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Do You Need a Business License to Sell on Etsy?

A question that often arises has been puzzling soon-to-be online sellers - do you need a business license to sell on Etsy? Navigating the legal requirements of starting an online shop can be a bit overwhelming, but thorough research and clear understanding are crucial for getting your Etsy journey started. In this guide, we will shed light on the most important factors that impact reselling products on this online marketplace platform.

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Do you need a small business license to sell on Etsy? Get all the details right here!

According to Etsy's policies, online sellers do not require a business license to get sales on the platform. Furthermore, what might affect your online shop is the area where you are located, and sometimes sellers must have a permit from their country, local, municipal, or state agencies.

Individuals who have started an e-commerce enterprise with an aim to expand would, according to the country's legal guidelines, require a business license. However, in case the online store is just a hobby for you, no license will be required.

Do You Need a Business License to Sell on Etsy UK?

UK sellers don't require any license to create their stores; however, everyone should still check with the municipal offices. In case you start posting listings and your monthly earnings surpass £1,000, you will be obliged to register your online shop with HMRC, and your earnings will be susceptible to taxes.

Woman holding a phone and typing on a laptop
Keep an eye on your earnings so you can register your shop in due time!

What Considerations Do You Have to Have In Mind if You Want to Expand Your Store?

You want to grow your store and become successful in e-commerce? Then, you should register the enterprise and obtain a license. There are different types of factors that determine that your enterprise needs registration and a license

The first factor is the type of products that are being sold. For some specific items, resellers must obtain a permit, which should be checked with the local government. There may be different rules for some items, such as healthcare products and used clothing

The second factor is the way you operate the shop. If you are partnered with a brand or a different company, a license will be required. The last factor is the revenue, and if the numbers turn out to be significant, check what kind of permit you should obtain.

Here is a helpful video with tips for success in this second-hand market.

What Kind of Store Is Considered Just a Hobby? Are You Still Required to Pay a Tax for Your Sales?

If you have a shop that is primarily used for personal enjoyment rather than financial gain, you might think that this means that it is just a hobby. However, in the world of the best online selling platforms, this is not the case. It's important to note whether you are making consistent sales and whether your revenue is below £1000. 

Tax obligations can apply when you surpass this threshold even though you are pursuing online shoppers just for fun. For an earning that is below this threshold, we must state that the government doesn't impose any extra obligations.

Tax reminder on a laptop
Are you just flipping items from your closet on the platform? Then, this is just a hobby

What Are You Allowed to Sell on Etsy?

Etsy's website welcomes unique sellers that offer a diverse range of products. The items that are allowed to be sold on the site include:

  • Handmade items such as artwork, clothing, jewelry, and home decor,
  • Toys,
  • Printables and digital artwork,
  • Unique furniture for a home,
  • Craft supplies such as beads, fabrics, and tools,
  • Eco-friendly beauty products,
  • Handmade accessories.

On the other hand, mass-produced products and items that violate intellectual property rights or contain hazardous materials, as well as items with explicit content, are not allowed to be sold on the platform.

A person working on an artwork
The multi-vendor marketplace platform is a space for creative entrepreneurs!

What UK Taxes Do You Need to Pay For Earning More Than £1000 per Month?

An income that surpasses £1,000 a month is considered self-employment earnings. You will have to register as self-employed with HMRC (HM Revenue & Customs) and keep an accurate record of your sales and expenses. This includes the earnings from the Etsy sales. 

Depending on the total annual revenue, you might also have to register for VAT (Value Added Tax) if the revenue exceeds the VAT threshold. Businesses must start paying VAT in case the taxable turnover exceeds £85,000.

Are There Any Tax Deductibles?

We have to state that reducing taxable income in the UK is possible for online sellers, just like for any self-employed individuals. These deductibles can be instrumental in offsetting the expenses associated with running the store and producing items. 

The most common deductible expenses include the cost of materials and supplies used to create the products as well as shipping and packaging expenses, transaction and listing fees as well as marketing and advertising costs. It's necessary to keep accurate records of all costs to substantiate claims and ensure compliance with tax regulations.

A person using a calculator
Make sure that you research all deductibles on the HMRC website!

Start Selling on Numerous Sites With a Crossposting Tool and You Profit From Your Etsy Shop

In case the online selling world is not just a hobby for you, we suggest using helpful crossposting software to offer your listings on various marketplaces. From eBay and Vinted to Depop and Shopify, a great crossposting app can be the secret helper that will increase your sales. One of the great advantages of multichannel listing software is that it can amend changes in your inventory for you, and it monitors the sales efficiently 24/7. 

If you want to invest in the best crosslisting software, give Zipsale a try. Our software for selling online is just what you require to reach new potential buyers quickly and effortlessly. Register with us right away!

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