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How to Start an Etsy Shop

How to start an etsy shop

Artists and crafters worldwide want to make money doing what they love. Etsy gives them that opportunity. If you're obsessed with making things, you can set up a shop on Etsy to sell your artistry.

Etsy started in 2005 as an alternative online marketplace for art, handmade products and vintage items. Nothing on the site can be mass-produced. This gives customers a unique buying experience finding handmade items from artisans and creatives in one place. It has grown into a publicly-traded company with over 60 million items for sale .

Some people have an Etsy shop as a side hustle, but many artisans make a great income selling online . Are you wondering how to start an Etsy business? The good news is it’s easy to get started and open an Etsy shop. We've put together this complete guide to share how it’s done and what to consider to establish your e-commerce business legally .

What Skills Do You Need to Be an Etsy Seller?

man working with leather

Etsy makes it easy for artists, designers, artisans and hobbyists to make money selling the things they make online. Obviously, you need to have the skills to make products, but do people want to buy what you make? That’s the big question. Are your products creative and unique? Do they fill a gap in the market or make the perfect gift

Before opening your shop, research what other shops are doing well and see who is your competition. If five other shops sell a similar product, how can you make it different or better? Or maybe you want to come up with another product altogether. For your business to succeed in a competitive market, you need a Unique Selling Point

Some of the critical skills needed to set up a successful Etsy shop include:

  • Product creation

  • Product photography

  • SEO

  • Marketing (particularly social media)

  • Persuasive writing

  • Customer service.

But if you're not confident in your ability for any of these skills, don't panic. Providing you can create unique products, you can develop your skills as you build your Etsy business. Plus, there are tonnes of online tutorials and courses you can take to boost your skills. 

What to Consider before Starting an Etsy Business

If you are making a business out of selling online — rather than just a hobby or side hustle — you’ll want to create a business plan . Starting an Etsy shop takes time and effort, so you may find it’s not worth it for only a few items. If you want to get serious about it and make a decent income from selling online, consider a few things before jumping in.

  • What is your brand name?

  • What is the design look for your brand and Etsy shop?

  • What are your unique selling points (USPs) and niche?

  • What craft supplies will your business need?

  • What are the start-up costs and expenses?

  • How many items will you sell, and at what price?

  • What is your business model and legal structure?

  • What rules and regulations must you follow?

  • Do you need an accountant or assistant?

  • What is your marketing plan , and how will you build your online presence?

Having an e-commerce business can only be successful if you put in the time to plan out all these details so nothing sneaks up on you later. With millions of products being sold on Etsy, you have to set yourself apart and be a step ahead of your competitors. So don’t skip this part.

How to Start an Etsy Shop

The good news is that starting an Etsy shop is free. Each listing you make on the site for your wares costs a small fee, and Etsy takes a 5% commission on every sale. If you use their payment system, there is a processing fee per transaction. The seller sets prices for goods, so consider the fees and commission you’ll pay when coming up with costs. 

Setting up an Etsy shop is as easy as pie. Firstly, go to etsy.com to create an account. Create your shop and add preferences, ensuring you have an awesome name for your shop. Then, list your items with really great photos and descriptive text.

But the work doesn’t stop after you hit publish. There are always things to do when running an Etsy business:

  • Optimising your shop for searches

  • Marketing your shop across social media

  • Packaging and shipping products

  • Creating new products

  • Coming up with creative sales

  • Creating discounts to incentivise shoppers

  • Taking care of administrative tasks.

Don’t forget to save receipts for your materials, equipment and other expenses. Keep track of any business expenses because you may be able to take deductions on your taxes.

Setting up Your Etsy Store in 8 Easy Steps

While setting up an Etsy shop is relatively straightforward, it can be daunting if it's your first e-commerce adventure. Plus, there are over 4 million Etsy sellers worldwide , so setting up your Etsy shop correctly the first time is crucial. To help you out, we've put together the eight steps you need to do to get started on the Etsy marketplace.

Step 1 — Create Your Etsy Account

Creating an Etsy seller account is incredibly straightforward. Before setting up an Etsy Seller account, you'll need to have a consumer account. Go to Etsy.com , click on "Sign In", and select "Register" to register a consumer account. As their website says, "Registration is easy". You'll just need to input the following:

  • Email address

  • First name

  • Password.

