Essential Steps to Legally Registering Your Etsy Shop | For Non-Business Minded Creatives
Battling Fear,Anxiety, overwhelm, and Confusion
About five years ago, I quit my full time job and decided to pursue a creative business. I’d made some money photographing weddings and portraits as well as had some luck designing wedding invitations for a handful of couples, so I thought I potentially had an opportunity to create a successful business. A few years into my ups and downs business, I saw an idea on Pinterest for custom calligraphy wedding vows and decided to try my hand at lettering my own wedding vows. I loved how they turned out so much, I posted them on the internet. And within a month of posting them, I had three different people ask me to hand-letter their wedding vows. I saw an interest in what I was doing and thought, I need to narrow down my business endeavors, Maybe there’s a market for this?
I set up an Etsy Shop, and began to sell wedding vow calligraphy! To customers and clients who weren’t just my mom or close friends. It felt amazing.
But under my “doing what I love and making money from it” excitement, was a big pile of anxiety.
Every blog or business resource I found emphasized the importance of establishing my business legally. I didn’t even know where to start when it came to making my business legal, creating a business plan, or opening a business bank account.
The business part of my business was overwhelming me.
I can’t tell you how many times I’ve sat, staring at the wall, discouraged, numb, and incredibly overwhelmed…unable to move because of my fear of running a business. Am I doing it right? Am I legal? What if the IRS audits me and I haven’t been paying the right amount in taxes? Will I go to prison?! What if I don’t understand how to grow my business and it flops (I still ask this one alllll the time)?
Every day I was questioning why having a fun business turned into having an anxiety attack.
Am I the only non-business minded person who gets overwhelmed with the legalities of it all?
While I’m no legal counsel, and the way you register and run your business is up to you, I thought it might be helpful to share the essential steps to setting up your Etsy Shop legally. I’m not calling these “basic” or “easy” steps because I hate when people tell me something is going to be easy. When someone tells me what I’m doing should be easy, it only makes me feel more discouraged and stupid when it turns out to be hard or confusing. But just because it’s hard or confusing to register a business doesn’t mean you can’t and shouldn’t. I’m here to help you out!
Steps for Making it Legal
Consider Your Fear
What about registering your business is scary? What about running a business keeps you idle in fear? I’ve found that identifying those fears really helps me move past them, instead of being triggered by them. Fear of the unknown makes humans procrastinate, so write down and identify your fears and discuss them with a trusted friend, mentor, or especially with another creative small business or Etsy owner.
Shameless Plug: I found a bunch of creative small business owners through Rising Tide Society’s Tuesdays Together groups. Check to see if there’s one in your city, and if there’s one in a city that’s one to two hours away, it’s worth every penny to connect with and learn from these creative small business owners. You don’t have to be a part of Honeybook to attend theses meetings.
What Kind of Business Do I Own?
Because this post is for one-person owned Etsy shops who are making between $200-$30,0000 a year, it is easiest to start out with a business called a Sole Proprietorship. There are a handful of different kinds of businesses in this world (and Etsy’s in-house attorney provides a beginner’s understanding of what types of businesses can be found on Etsy) and it’s important to read about them and understand them, but if you are either using Etsy as an on the side job or want to grow your Etsy into a bigger shop, it never hurts to start with a Sole Proprietorship. It means you own the business and are liable for the business. This means if you pay your bills and keep an honest business (like, honest and clear policies in your Etsy shop), you should be okay.
If your shop gets a bit bigger, more popular, and you begin adding employees or add a partner, then you can and potentially should look into changing your business type. It’s best to consult an accountant (consultations over the phone are oftentimes affordable or free) or a business owner who has experience moving beyond a Sole Proprietorship. When did they change their business type? How much were they making when they switched away from being a Sole Proprietor?
The majority of Etsy Shops out there are Sole Proprietorships.
What is the name of my business and how (and why) do I make that legal? Naming your business is part of the fun isn’t it? You need to name your business and register that name in the city you live in. Prepare 1-3 different business names just in case the name you want to name your business is already taken (this is highly unlikely, but you never know!).
I moved to New York City and typed in “How to register my DBA (Doing Business As) in New York City”. Google will most likely help you find the answer! There’s typically a Government office you go to with a form to fill out that gets notarized. There’s typically a fee for this. I’ve paid anywhere from $30-$107. On this form you will declare what type of business you own (a Sole Proprietorship, remember?!). It might be unclear where to get the form when you arrive at the office, but if you ask around, most government workers will know where to get the form, and where to take it to make it official. I’ve read that if your business is your first and last name (and only your name), you don’t need a DBA. I would really triple double check what that means where you live, because it really depends on the place.
Where do I get a Sales Tax Certificate?
You probably have to apply for a certificate in person at the County Courthouse or online (so it’s best to do this directly after you make your business name official!). In Texas, I signed up for mine in person. In New York, I applied for it online. Once again, this is where googling is helpful. Typing in “Sales Tax Certificate for COUNTY or STATE” you live in should yield some results. If you just can’t find this information, go ahead and ask about it when you go register the name of your business. Those government officials might be able to help you or point you in the right direction!
How Do I Set Up My Finances?
Don’t skip this step and don’t let that fear of the unknown keep you from managing your finances! There were years when I first started my photography business, I didn’t really keep up with where my money came from and where it was going, and that made life really hard. Saving for new gadgets, saving for taxes, or saving to invest in yourself or your business—- it’s a whole other world of confusion and frustration, isn’t it? I know, I get it. I’ve been there. I still am there sometimes.
You CAN be an amazing and smart business owner with my “Don’t Feel Stupid” Money Management post.
You’ve got this!
The good news: You can do this.
The hard news: Expect it to be more frustrating than you thought. Expect yourself to feel a little bit “huh?” Or “Am I doing this right?”. And expect to make more than one visit to the Bank or to the County Courthouse because you didn’t bring the correct forms or form of I.D. Expect the government website you’re using to be confusing and not super helpful (but be surprised at what information they DO provide and how some of it actually is helpful).
If you ask questions of a government official (like, “I’ve registered my business, where can I get a Sales Tax Certificate?”), they may or may not know the answer. They may look at you like you are stupid for not knowing the answer to your own question. You might feel stupid. You are not. They are not either. Their job isn’t glamorous and they’re responsible for a lot of thingsThey may be the most helpful person you’ve talked to yet. It really depends on who you’re talking to. Give them grace. Give yourself grace.
Go get ‘em!
When it comes to actually operating your business, it’s up to you to learn, be mentored, and figure out how to grow. I’ve sat across from many entrepreneurs, and I know one thing: we’ve all got an opinion about how to run a business. I’ve found it SUPER helpful to seek guidance from other people doing something similar to my business. A photographer may or may not know a lot about product based businesses, but a jewelry maker would. So for me, finding other Etsy shop owners who run product-based businesses, is a really helpful way for me to grow and learn.
The best place to start in running a business, is to admit you don’t know it all, but are willing to try to figure it out.
You can start a business, it isn’t too hard for you. Breathe through it all, and take one step at at time. You’ve got this.
What questions and comments do you have? I’m here to answer them as best I can!
High fives,
Stacie