How to Start a Business on Etsy

Sep 12, 2022

If you’re looking to turn your passion into a small business, then Etsy is the perfect platform to do that. But where do you start?

As a designer, crafter, or artist, you’re likely already familiar with Etsy. After all, the international marketplace is home to thousands of online storefronts for everything from knitwear to fine jewellery.

In this article, we’ll answer some commonly asked questions about how to start a business on Etsy, such as:

  • What is Etsy?
  • What should you sell on Etsy?
  • What do I need before opening an Etsy shop?
  • What are the steps for starting an Etsy shop?
  • What are some tips for increasing sales on Etsy?
  • How much does it cost to start an Etsy shop?
  • How can I protect my small business on Etsy?

7 FAQs About Starting an Etsy Business

Questions for before you begin

1. What is Etsy?

Etsy, an ecommerce platform filled with handmade and vintage goods, was created in 2005. The founders wanted to replicate the kind of experience that buyers and sellers have at sprawling craft fairs around the world.

As of 2018, Etsy became a publicly traded company with more than 60 million listings, 2.1 million sellers, and 39.4 million buyers (with gross merchandise sales of nearly $4 billion).

If you’re a consumer looking for something unique and would like to support a small business, then Etsy is the place for you.

2. What should you sell on Etsy?

Before we discuss how to set up an Etsy shop, we must first ensure that selling on Etsy makes sense for you and your business.

Etsy is home to handmade and vintage goods. While handmade can mean a number of things, in this context it refers to products that you have created or designed yourself. This could include jewelry or artwork that you have made, articles of clothing that have your designs printed on them, or even digital products like designs and patterns that people can download. However, in order to sell your products on Etsy you must ensure that you are selling your own work.

3. What do I need before opening an Etsy shop?

While you may be excited about opening your shop, there are a few things that you should consider before you sign in and start setting up your shop.

Determine what you’ll sell

If you’re considering opening up an Etsy shop, then you must already have a product in mind that you would like to sell. You can start by taking a look at things that you’ve made and decide what you would like to put on the platform.

You can sell one-offs and originals, or you can offer multiple of the same item. However, if you want to sell items in multiples, then you’ll need to make sure that they’re quick and easy to replicate.

You can always start with a few things and then expand later, but it’s wise to ensure that your products share a cohesive theme or fall within the same genre. This will help establish your brand with potential customers.

Once you’ve decided what you would like to sell, you can begin taking photos of your products. You don’t necessarily need to hire a photographer to do this. You could set up some white poster board near a window with good lighting and take photos of your products with your phone camera (especially if you have portrait mode). Alternatively, you could order a lightbox off of Amazon.

Regardless of your methods, taking these photos of your products now will make things a lot easier once you’re ready to start creating your listings on Etsy.

Do your research

Now that you’ve decided what you’re selling, you’re ready to do some research.

You can use the Etsy search bar to look for products like yours. You should also spend some time searching and looking at similar shops, as this will help you discover what’s already out there and make it easier for you to find a way to set your products apart from the competition. Moreover, this will help you determine what price items like yours are selling for.

One of the most important things for successfully selling products on Etsy is finding a niche. If your listings are generic then they’ll get lost in a sea of similar listings and products. The more attention you bring to your listing details, the more visible your products will be to those searching.

Moreover, to have a profitable Etsy store, it’s critical for shop owners to understand their direct and indirect costs. This enables you to price your products appropriately and ensure that you’re able to make a profit, so that you can work on your Etsy business full-time.

Direct costs may include:

  • Materials to make your products
  • Packaging costs
  • Shipping expenses
  • Direct labour costs

Indirect costs may include:

  • Rental of your studio, workspace, or storage
  • Taxes
  • Etsy fees
  • Indirect labour costs, such as responding to emails, managing your store, or posting on social media
  • Professional fees, such as costs of an attorney or tax advisor
  • Business compliance costs, such as licenses, permits, business registration fees, fictitious name filing, annual report filing, etc.
Establish basic branding

A brand is the personality or identity of a company or product. It’s a way of distinguishing a specific line of products with a cohesive narrative. This includes the look, feel, and story behind the company, product, and/or business owner.

Your branding should inform customers about your shop without explicitly telling them. You can establish your brand with your shop’s:

  • Name
  • Logo
  • Banner image

It’s important to note that you don’t need to spend a lot of money in order to create your brand. There are plenty of free online tools such as Canva and Constant Contact’s Logo Maker that you can use to create your own logo and banner.

Open your business bank account

In order to make it easier to file your business taxes, it’s wise to set up a separate bank account to handle all of your Etsy transactions and costs. This allows you to have every business-related expense in one place and not mix it with your personal money.

Questions about setting up your business

4. What are the steps for starting an Etsy shop?

Now that we’ve covered some of the foundational work, we’re ready to discuss how to start an Etsy business. You can set up your Etsy shop in nine easy steps!

Step 1: Create your Etsy account

In order to create a seller account, you must first have a consumer account on Etsy. If you don’t already have an account, this can be easily made for free by clicking “Sign In” and then “Register” in the top right corner of the website. Once you’ve completed the registration, you’ll receive an email asking you to confirm your account.