You'll receive an email to confirm your account and then sign in to your account. To set up a seller account, go to the drop-down menu next to the shopping basket icon in the top right. On the drop-down menu, select "Sell on Etsy". On the "Sell on Etsy" page, a black button says "Open Your Etsy Shop".

Step 2 — Choose Your Etsy Shop Preferences

After clicking "Open Your Etsy Shop", it’ll take you to a page where you can select your Etsy Shop preferences. Shop owners will need to select:

  • Shop language — This is the default language for your product descriptions. You won't be able to change this language later, so choose carefully. You can add more languages later, though.

  • Shop country — This is where your shop is based. Unfortunately, Etsy isn't available in every country, so you may need to wait if your country isn't listed. Alternatively, you may be able to set up a UK business as a non-resident to get around this issue.

  • Shop currency — This is the currency you'll use for your product prices. Don't worry; customers from other countries will see prices in their own currencies.

After choosing your shop preferences, you'll need to select a description for your business. The options are:

  • Selling is my full-time job

  • I sell part-time but hope to sell full-time

  • I sell part-time, and that's how I like it

  • Other.

You won't need to think about your shipping price at this stage. But you should be considering your shipping costs or offering free shipping. Free shipping is a big incentive for buyers and adds legitimacy to your business.

Step 3 — Pick Your Etsy Shop Name

If you're registering your Etsy shop, you've probably already got a shop name in mind. But it's important to remember that Etsy has naming rules you'll need to follow:

  • Maximum of 20 characters

  • Must be unique

  • It may only contain roman letters and numbers

  • No spaces.

If you've got your shop name ready, you can check its availability with Etsy's shop name checker. Unfortunately, if your chosen shop name is already taken, you'll need to find a new one. You can probably play around with the one you've already chosen but make sure it's different enough from the existing shop.

Read our guide on creating a stand-out business name.  

As a shop owner, you may be considering creating a separate e-commerce website for sales later on or possibly a brick and mortar store. If that's the case, you should check to see if the web domain for your chosen name is available. It's also worth checking if the name is available on Companies House using a business name checker .

Step 4 — Design Your Branding and Shop Logo

When choosing your shop name, you should consider your shop's branding and logo. Although you can complete this step after choosing your name, some names lend themselves to better branding and logo designs .

There are millions of shops on Etsy, so you've got a lot of competition even if you sell entirely unique items. Your logo and branding are crucial if you want your shop to stand out from the crowd. You've likely got a creative flair as you're setting up an Etsy shop, so designing your branding shouldn't be a problem. You'll need to create the following assets for your shop:

  • Shop logo — 500 x 500 px

  • Cover photo — 3360 x 840 px

  • Banner image — 760 x 100 px

  • Profile photo — 400 x 400 px.

Etsy has inbuilt photo editors and designers that you'll access after set-up. But, if you have your assets ready, you'll be able to get your shop set up more quickly. If you're unsure about designing your branding, there are plenty of tutorials online and logo services available to help.

Step 5 — Create and Optimise Your Listing for the Etsy Search Algorithm

There are a lot of Etsy shops, and almost every sale you make will come from somebody's initial search in the Etsy search bar. But to entice customers to find your products or shop, you need them to be visible in search results. That means you need to optimise your listings for search engines and make them appealing to potential customers. Before starting an Etsy shop, learn the basics of search engine optimisation (SEO) to give your listings a better chance of ranking.

Here's what you need to include when you create Etsy listings:

  • Listing details — This includes your product title and a detailed description of who made it and when and materials used.

  • Photos and videos — All Etsy listings require at least one image, but you can add up to 10. It's worth including as many images as possible as it reassures potential customers. It's also worth having dimensions in the photos if you can. Videos are a great way to beat your competitors and show off the quality of your products.

  • Stock and pricing — Keeping on top of your pricing and inventory is crucial for your success. Your prices will need to include the cost of craft supplies, time and shipping costs. For stock, we'd recommend using industry practices and creating a Stock Keeping Unit (SKU) for each product.

  • Variations — If your products have different sizes or colours available, use this to create them. You can also use this section if you offer any personalised products.

  • Delivery and shipping settings — Etsy makes shipping easy with their shipping calculator. They use your location to calculate shipping costs. You'll need to choose whether you offer free shipping for domestic and international customers. You'll also input dimensions.

