Do You Need a Business License to Sell on Etsy?

Etsy does not require you to have a business license to sell on their platform. Anyone can sell both physical and digital products on Etsy. Etsy doesn’t enforce rules on who needs or who doesn’t need a business license to sell on their marketplace.

That said, you may need a license or permit from your local, country, state, or federal agencies regulating businesses. Whether you need a business license or not depends on what you sell, where you live, how much profit you make, and who your customers are.

In most jurisdictions, it comes down to if your Etsy shop is a hobby or a business. If you’re selling products as a hobby, you generally wouldn’t need a business license.

The IRS has a guide that distinguishes between what is defined as a “hobby” and a “business”. In general, for businesses:

  • You maintain accurate records of your shop in a businesslike manner.
  • Your time and effort indicate you intend to make your shop profitable.
  • Your livelihood depends on the income you receive from the shop.
  • You’ve made a profit in similar activities in the past.

In many cases, if you make a profit or intend to make one, you need a business license. The good news is that you can write off business expenses when you file your taxes.

You should also know that home-based Etsy sellers aren’t exempt from business license regulations. Your local jurisdiction may require a permit or certification such as a home occupation permit for your business to be legal.

Disclaimer: this isn’t tax or legal advice. For specific questions, you should speak to a business attorney.

Omar is a Digital Marketer and the founder of StartMarketing. He received his Master's degree from Queen's University, Belfast in 2017 and launched many successful web projects for clients since then. His expertise is in SEO, content management and social media marketing.

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