Etsy specializes in selling handmade goods to interested buyers. But do sellers on this platform need an EIN to sell their listed items?
Etsy sellers are considered independent and do not need an Employee Identification Number (EIN) to sell items. Etsy sellers are less likely to require any complex documentation to set up their store and make sales.
There’s still a lot more to know about the employment status of Etsy storeowners. That’s why information in this post will prove useful to sellers on the world’s most recognized handmade goods store.
Do I Need an EIN for Etsy?
Etsy users (buyers and sellers) do not need an EIN. All users can purchase and list items freely without requiring any form of employee identification.
You can trade cash for items or vice-versa without worrying about presenting an EIN.
Can You Use an EIN on Etsy?
Sellers who desire to update their tax information on Etsy can use an EIN or Social Security Number (SSN). However, it is not an express requirement that sellers must have an EIN to form tax reports on Etsy.
Most sellers on Etsy already report taxes on their personal returns. But sellers that are in a partnership or part of a limited liability company (LLC) must have an EIN.
Does Etsy Send You a 1099?
US law mandates Etsy to send out 1099-K tax forms to sellers. Etsy 1099-K forms report total sales income received from Etsy Payments within a calendar year.
In most cases, Etsy will send only one 1099-K form to a seller that meets federal/state requirements. Etsy storeowners with more than one shop will also receive one 1099-K form to combine all shops gross totals.
Does Etsy Count as Self–Employed?
Etsy sellers are considered as self-employed and are required to pay taxes from their net profit.
How Do I Get Proof of Income from Etsy?
First method to get your proof of income from Etsy: Downloading monthly/annual reports
You can download monthly reports of your sales activity directly from Etsy. First, you need to sign in to www.etsy.com and proceed to Shop Manager.
Then, select Settings and Download Data. You will see different options to download reports on this page.
Select the time duration you need as proof of your income and click on Download. The file containing your proof of income will be saved into a folder on your device.
Second method to get your proof of income from Etsy: From your taxpayer’s ID page
First, sign in to www.etsy.com and click on Shop Manager. Next, click on Finances.
After this, click on Legal and Tax Information. You can view the tally of your 1099 data and export this information onto your device.
Do Etsy Sellers Need a Business License?
Etsy sellers may not require a business license to list items on their storefront. A seller’s location, type of listed items, and pricing usually determines whether a business license is necessary.
Some locations may require businesses to register as an online business, even if sales are not long-term. Few states in the US may also require sellers to register a business license if sales exceed a certain amount.
How Do I Report Sales Tax on Etsy?
Some states might require you to collect and report sales tax on all your business interests. You can submit your sales tax on Etsy by first signing in to www.etsy.com.
Next, go to Shop Manager, then Finances, and Payment Settings. After these steps, select Sales Tax.
You can pick a rate depending on an entire state’s requirements, or just for zip codes (local sales tax). Next, set taxes for every location you need to collect a sales tax for, then click on Save.
After saving these preferences, Etsy will help you retrieve sales tax based on the rate you set.
Does Etsy Submit Sales Tax?
Etsy has an option to help sellers submit their sales tax, but only if these sellers enable this option. Many states don’t require online sellers to submit sales tax information.
But Etsy has this support to cover sellers operating in any state with such legislation.
Does Etsy Report Income to IRS?
Yes, Etsy reports your income to the IRS through a Form 1099-K. Earners on Etsy must submit information on income made from selling products after subtracting business expense.
If an Etsy seller does not receive a 1099-K form, the seller must report that income on tax returns.
Do I Need a DBA to Sell on Etsy?
Etsy sellers that list shop items under a different name must register a Doing Business As (DBA). The DBA can be registered within your locality and doesn’t require any special licenses to complete.
It may be impossible for sellers on Etsy to close sales without registering a DBA for their business name.