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No, Etsy does not require a business license to get started selling online with an Etsy account. Other government agencies may require that you have a business license to sell on Etsy; however, it depends on where you live.
An Etsy seller needs a business license if their Etsy activity is a business. If it is a hobby, no license is necessary. However, it is hard to follow the IRS guidelines to determine whether you have a business or a hobby.
US Etsy sellers are required to pay income tax on their Etsy sales, along with any other employment income (such as income from another part-time or a full-time job). Sales tax is another tax you’re likely familiar with, and, in fact, there’s a good chance that you’ve already paid it today.
According to Columbia Law School, Etsy itself does not mandate sellers to possess a business license to register an Etsy seller account and sell their items on the platform....
Etsy doesn’t require sellers to have a business license to sell on Etsy. However, when selling on Etsy you're required to follow any laws that apply to you as a small business selling online. If you have any questions regarding which laws apply to you, please contact a qualified professional.
Do I actually need a business license to sell on Etsy? Maybe. To determine whether or not you can sell on Etsy without a business license in 2021, you must first consider whether you want your Etsy store to be a business or a hobby. If it’s a hobby, you don’t need to worry about a license.
Even if you’re only selling on Etsy for fun, the state, county, or municipality you live in may require a business license. To avoid violations and fines, you’ll want to make sure you research your local laws and regulations as they differ from one region to the next.