Etsy is a recommended platform to sell creativity, crafts, and intellectual property. Thousands of sellers depend on Etsy to sell hand-made and specialised items. On the other hand, Etsy lets sellers connect to a great customer base that looks for creative supplies, crafts, and more.
Do you require a business license to sell on Etsy in California or other locations? The short answer is no. The beginner’s guide on Etsy never mentioned the business license requirement to sell on this platform. However, a small bump is there on Etsy if you are thinking of marketing for a profit and extending your business over a specific area.
In addition, the requirement for a license relies on local government laws, sales tax policies, and business activities. However, the licensing option can be complicated for beginner sellers on Etsy, especially in California.
Don’t worry; we have covered everything about Etsy and its business license requirements in this guide. So, let’s check if you require a business license to own an Etsy store in California.
Importance of a Business License to Sell on Etsy in California
The sole decision of whether you need a business license to sell your products online depends on what you are selling and what type of business you lead. Do you need a business license to sell on Etsy in California? You don’t need a license to sell on Etsy or anywhere online if you are a sole proprietor.
Otherwise, you must have a business license to open an Etsy store in California. To make things more transparent, we have mentioned the instances where you should obtain a seller’s permit, and they are:
- You have a business in California.
- You intend to lease or sell a tangible personal property that will be subject to tax if you sell it at retail.
A Quick Intro to Business License
You might be thinking about what a business license is. A business license is a seller’s permit that acknowledges their business and all its transactions under a suitable jurisdiction. Local governments manage business licenses and must make stores and sales valid under tax laws.
Do you require a specific business license to sell on Etsy in California? So far, you might have learned how to sell on Etsy and make a sustainable profit through your online store. Now, you can legally obtain a license through the local government. However, you might not require a business license or seller’s permit if you reside anywhere but in California.
Since obtaining a seller’s permit is not mandatory for all regions, you can research whether you must get a business license depending on your business. After all, a business license can hurt your sales expenses. On the other hand, licensing requirements are comparatively less strict for online sellers than for those who own physical stores.
However, you might have to obtain additional licenses based on your listed products, business infrastructure, industry policies, and local government norms. If you are an online seller in California, you might require a business license to sell on Etsy.
Here are some heads-ups for online sellers, retailers, and other businesses in California:
- Both retailers and wholesalers in California must obtain a seller’s permit to sell products on Etsy or anywhere online.
- Sellers can apply for a temporary license if they plan to sell products online for less than 90 days.
- In addition, sellers in California need to register with the CDTFA for a Registration Certificate.
- Finally, sellers must have Etsy accounts to sell their products on the specific platform.
Required License to Sell on Etsy in California
Are you selling tangible merchandise to others for consumption, use, or storage in California? If yes, you must obtain a Certificate of Registration by registering with the CDTFA. However, you will only require the Certificate of Registration – Use Tax if any of the following terms apply to your business:
- You lease or own tangible or real merchandise, including a computer server in California.
- Otherwise, your business directly or indirectly uses, occupies, or maintains any of the following terms:
- A permanent or temporary office
- A subsidiary agent
- Place of distribution
- Storage place or warehouse
- Sales or sample room
- Or any type of physical location of the business in California
- Your business has persons operating in California to sell, assemble, deliver, take orders for, and install your tangible products or merchandise.
- Or, your business has combined sales above $500,000 through tangible merchandise during the current or preceding calendar year. However, this rule came into effect on April 1, 2019.
- Finally, your business gets rentals from leasing tangible merchandise in California. This can include vessels, vehicles, aircraft, etc.
So, do you need a business license to sell on Etsy in California? That must be clear by now if your business qualifies for any of the terms and conditions mentioned above.
Additional Business Licenses to Run an Etsy Store
You may require different types of business licenses to sell on Etsy if you are from somewhere other than California. However, you must thoroughly research whether you need a seller’s permit if you run an Etsy business anywhere other than California.
How much does a business license cost, by the way? Local tax laws for digital and physical products determine the cost of obtaining a business license. You can check it out from the local county clerk’s office, the Secretary of State’s website, etc. to recognise the right jurisdiction.
Reportedly, owning an Etsy shop might require one or more of these 4 common licenses:
Business Operation License
This license is mandatory for all online sellers. However, not all online sellers require this, depending on your government-mandated business regulations. County and municipal requirements, federal laws, or state ordinances license online selling.
In addition, you should contact your Small Business Administration or local taxing authority to check whether you require a license for your eCommerce business and what the steps are. The rate of obtaining a Business Operation License can be anywhere from $50 to $100.
A Seller’s Permit
Do you require a business license to sell on Etsy in California? You can get a Certificate of Registration and a seller’s permit in California for your digital business. Businesses in California require a seller’s permit regardless of their sales profit or income.
However, you may apply for a seller’s permit in other states according to specific norms. For instance, businesses in Oklahoma need a seller’s permit if the store’s sales profit exceeds $10,000 per annum.
On a related note, the following states in the United States don’t require a seller’s permit:
- Oregon
- Montana
- Alaska
- Delaware
- New Hampshire
A separate license may be mandatory for your business based on the types of products you deal with. Digital products and craft supplies face fewer restrictions than federally controlled goods and food items. You must contact the local food department to check if you require an additional seller’s permit.
Home Occupation Permits
Do you ship or sell products from your home address as an Etsy shop-owner? If yes, then you have to apply for a home occupation permit. However, confirm this permit requirement via your city’s local Small Business Administration.
EIN or Employer Identification Number
Do you need this particular business license to sell on Etsy? You don’t require an Employer Identification Number if your Etsy store is registered as a sole proprietorship. So, you have to report only under your federal tax return if you own a sole proprietor business.
Otherwise, you should obtain one as this license is a sales tax permit for the Internal Revenue Service. A Limited liability Company requires an Employer Identification Number to separate your business from personal assets or finances. Not to mention, this will require additional costs and appropriate paperwork.
Steps to Create An Account on Etsy
Do you require a business license to own an Etsy store in California? Hopefully, the guide has clarified that. However, you must own an Etsy account to learn how to sell on Etsy if you are ready to start an online business. Opening an Etsy account is completely free of cost.
Here’s what you have to follow to create an account on Etsy:
- Open a web browser on your computer and navigate to etsy.com.
- Before you proceed, go through Etsy’s terms of use and privacy policy. Agree with them to go to the next step.
- Afterwards, hit the Register button from the upper portion of the website.
- Next, fill out the provided form accordingly.
- Now, a confirmation email will appear on your email address. Open the mail and click on Confirm.
Finally, you can log into your Etsy account and complete the profile.
How to sell on Etsy? Creating an account on Etsy isn’t enough to make you capable of selling on the platform. Here’s how you can update your Etsy account and turn it into a store:
- Start by signing into your Etsy account.
- Next, hit the ‘Sell on Etsy’ option from the homepage.
- After that, click the option ‘Open Your Etsy Shop’.
- Choose your country, region, language, currency, and other required information.
- Now, you can decide on your Etsy shop’s name and Save it.
Make sure that you perform these steps on a desktop web browser. The mobile app of Etsy doesn’t allow you to create a shop.
Wrapping up…
Should you apply for a business license to sell on Etsy in California? Yes, you must, depending on your business type and the tangible merchandise you sell. For more details, you must visit the local municipal and county office and resolve your queries.
