to renew your business license<\/span> each year.<\/p>\n

First, however, you need to decide on a business name<\/span> and then a business structure<\/span>.<\/p>\n

Business Name<\/span><\/strong><\/h3>\n

Select a name for your business venture.\u00a0Choose a business name<\/span><\/a>\u00a0carefully because it becomes your brand. You can use part of your name or describe your product in your business name<\/span>.<\/p>\n

When considering a name, think of something memorable and easy to pronounce and spell. Especially if selling online, you want your name to stand out among your competition.<\/p>\n

Business Name<\/span> and Trademark Search<\/strong><\/h4>\n

Once you settle on a shop name<\/span>, be sure no one else is using it. To do this, search your Secretary of State database and USPTO\u2019s\u00a0trademark database<\/a>\u00a0for prior name registration. If you see the name already registered, do not use it.<\/p>\n

Business Name<\/span> Registration<\/strong><\/h4>\n

If the business name<\/span> is available, you want to secure it for your business.<\/p>\n

If you are a sole proprietor<\/span>, you register it by filing a fictitious name or DBA<\/span> (doing business as<\/span>)<\/a> with your local government<\/span>.<\/p>\n

If you are forming a corporate entity, you register the name when filing the formation documents with the Secretary of State.<\/p>\n

Business Structure<\/span><\/strong><\/h3>\n

On a business license<\/span> application, you indicate your corporate status. That is sole proprietorship<\/span>, corporation, limited liability company<\/span> (LLC), or other business entity.<\/p>\n

Sole Proprietorship<\/span><\/strong><\/h4>\n

As a one-person Etsy shop<\/span>, you act as a sole proprietor<\/span>. Therefore, you record any Etsy income (or losses up to your Etsy income amount) on your personal tax return<\/span>.<\/p>\n

The advantage to a\u00a0sole proprietorship<\/span><\/a>\u00a0is that there is little paperwork to do. Therefore, a one-person Etsy shop<\/span> may most likely be a sole proprietor<\/span>.<\/p>\n

Corporation or Limited Liability Company<\/span> (LLC)<\/strong><\/h4>\n

However, a formal corporate entity like a\u00a0corporation<\/a>\u00a0or\u00a0limited liability company<\/span> (LLC)<\/a>\u00a0offers other benefits to an Etsy seller<\/span>:<\/p>\n