Some of you here may know that I do leather work as a side hobby. I've gotten a lot of requests to set up an online presence beyond just social media to start selling more of my products. I don't know a lot about business law or tax law, and I'm not sure if I want to deal with forming an LLC, or stick with a sole proprietorship. I feel like Etsy will be the easiest option at the moment, but I still have a lot of questions I would love to run by someone with any experience with Etsy or small business formation!

Thanks in advance!

My smarter half runs an etsy store and formed an LLC, which I think she had to do to get a tax ID. Plus it's cheap liability protection and allows you to do trade shows and so forth, since alot of them require a tax id for entry.

gigemhilo said:

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You can get a tax id without an LLC

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So, when you say Tax ID - is that similar to an EIN, or is that the permit the state of Texas requires to collect sales tax on sales?

Thank you for this!! This is some excellent information! My email is staffordleatherco at gmail dot com

Don't underestimate the recurring administrative paperwork associated with forming an LLC. It may not sound like a lot but it gets to be a pain in the ass pretty quick.

On the 'protection from liability' front, think about the worst case scenario where you might be exposed to contract liability. Ordering whole containers of supplies from a Chinese manufacturer is one thing, but if you are doing small transactions here and there, you might look closer at whether a DBA is sufficient for now.

Stat Monitor Repairman said:

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Don't underestimate the recurring administrative paperwork associated with forming an LLC. It may not sound like a lot but it gets to be a pain in the ass pretty quick.

On the 'protection from liability' front, think about the worst case scenario where you might be exposed to contract liability. Ordering whole containers of supplies from a Chinese manufacturer is one thing, but if you are doing small transactions here and there, you might look closer at whether a DBA is sufficient for now.

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Thank you! These are my exact thoughts - and why I'm considering just sticking with a DBA for now. I had an LLC a few years ago for another side project, and it was a pain to deal with. My leather hobby is just that, a hobby, for now, and I don't see it taking over as my main source of income ANY time soon. This is just an avenue to make it a little easier for my small sphere of influence to order things from me and for me to track things I've made. I don't foresee anyone trying to sue me over a wallet or a dopp kit...

My girlfriend's father is a CPA, and owns and operates his own business in Houston - so I'm hoping to pick his brain a good bit before I make a final decision. But I wanted to consult TexAgs as well, since we have such a diverse group of people here with incredible backgrounds. I figured someone may have some advice for me!

rally-cap said:

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gigemhilo said:

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You can get a tax id without an LLC

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So, when you say Tax ID - is that similar to an EIN, or is that the permit the state of Texas requires to collect sales tax on sales?

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TIN and EIN are usually interchangeable and are associated with the IRS.

Texas ID is officially called the Texas Taxpayer Number. If a legal entity is involved, it will also have a Texas File Number associated with it. TTN is for the Comptroller, and TFN is for the Secretary of State.

Hopefully this clears up any miscommunication.


Back to the original question, you do not have to have an LLC to get an EIN/TIN -OR- a Texas Taxpayer Number.

Sneal17 said:

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My wife and I have an Etsy shop and I can offer the following advice:

• You can operate as a DBA, but you won't have the same legal protection
• Register here: https://mycpa.cpa.state.tx.us/securitymp1portal/displayLoginUser.do
• If you start as a DBA and then switch to an LLC, you will have two EIN numbers and will need to talk to the comptroller's office to only use the new one
• A big benefit to using Etsy is that Etsy collects and remits sales tax - this means that you don't need to report the sales tax from Etsy as you would then be double reporting.
• Any sales or giveaways made outside of Etsy will have to be reported to the state (sales tax paid)
• If you call the comptroller's office they can walk you through most of this

On the Etsy Side:

• There are several fees associated with using Etsy's services: Credit card fees (unavoidable), listing fees, advertising fees, and a few others.
• If you are driving all of the traffic to your shop, you can avoid etsy fees by using this service: https://www.etsy.com/pattern
• If you are letting etsy drive traffic to you then it might be worth it to just remain on etsy or sell through both

If you want to post your email address, I can get in contact with you outside of Texags as I never check this site.

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Sneal:

You mind shooting me an email at jaggiemaggie at gmail dot com ? My wife and I just started an etsy shop 4 weeks ago and wouldn't mind picking your brain. Thanks!

Howdy Guys,

Shameless self promotion, but I created a dashboard that can be used to help anyone manage their Etsy business. I would appreciate any support/feedback.

https://www.etsy.com/shop/DataDad

Just sent you a private message. My wife started an etsy business a few years ago and she turned it into a very successful business. It got too busy and we had our 2nd child so we closed it but we learned a ton on how to run an etsy business.

If you choose to proceed as a sole proprietor, get an EIN. If you have to give anyone a 1099 or if anyone asks you for a W-9, you really don't want to have to use your SSN. I'm a CPA and I can assure you that the average person doesn't take a great deal of care to secury transmit Forms W-9 or 1099.