How to start an Etsy business: Your complete guide

Not so long ago, if you wanted to sell your handmade or vintage item, you needed to find a way to do so in person. But thanks to the rise of e-commerce, your options have exploded. While you can list products on sites like Amazon and eBay, you might have the most luck getting in front of more than 96 million buyers actively looking for vintage and handmade goods.

Enter: Etsy.

Over 9 million people have leveraged Etsy to sell handmade and vintage goods to people all across the globe. And if you’re considering joining them, you’ll need to figure out how to start an Etsy business. Fortunately, we’ve gathered all the steps you need to take here.

1. Create an Etsy account

You’ll first need to set up an Etsy account. The platform makes this relatively easy: Just head to Etsy and click “Sign In” in the top-left corner (This is the easiest way to get started).

In the sign-in popup that opens, choose “Register” from the top-left corner. You can fill out the form to establish your account or use Google, Facebook or Apple logins.

You’ll get an email from Etsy to confirm your contact info. Follow the steps to get your account set up.

2. Set up your storefront

Creating your account is the first step as you learn how to start a small business on Etsy, but you can’t stop there. You also need to establish yourself as an Etsy seller. That means heading to the Seller page while you’re logged into your account and clicking “Get Started.”

You’ll need to answer a few questions to set up your Etsy shop, like where your business is located and which language and currency you want to use. As part of that process, you can also get resources from the company, like selling internationally and branding your shop.

Note that you don’t technically need a business license to sell on Etsy, but local rules still govern you. Check whatever legislation applies in your jurisdiction to find out if you need to get licensed before you can start selling.

While you don’t always need a license, you do need to be ready to choose your shop name. It has to be between 4 and 20 characters with no spaces, special characters or accented letters. (Don’t stress too much here — you can change your shop name later.)

3. Add items to your shop

You’ll need to stock your shop as you continue through the Etsy seller setup process. This can be one of the biggest hurdles as you figure out how to start an Etsy business because you can’t establish your shop without this piece. In other words, if you’re not ready to upload pictures of your products, write descriptions, and decide on pricing, you won’t be able to set up your Etsy shop.

In addition to listing the products themselves, you also need to make some shipping decisions. Fortunately, this is one of the areas where it can be easier to start a business on Etsy than on other sites. Etsy can calculate shipping costs for you and allows you to buy your shipping labels directly through the platform.

For help listing an item, Etsy has a guide.

4. Set up payment and billing details

After you click “Save and Continue” on the “Stock your shop” page, you’ll get taken to a page focused on getting you paid — and paying Etsy.

Here, you’ll need to connect a business bank account so Etsy can pay you, and you’ll need to add a credit or debit card to pay the company.

If you have a U.S.-based bank account, connect it to your Etsy shop through Plaid, which has several tools to keep your data safe. Etsy requires sellers to set up two-factor authentication to further safeguard your info. Once you do that, you’ll be able to get your shop established.

5. Open your Etsy shop

Congrats! Once you reach this step, you’ve officially figured out how to start a small business on Etsy.

At this point, you’ll have the link to your shop to share with friends, family, your social media network and anyone else you want. You can officially start advertising too, whether buying an ad on Facebook or a spot in a local paper.

How to personalize your Etsy shop

While your shop is technically open, meaning you’ve mastered how to start a small business on Etsy, there’s a lot more to explore when it comes to actually running it.

You’ll want to personalize your shop to stand apart from your competition. You can do that through your:

• Shop icon (essentially, your logo on Etsy)
• Banner
• Welcome message

You can customize those through your Shop Manager. Ideally, you want your icon and banner to accurately reflect your shop and flow well with the imagery you’ve chosen for your product listings.

Apply that personal touch as you interact with customers, too. Stay responsive as people buy your products or message you through your shop. If you consistently provide good customer service, you could be eligible to become an Etsy star seller.

How much does it cost to sell on Etsy?

Before you start a business on Etsy, you want to make sure it’s going to be profitable. As you’re crunching the numbers — from totaling up the cost of materials to budgeting for shipping costs — don’t forget to factor in Etsy’s fees.

