How to sell on Etsy
Last reviewed . General information, not legal or tax advice.
To sell on Etsy, create an Etsy account, set your shop's location and currency, choose a shop name, list items you made, designed, handpicked or sourced, and add how you get paid and how you pay fees. Etsy charges $0.20 per listing, a 6.5% transaction fee and, in the US, 3% plus $0.25 for payment processing.
What does it cost to sell on Etsy?
Etsy has no monthly fee for a standard shop; you pay per listing and per sale. These are the rates on Etsy's own selling page for a shop with a US bank account:
| Fee | Amount | When it applies |
|---|---|---|
| Listing fee | $0.20 | Each listing you publish; it stays active for four months or until it sells |
| Transaction fee | 6.5% | The sale price, including the shipping price you set |
| Payment processing (US) | 3% + $0.25 | Each sale paid through Etsy Payments; rates vary by bank country |
| Offsite Ads fee | 15% | Only sales that come from Etsy's ads on other sites |
| Currency conversion | 2.5% | Only if your listing currency differs from your payment account's |
| Shop set-up fee | Varies | One time, for some new shops; Etsy shows the amount before you finish setup |
Offsite Ads are optional for most sellers, but Etsy says they may become required depending on how much a shop sells on Etsy in a 12-month period. Check the fee page again before you set prices, because Etsy sets and changes these rates.
How much of an Etsy sale do I keep?
A worked example using the rates above. You sell a candle for $30 and charge $5 for shipping, so the buyer pays $35 before any sales tax. Assume the processing percentage applies to that $35:
| Item | Without Offsite Ads | Sale came from an Offsite Ad |
|---|---|---|
| Listing fee | $0.20 | $0.20 |
| Transaction fee, 6.5% of $35 | $2.28 | $2.28 |
| Processing, 3% of $35 + $0.25 | $1.30 | $1.30 |
| Offsite Ads fee, 15% of $35 | None | $5.25 |
| Total Etsy fees | $3.78 | $9.03 |
| Left before your costs | $31.22 | $25.97 |
From what is left you still pay for materials, packaging, the actual postage and your time. That is why fees belong inside the price, not on top of it: work out your unit cost first, then add the fees and your margin, as in how to price a product or service. A price that only works without Offsite Ads is fragile, since one ad-driven sale can wipe out the profit.
How do I open an Etsy shop?
Etsy lists the setup in this order; plan for the decisions behind each one before you start.
Create an Etsy account
Use an email address you will keep for the business, because buyers' messages, orders and Etsy's notices all arrive there.
Set your shop location and currency
Your listing currency should match your payment account's currency, or Etsy charges a 2.5% conversion fee on your sales.
Choose a shop name
Pick one you could also use as your brand. If it differs from your legal name, your state may require a DBA filing; see business names, DBAs and trademarks.
Create your first listings
Each costs $0.20 and runs four months. Photos, a clear title, materials, dimensions and processing time answer the questions buyers would otherwise message you about.
Set how you get paid
With Etsy Payments, buyers can pay by card, PayPal, Apple Pay, Google Wallet or Etsy gift cards, and Etsy deposits your sales into your bank account in your currency.
Set how you pay Etsy's fees
Add the billing method Etsy will charge for its fees, such as listing fees and any one-time shop set-up fee.
What can I sell on Etsy?
Etsy describes itself as a marketplace for original items. Everything listed must be made, designed, handpicked or sourced by the seller, as set out in its Creativity Standards and Seller Policy. If a production partner makes your design, or you list items you did not make, read those standards first to check that the item qualifies and how Etsy expects it to be described.
Federal product rules still apply on Etsy. Jewelry claims such as "handmade" or "sterling" have FTC definitions (starting a jewelry business), clothing needs fiber, origin and care labels (starting a clothing brand), and skincare is regulated by the FDA (starting a skincare line).
Does Etsy handle sales tax and income tax for me?
Partly. States treat Etsy as a marketplace provider. Texas, for example, names Etsy among the marketplace providers that must collect and remit sales tax on sales made through them. Texas still requires a seller based in Texas to hold its own permit and file returns, even if every sale goes through a marketplace. Rules differ by state; see seller's permits and sales tax.
Income tax stays with you. Under the IRS's Form 1099-K rules, a marketplace must send the form when your payments for goods exceed $20,000 in more than 200 transactions, and may send one for less. Whether or not a form arrives, the IRS says you must report all income from selling. Whether your shop is a hobby or a business for tax purposes depends on factors the IRS lists, such as whether you run it like a business, keep complete records and work to make it profitable (IRS guidance).
Frequently asked questions
How much does Etsy take from each sale?
For a shop with a US bank account, Etsy takes a 6.5% transaction fee on the sale price including shipping, plus 3% and $0.25 for payment processing, plus the $0.20 listing fee. On a $35 order that is about $3.78. A sale from an Offsite Ad adds a 15% advertising fee, which is about $5.25 more.
Are Etsy Offsite Ads mandatory?
Not for most sellers. Etsy says offsite advertising is optional for most shops but may be required depending on how much a shop sells on Etsy in a 12-month period. You pay the Offsite Ads fee only on sales that come from those ads, so price your items to stay profitable when it applies.
Do I need an LLC or a business license to sell on Etsy?
Etsy's setup asks for a shop location, a payment method and a billing method, not an LLC. Licenses and registrations come from your state, county and city, and depend on what you sell and where. An LLC is optional; see LLC vs sole proprietorship and business licenses and permits to decide what you need.
Does Etsy send me a 1099-K?
Etsy must send Form 1099-K when your payments for goods exceed $20,000 in more than 200 transactions in a year, and it may send one for lower amounts. Either way, the IRS says you must report all of your selling income on your tax return, so keep your own records of sales, fees and costs.
Sources
- Sell on Etsy: fees and frequently asked questions, Etsy. https://www.etsy.com/sell
- Marketplace Providers and Marketplace Sellers, Texas Comptroller of Public Accounts. https://comptroller.texas.gov/taxes/sales/marketplace-providers-sellers.php
- Understanding your Form 1099-K, Internal Revenue Service. https://www.irs.gov/businesses/understanding-your-form-1099-k
- Know the difference between a hobby and a business, Internal Revenue Service. https://www.irs.gov/newsroom/know-the-difference-between-a-hobby-and-a-business
This guide is general information, not legal or tax advice. Rules differ by state and city and change over time, so confirm the details with the official sources above or a licensed professional.