I just sold my first pen on House of Doers.
I would like to eventually start my own business. I know I will need a business license. If I am doing this as a hobby and open an online store, do I still need to get a license?
That depends on the regulations in your specific state and city.
I will check with the town hall. Thank you very much for your help.
Hi, sorry --was on a break for a while–No, you don’t need a license to open an on-line store (at least if your own website on on Etsy). But I suggest getting a business license now–you can use it to start getting materials and supplies at wholesale, or just tax exempt, and you can start capturing the expenses for your business (machines, tools, materials, packing & shipping supplies, etc.).
And start filing your taxes as a business–though that’s based on my experience only (in WA state). After a 5 or 7 years without making profit with this approach (was about 15 years ago, so might be different rule now), the IRS decided I was a hobby, and not to bother with business side–but the next year I did start making enough to be considered a business again, and fortunately all the depreciation for items I bought still continued/carried on (I use TurboTax).
But your state, who issues the business license, may not care about the IRS definition–if you have to collect sales tax on anything you sell in your state, you have to file with your state and pay them that sales tax collected (unless the on-line shop is in a platform, like Etsy, where the platform collects & pays to the state, so you note that in when you file). And check with your city, too–though the city license is a lot easier to wait on getting until you feel you are past “hobby”.
And it’s a lot easier to figure out all the things you need to do as a business while you’re not so busy, and your time is not swamped with actually making things & filling orders and then trying to catch up with all the paperwork and learning the filing and the “oh, crap” and trying to catch up.
It may be a little intimidating at first, but states & many cities have really good info on their websites, and you may even get help from a local small business group, too.
Thank you so much for your input!
I did send in my paperwork for a DBA license through my town. Currently waiting on the response from them.
Can I still set up my Etsy shop without my DBA and then go back and add it later? How many items should I have when I set up my shop? I know I should have a few “staples” like earrings or ornaments that are easy to produce. Other items will be custom items.
Thank you for your help, I greatly appreciate it!
You’re welcome–glad you’re getting your license going! For Etsy, you don’t need a license to set up your shop, and in fact there’s no place to enter any license info when you set it up (you use your SSN for tax ID #–but you can change that later if your business has its own tax # later).
For setting up the shop, I recommend looking at the Etsy handbooks/tips to get set up and all the shipping options & all, and the forum can be very helpful, too. And also you can get ideas from other shops w/ similar items. But good photos and descriptions are key. You don’t have to start with a lot–can start with just 1 listing to be open. But the more you have, the better the odds you’ll be found in searches–but their algorithms are a whole issue on their own. (And if you have a lot of similar items to list, once you have a basic description you like, just “copy” that, and edit w/ new photos and details as much faster than writing each one from scratch…). Good Luck!
Thank you so much for your help!