We'd recommend saving them each as drafts when you create listings before going live. It's always good to double-check the listing details, as a simple mistake can be costly. Take the time to preview each listing before publishing the product.

Etsy recommends that you create at least ten initial listings to have a chance of being visible in the Etsy community. If you haven't got ten products, you'll need to do everything to optimise your listings. It's also good to promote your products through an Instagram or Facebook page.

Step 6 — Register Your Business

The next section of registering your Etsy shop is to set up Etsy payments. But before you can do that, you need to choose whether you will be a sole trader (sole proprietorship) or a limited company

Your choice will affect how you run your business, pay taxes and the records you need to keep. Here are the critical details about becoming a sole trader or limited company:

  • Sole trader — There is no legal distinction between you and your business as a sole trader. This means you are responsible for any debts your business may accrue. You will pay your business taxes through self-assessment tax.

  • Limited Company — Your new business will be a separate legal entity as a limited company. You have limited liability for business debts, and corporation tax is processed separately. You pay yourself a salary and dividends from company profits.

Registering as a sole trader or limited company is relatively straightforward but can be daunting. One of the best things to ensure a successful registration is to use a formations company like Mint Formations. At Mint Formations, we take care of your registration with Companies House and HMRC so you can rest easy.

Read our complete overview of the differences between sole traders and limited companies

Step 7 — Get Etsy Payments Set Up

You can set up your Etsy payments now that you've registered as a sole trader or limited company. On the payment settings page of the registration, you'll need to select whether you are a sole proprietorship or an incorporated business. Each one requires you to input different company details:

Sole proprietorship:

  • Your full name

  • Date of birth

  • Address

  • Phone number

  • Country.

Limited companies are required to provide the exact details alongside the following:

Once you've input your business details, you'll need to include your bank account details for payments from Etsy. This can be any bank account , but we'd recommend setting up a dedicated business payment account for your company. This helps to keep your personal and business finances separate.

Next, you'll need to set up your payment method for Etsy fees. You'll need to input the same details you would for any online purchase. You can sign up for auto-billing to not miss any payments.

Step 8 — Launch Your Etsy Shop

Before you can start shouting from the rooftops about your new shop, you'll need to do a few final things that are less urgent:

  • Update your Etsy biography — This is a brief bio and photo of yourself. This is a significant trust signal for potential customers.

  • Review and set up shop policies — Take the time to select a processing time for orders, shipping policies, payment options and a returns/exchange policy.

Pop the champagne; you're ready to launch your Etsy shop and start making income from your passions. Share it with your friends and family and let the world know.

How to Start an Etsy Shop FAQs

What are the commission rates and fees on Etsy?

It's free to open an Etsy shop, but there are three separate fees for selling items:

  • Listing fee — $0.20 (exchange rate applies to UK sales)

  • Transaction fee — 5% (including delivery)

  • Payment processing fee — 4% + £0.20.

You may also need to pay an advertising fee if sales come from offside ads. While the fees may seem minor initially, they can quickly rack up if your products prove popular.

How much money do Etsy shop owners make?

The amount that Etsy shop owners make varies drastically. According to the CEO of Etsy, the average Etsy seller makes around $2900 (2,222.34) a year. It's important to note that this includes all Etsy sellers, both full-time and part-time, which skews the numbers.

Most of your success comes down to the effort you put into your store and the popularity of your products. There are plenty of Etsy sellers that make far more than the average.

Do Etsy sellers need to pay taxes with an Etsy shop?

The short answer is yes. If you sell more than £1,000 in a year on Etsy, then you will need to register a self-employed business and pay taxes depending on your income. Every country has different rules regarding taxes, and you must pay on income made from an e-commerce enterprise. Please consult an accountant in your country of residence to determine your tax obligations.

When you are ready to start your Etsy business in the UK, you need to register with HMRC. If you plan to make selling online a large enterprise, you might consider forming a limited company. You can go the sole-trader route if it’s more of a side hustle. Deciding and completing your company formation is crucial to your business success. We can help you set up Etsy tax fast and easy.

Are you ready to start an Etsy business? At Mint Formations , we help you form your limited company and remove all the stress of starting a business. We’ll secure your brand name and get your company registered fast so you can start doing what you love.

Want to register your UK limited company today?

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