The platform charges sellers in three different ways:

• Listing fees. Etsy charges a flat rate of $0.20 per listing. That fee applies whether or not the item sells. This cost can go up if you decide to add options like auto-renewal, which means the item gets automatically relisted on your page after it sells.
• Transaction fees. When one of your products sells, Etsy collects 6.5 percent of the order total (including shipping, gift wrap costs, etc.).
• Payment processing fees. These vary by location, but in the U.S., sellers pay 3 percent plus a $0.25 flat rate per payment that is processed through Etsy.

How to finance your Etsy business

Starting an Etsy shop may include costs like buying materials to make your products and keeping inventory on hand. While some Etsy owners might take these costs out of pocket, you can also finance your Etsy business in a number of ways, including:

Small business loans

Small business loans can be a great way to finance your Etsy business if you have some market experience under your belt. Lenders often want to see that you’ve been in business for a few years and generate a steady flow of income when approving you. You’ll need to provide business bank and financial statements to show that you can pay for the loan. That said, you can find lenders that offer startup financing, lowering the barrier to eligibility.

Crowdfunding

Crowdfunding allows you to raise money for financing your business, usually through an online platform like Kickstarter or Kiva. You can gather financing from a large group of people interested in investing in your business. Depending on the type of crowdfunding you use, you may not pay interest or may not even need to pay the investors back. Types of crowdfunding include:

• Donation crowdfunding raises money through donations that you do not have to repay
• Reward crowdfunding offers individuals a reward like swag or the product you’re creating in exchange for funding
• Debt crowdfunding allows you to borrow money that you will repay with interest, like a business loan offered through a large group of individuals
• Equity crowdfunding gives investors ownership of your business in exchange for financing

Small business grants

Small business grants are a form of funding that your business will not have to repay. You can find small business grants from federal, state or local governments, and some corporations fund their own private grants. The amount of funding varies with the grant, but even a low grant, like $5,000, might be enough to get your Etsy business started.

Because grants provide free access to money, they tend to be competitive. You will need to meet the qualifications outlined for the grant application. You’ll also need to be patient about hearing back from the grant organization since they can take weeks or months to announce the winners.

Small business credit cards

Small business credit cards are an ideal way to finance short-term costs, and many come with rewards like cash back or travel points. They may require strong personal credit like a personal credit score of 670 or higher, though you can find business credit cards for bad credit. Otherwise, credit card companies don’t look as closely at your business’s time in business or financial statements the way a business loan does.

To avoid paying interest, you’ll want to pay the balance in full each month. Doing so will mean that you’ll receive a grace period of at least 21 days from your next statement to the time the credit card payment is due.

Whether or not you make payments in full, your business credit card can help you build positive business credit as long as you make payments on time.

Bottom line

Now you know the steps you need to follow to figure out how to start an Etsy business. Fortunately, the platform makes it relatively easy. Really, the hardest part is getting your product pricing and photos set up so you can load them in as you establish your shop. As you figure out that pricing, make sure you account for the fees Etsy charges its sellers.

Frequently asked questions

• How do I attract buyers on Etsy?

  Your product listings go a long way here. Make sure the descriptions are accurate and engaging, and choose well-lit, clear product photography. Adding videos to your products can help them get more attention. When you do make a sale, make sure you ship things promptly to encourage the buyer to leave you a positive review because more stars can help too. Beyond that, you can turn to external marketing, like social media posts and ads.

• Do you need an LLC to sell on Etsy?

  You’re not required to register your business as a limited liability company (LLC). In fact, the majority of Etsy sellers operate as sole proprietors.

• Does Etsy report my shop income to the IRS?

  Etsy will usually report your gross income to the IRS in the form of a 1099-K. You’ll get a copy of this form too. But even if you don’t, you’re still legally required to report this income on your taxes. Because of this, some people choose to establish, sell and pay their Etsy taxes through an LLC. As an added bonus, the LLC offers you a large measure of liability protection.