Laws and legalities of selling on Etsy
In addition to a business license, your retail business may need to comply with other legal requirements. For example, you cannot sell copyrighted material on Etsy — it’s illegal and against Etsy policy. Some sellers believe crediting the original creator can avoid copyright infringement on Etsy. But that isn’t the case. The only exception is if you have the creator or copyright holder’s permission.
Other legal considerations for selling on Etsy include:
- Etsy sales tax. You may have to collect sales tax even if your sales are online only. Remember that states can have different laws for collecting Etsy taxes on physical goods versus digital products.
- Business names. States or local governments can require you to register a Doing Business As (DBA) if your store name differs from your legal name.
- Federal tax ID. Also called an Employer Identification Number (EIN), you may need a federal tax ID for your Etsy business.
- Selling food on Etsy. You can sell food on Etsy, but be aware of the many government regulations on making, packaging and selling food.
How to protect your Etsy store with business insurance for ecommerce
You don’t need business insurance to open a store on Etsy. Etsy doesn’t require it to sell. But think about this: Anytime you sell products to people, you put yourself — and your finances — at risk.
If you didn’t read Etsy’s terms of service, you might not know that you agree to release the platform of any liability — and place it squarely on your shoulders. Something as small as scented soaps could cause a harmful rash and potentially trigger a lawsuit. Without business insurance to protect you, you’re financially responsible.
Ecommerce liability insurance can help. If you or one of your products causes an injury, illness or other damage, general liability insurance and professional liability insurance coverage can help protect your personal assets.
How NEXT helps protect your Etsy ecommerce business
If you have an Etsy shop or you’re thinking of starting one, small business insurance can help protect your store and finances.
At NEXT, insurance is simple and affordable. Our ecommerce insurancecan help cover some financial losses such as medical payments if a customer gets hurt, and protection if a competitor claims you stole their ideas.
Our application process lets you review your policy options, purchase coverage and get your certificate of insurance in less than 10 minutes.
Start a free instant quote with NEXT today.