After confirming your account and signing in, you can click the grey silhouette of a person in the top right corner of the webpage (right next to the shopping cart). When you click here, a drop-down menu will open. You can then click “Sell on Etsy” from the list of options. This will direct you to a new webpage where you will be able to click a black “Open Your Etsy Shop” button below the banner.

Step 2: Enter your shop preferences

The first stage of creating your Etsy shop is one in which you will be required to enter your shop preferences. You will be asked to choose a shop language, currency and country, and to state whether your Etsy shop is your full-time source of income or not. When finished, you should click “Save and continue” in the bottom right corner.

Step 3: Name your shop

The name of your shop must be unique from other Etsy shops, and must be a length of 20 characters or less. Moreover, you can only use unaccented roman letters and numbers.

Once you’ve entered the name you want, you can click “check availability.” You’ll only be allowed to change your shop name once after it’s been made, so choose carefully. After deciding on a name you may click “Save and continue.”

Step 4: Create your listings

Now you’re ready to create your listings (this is where your product photos will come in handy). It’s important to note that Etsy recommends having a minimum of ten different listings for a greater chance of visibility.

Each listing may include:

  • Photos
  • Videos
  • Listing details
  • Inventory and pricing
  • Product variations
  • Shipping information

You can preview each listing before you save it. Once you’ve added all of your listings, you can select “Save and continue.”

Step 5: Input your payment settings

Since Etsy needs to know your tax filing status, the first question you’ll be asked is whether your business is an individual or sole proprietorship, or an incorporated business (a registered legal entity).

If you select “individual or sole proprietorship,” then you’ll be asked to provide your country, full name, date of birth, address, phone number, and information regarding your Social Insurance Number (SIN).

If you select “incorporated business,” then you’ll need to enter details such as the name of the legal entity, the legal business address, and the business registration number. Etsy will still require a primary contact for the business, so you’ll also need to provide a full name, address, date of birth, and details regarding your Social Insurance Number (SIN).

After completing this section, you’ll be asked to input the country where your bank is located and to provide your banking details for the chequing or savings account that you want the money from your Etsy sales to go into.

Step 6: Enter your credit card information

Etsy requires their sellers to put credit cards on file in order to pay for their Etsy fees. You’ll be asked to provide the credit card number, CCV, expiration date, and the full name on the card.

For peace of mind, it’s wise to sign up for auto-billing so that Etsy can charge your card on the first of every month. Alternatively, you can pay anytime from the first to the fifteenth of each month.

Step 7: Open your shop

Once you’ve entered your credit card details and clicked the “open your shop” button, you can share your shop with friends, family, and followers!

Step 8: Update your bio

Adding a brief bio and photo helps communicate your brand to potential customers. This is where you can share some details about what inspires you to do what you do!

Step 9: Set up your shop policies

This step is critical. In order to reduce chat questions from potential buyers and to help in the event of disputes, it is important to include a policy section that’s clearly visible in your shop.

Elements of your shop policy that you may want to detail include:

  • Processing times
  • Payment options
  • Shipping policies
  • Return and exchange policies

Questions for after you’re up and running

5. What are some tips for increasing sales on Etsy?

Two excellent ways to increase sales on Etsy are to opt into Etsy ads and/or to maintain a social media presence on platforms, such as Facebook, Instagram, and TikTok. These are great ways to reach potential buyers and get your products out there!

6. How much does it cost to start an Etsy shop?

While setting up an account on Etsy is free, Etsy sellers are charged a variety of fees for using certain services. Moreover, it’s important for Canadian sellers to note that all fixed-cost fees are charged in USD. Etsy converts fees from USD to CAD at the market rate at the time the fee is reflected in your payment account. This conversion may change as currency exchange rates go up or down.

Some of these costs include:

  • Listing fee: A listing fee is charged to sellers when they list an item in their Etsy store. This fee is $0.20 USD per listing and it has to be paid regardless of resulting sales.
  • Multiple quantity fee: This is charged to sellers when they sell multiple quantities of a listing in one transaction. The fee is $0.20 USD per additional item. The listing fee covers the first item, so only additional quantities sold in the transaction are subject to this fee.
  • Transaction fee: A transaction fee is charged to sellers whenever they make a sale. This fee amounts to 6.5% of the total cost of the transaction (including the product price, shipping, delivery, and gift wrapping).
  • Payment processing fee: In Canada, there are two possible payment processing fees. For domestic orders or orders from the United States, Etsy sellers are charged 3% of the total sale, plus a per order fee of $0.25 CAD. For international orders, Canadian sellers are charged 4% of the total sale, plus a per order fee of $0.25 CAD.

A full list of Etsy’s fees can be found through their online Help Centre.

7. How can I protect my small business on Etsy?

As a small business owner, it’s important to ensure that you and your business are protected against any unforeseen events.

Insurance is a critical component to the survival and success of your business. Anything from defective products to third-party damage can be covered financially by small business insurance. This can help provide you with the peace of mind that your company is protected.

There are many factors at play that can affect your small business insurance, making your coverage as unique as you and your company. Call us at Nexus Insurance Brokers today and get custom coverage that’s suited to you.

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