If you want to sell on Etsy, or online in general, you might think that all you have to do is open your shop or set up a website. But depending on where you’re located, you might be violating laws if you sell anything without getting your paperwork in order!
Etsy doesn’t require you to have a business license to open a shop, but there might be laws that do require you to have one, depending on where you live.
Disclaimer: This is not legal advice, it’s my own experience. Do your own research about business licenses and permits before selling anywhere. 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.

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Local laws about business licenses.
In the US, every state has its own regulations about business licenses and home-based businesses.
Some states require you to have a business license and some don’t, so you’ll have to do your own research about what’s legal in your area. This also applies to your local county or city, because some places don’t let you operate certain kinds of businesses from home.
When I did wedding cakes, I was allowed to have a home-based baking business because the county I live in allows it. But I have a friend who lived 15 miles away within city limits, and she wasn’t allowed to bake from home there.
There are also some homeowners’ associations that don’t allow you to run a business out of your home, and a lot of landlords don’t allow renters to do it, either.
In the case of renting, it’s a liability issue, and most landlords don’t want to be involved in having any kind of business liability on their property.
For homeowners’ associations, it’s usually a traffic situation, and you’ll have to investigate to see what’s allowed where you live.
So even though Etsy doesn’t care whether you have a business license, it does say in the terms of service that you have to abide by all of the legal requirements for where you’re located. By selling on Etsy you’re basically agreeing to those terms, so you need to make sure you’re doing it right!
Do I need separate business licenses if I have more than one Etsy shop?
If you have more than one Etsy shop, you might need to register with your state or country with a second business license, or with a DBA (Doing Business As), which basically lets the state know that you’re operating a business under an assumed name. This is pretty common, so it’s another thing to check out before you sell anything.
I have multiple names that I sell under on Etsy, and I have DBAs registered with my state for all of them.
The law here says that you have to have a business license or DBA before you sell ANYTHING, so if I sold things without registering with the state I’m technically in violation of state laws.
Make sure that you’re clear on what’s required before you start selling!
Do I need to register to collect sales tax to sell on Etsy?
Etsy collects and remits sales tax for its sellers in most states and countries where it’s required to, but you’ll need to check to make sure that your location is included. If it isn’t, you might have to register to collect and remit sales tax to your state yourself.
To see the current locations where Etsy collects and remits sales tax, click here: Etsy sales tax information for US states
To see all of the articles about how VAT is collected and how sellers should have the information set up on Etsy, click here: VAT on Etsy articles
Registering for sales tax with your state is usually a separate process from just getting a business license, but it’s usually done at the same time.
If you have a website where you sell separately from Etsy, or if you sell on a platform that doesn’t collect sales tax for you, you’ll be responsible for collecting and remitting the tax to your own state based on the laws there.
Definitely check with your state tax authority about how you should be doing this, because they’ll want you to do it a certain way, but it’s different from place to place.

To read about what happens when you deactivate an Etsy listing, click here.
List of State tax authorities for the US.
Here’s a list of the websites for each US state. Click the state to go to the official website to start your business license research. You’ll also need to find the laws for your county or city because as I mentioned above, there could be additional regulations that they have.
One thing to mention, if the state website says that the state doesn’t have a general business license, that doesn’t mean that you don’t need one!
My state has that message, but business licenses are issued by the local county or city, not by the state itself. You’ll need to make sure that you’ve checked everything out on the local level to make sure that your business is covered.
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming