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How To Grow Your Etsy Business

  • Jun 19, 2016 | Jessica Sillers

Being an Etsy seller no longer means running your business alone. The site’s revised guidelines allow shop owners to collaborate with other artists, hire employees, or even outsource some of the manufacturing for their goods.

Expanding your business to include other workers or partners is a big step for entrepreneurs. Consider what kind of help you need and how your tax responsibilities will change to get the best results.

Hiring Staff

Why It Helps Your Business: If you can’t keep up with demand for your handmade goods, sometimes the only solution is extra hands!

Whether you add year-round staff or just need seasonal help, you can reach a wider customer base and complete orders faster. Remember that while employees should save you time overall, they also add some new tasks to your plate. Factor in extra time to train and manage staff, including performing quality checks.

Transparency is one of Etsy’s top values. Stay compliant by listing the names and specific roles of everyone who makes items for you on your shop’s About page.

Tax Issues to Watch: Freelancers, employees, and seasonal workers all need different tax documents. Check the IRS website to make sure you understand how to classify workers and provide the necessary forms.

If you’re hiring remote employees, check your nexus. Staffers knitting, stamping, or sewing for you in another state can establish nexus. Make any necessary adjustments to your checkout process so that you collect the appropriate sales tax.

Collaborating With Another Artist

Why It Helps Your Business: Well-established businesses can get an extra edge by adding a new service or incorporating a unique feature. If you sell handmade tote bags, for example, you might want to collaborate with an artist who weaves and dyes her own cloth. Painters and calligraphers might join forces to create a new line of greeting cards.

Set clear expectations with the other artist before you begin working together. Will you be in a formal business partnership, or simply collaborate on some projects? Draw up a contract that outlines the work process, guidelines, and how you will share costs and profits.

Tax Issues to Watch: Remember to provide a resale certificate to another shop if you’re using their product as inventory or to create your own works. It’s your responsibility to prove that you’re making a sales tax-exempt purchase.

Working With a Manufacturer

Why It Helps Your Business: Etsy is best known as a platform for handmade products. So why would you need an outside manufacturer?

Etsy’s concept of authorship includes products the seller designs but needs help producing. They use the example of a wedding invitation artist who contracts with a studio to physically print the cards. Outsourcing the sewing of clothing patterns you design also falls under this umbrella.

Etsy requires sellers to apply to work with a manufacturer to stay within the site’s guidelines. Expect to provide details about the manufacturer, your business story, and the design and production process for your goods.

Tax Issues to Watch: Will the manufacturer send the completed product back to you, or ship it on your behalf to the customer? The latter case is a form of drop shipping.

You’ll need to provide the right resale certification to demonstrate that the transaction between you and the drop shipper is not taxable. Who holds sales tax responsibility can get complicated. We’ve created a guide to help you understand how it works.

Etsy’s new guidelines offer huge potential for business growth. Get up to speed on tax implications so that when you’re ready to expand your shop, you’ll have the knowledge you need to succeed.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jessica Sillers
Avalara Author Jessica Sillers