Etsy is one of the most popular marketplaces in the world. There's a big selection of products, plenty of customers ready to shop, and plenty of opportunities to make money. It's for this reason that many businesses call Etsy home and as a platform to sell their products. That said, if you live in Virginia and plan on using Etsy as a way to sell your products, it's important to know what the rules and laws are. For example, you might need a business license to shop on Etsy.
A business license is a permit that's issued by government agencies that allows you to conduct business in a specific geographic location. Professionals like lawyers, doctors, insurance salespeople, real estate brokers, and even tradesmen need a license to offer their services. What's more, anyone who registers an LLC or plans to sell online in Virginia should also get a business license, even on Etsy.
Read on to learn more below.
Do You Need a Business License To Sell on Etsy in Virginia?
Contents
What Is Etsy?
Etsy is a marketplace that connects people who sell products to people who want to buy products, which seems simple at its core. However, Etsy is more of a niche website and is known for having high-quality products that are made with passion compared to other marketplaces like Facebook Marketplace.
For example, most sellers on Etsy are artists, people who embroider clothing, or craftsmen who make things. The whole purpose of Etsy is to sell handmade goods, art, vintage items, and crafting supplies.
This gives it a unique distinction from other marketplaces and makes it a great place for small business owners who specialize in arts and crafts to make a living. In fact, more than 7 million private sellers sold products on Etsy in 2022, and that number is projected to grow for 2023 and 2024.
Who Can Sell on Etsy?
Etsy makes it easy for everyone to get involved on the platform. On the customer side, all you need is an email and a purchase method to get started. On the seller’s side, you’ll need to be over the age of 18, have a valid email address, and live somewhere that Etsy accepts payments. While this isn’t everywhere, Etsy is popular in most countries.
Aside from the basics, Etsy requires credit card or banking details and a specific item that you will sell. The item has to be vintage, handcrafted, or some type of art because you can’t just sell anything on Etsy. It’s also important to note that Etsy charges a fee for you to list a product for at least four months or until it sells to protect customers from scammers. There is also a transaction fee for each sale that totals about 6%.
There are also special business plans you can choose from that can help you market your account.
Does Etsy Require a Business License?
Etsy does not require a business license because it is a national company that follows federal laws. Therefore, there is no business license requirement for sellers on Etsy. Still, Etsy does require you to follow the law, so it’s important to get a permit or business license in your state if you think you need one. You can check online or contact local agencies in your area to learn more.
Etsy also isn’t known for enforcing these penalties or notifying you if you’re not following the rules. For this reason, it’s a good idea to be aware on your own to avoid legal problems down the road.
Do You Need an LLC To Sell on Etsy?
No, you don’t need an LLC to sell on Etsy. However, it does help if you plan on making a lot of revenue. An LLC can help you save money on taxes and reduce your liability when selling on the platform. Plus, starting an LLC in Virginia is a breeze, and you only have to fill out a few forms. While a lawyer can help, that’s unnecessary as long as you work with a reputable resource.
Do I Need a Business License To Sell on Etsy in Virginia?
Virginia has a handful of laws and regulations that pertain to selling crafts and items in general, so yes, you usually need some type of license to sell on Etsy if you live in Virginia. While the state government doesn’t have licensing requirements, local governments within Virginia’s counties require you to register for a license so that they can collect taxes from you. Therefore, it’s a good idea to get a license if you plan on selling anything in Virginia to avoid tax problems.
That said, this may only apply to businesses. If you’re just selling something once or running a small operation, you might not need a business license or seller’s permit in Virginia. Still, we recommend learning more about business licenses in Virginia if you plan on selling anything on Etsy.
If you want to know if you need a business license to sell things on Etsy, consider the questions below.
Do You Have a Business?
First, it’s also important to consider the status of your operation. For example, you might not think that you have a business, but the IRS might feel differently. According to the IRS, if you’ve been spending time on the platform selling and have made a profit in the last three to five years, the IRS can classify you as a business – even without an LLC designation.
If you own a business, then you need a business license to sell on Etsy in Virginia, but the benefit is that you can write off any expenses from Etsy.
Do You Have a Hobby or Side Hustle?
If you’re using Etsy as a hobby or side hustle to make a few extra bucks here and there, it might not be worth it to go through the trouble of registering your business in Virginia. This is because the profits you make won’t be too high, and if you make less than $600 per year, you don’t have to claim income anyway. If you do make over $600, make sure you make a note of how much you make and include it in your income for the applicable tax year.
The downside of not being a business on Etsy is that you can’t write off expenses. Even if you have to spend money to make money, that doesn’t count unless you’re a business.
How To Get a Business License To Sell Items on Etsy in Virginia
Obtaining a business license isn’t challenging if you know where to start. There are a few steps that you have to follow, and you should take things slowly to ensure that everything is done properly. First and foremost, you need to come up with a name for your business.
Choosing a Name for Your Business
When choosing a name for your company, it’s important to think of a memorable name. You can leverage this on Etsy to get repeat customers. It’s also a good idea to consider a name that’s SEO-friendly to help your product come up when someone runs a search on Etsy.
Once you have the name, it’s time to register it. This can be done by filing the name with Virginia’s local government.
Also, make sure you check for trademarks to see if the name you want to go with is already in use. The process for choosing a name does not vary too much by state, but there may be some subtle differences.
Determine the Structure of Your Business
Another important step is to determine the structure of your company. Businesses in the United States can be LLCs, sole proprietorships, and partnerships – this is not an exhaustive list, but these are the most common.
Sole proprietorships and partnerships have the most risk but don’t require a lot of paperwork. While you don’t have any liability, the fees are more affordable, and there is less red tape getting started.
On the other hand, LLCs are more expensive to maintain, but you have liability protection in case anything goes wrong; when you’re selling on Etsy, it’s always a good idea to have liability protection. Plus, you get tax advantages and the ability to take out business loans or lines of credit.
Disclose the Nature of Your Business
When registering a business in Virginia, you also have to disclose the nature of your company. The state and county need to know what you plan on selling, how you make it, and how it should be taxed. During this phase, you’ll also find out if you need additional business licenses to sell on Etsy. Most companies do this by providing the county or state with a business plan. However, other methods are available to you.
Sales Permits and State Tax Accounts
Virginia also requires permits and state tax accounts. You’ll need to obtain these if you plan on selling in Virginia to follow the state’s laws and pay your taxes. Avoiding taxes is always problematic, but applying for these permits and accounts is not difficult. In fact, you can do so online at an affordable price.
Other Permits and Licenses You Need in Virginia To Sell on Etsy
Other permits and information may be required when selling on Etsy in Virginia. You’ll need an EIN, a seller’s permit, and a home occupancy permit if you plan on running the operation from your home.
You can apply for these permits through your local government or municipality, and the EIN can be requested from the IRS. You’ll also need a registered agent to maintain the business in Virginia.
As for the home occupancy license, it’s a license that allows you to sell things from your home. In Virginia, the fee for a home occupancy permit is about $25, but this can vary depending on the county. Some counties in Virginia may also require a zoning permit to sell out of your home. For example, in Campbell County, you need a zoning permit and have to be the owner of the property, or you have to clear it with the owner. Other counties also have unique rules, like Fairfax, which requires you to be the owner of the home.
FAQ
Still have questions about selling on Etsy in Virginia? Find answers to some of the most common questions below.
Do You Need a Tax ID to Sell on Etsy?
No, you don’t need a tax ID to sell on Etsy. All you need is a social security number to start selling on Etsy. That said, if you own an LLC and plan on selling on Etsy in Virginia, it’s a good idea to get a business license and an EIN number, which will serve as your tax ID.
Does Etsy Collect Sales Tax in Virginia?
Yes, Etsy will collect sales tax on sales in Virginia. On top of its transaction fee, the platform will deduct the necessary amount of taxes from the sale. That doesn’t mean you can ignore these taxes, and you should still keep them in your files to avoid any legal problems.
How Much Does a Business License Cost in Virginia?
Business licenses in Virginia vary in price because they are based on the county that you live in and the geographical location where you want to sell your products. On average, the cost of a business license in Virginia is between $15 and $50 if you make less than $100,000. If you make more than $100,000, you might have to pay 30 cents for every $100 of projected revenue.
Start Selling on Etsy Today!
Etsy is one of the best platforms to take advantage of if you run a small business. The website is known for having great products, and many people do most of their business through Etsy. What’s more, Etsy provides its users with protection, so you don’t have to worry about getting ripped off or going through the hassle of filing a claim against someone.
That said, if you sell products in Virginia, you typically need a seller’s permit or some type of business license. This applies to selling from your home, but you might be able to avoid the lengthy process if you’re not a business and just making a one-off sale.
Ultimately, make sure you have everything in order before you start selling on Etsy. It’s better to be over-prepared than under-prepared.