Starting your own Etsy store in Australia

Have you ever thought about setting up your own Etsy store? If you make homemade goods, craft supplies or jewellery, marketing them to a wide range of people can be difficult. If you have considered starting a new business venture but you’re struggling to find interested consumers, Etsy can expose you to millions of active shoppers. Esty is an online marketplace specialising in homemade goods, craft supplies and jewellery. Millions of businesses around the globe choose to use Etsy over creating their own website. If you are considering starting an Etsy business, read on to find out what you need to consider, and if you will require an ABN. 

Do I need an ABN to sell on Etsy?

Whether you need an ABN will depend on your business goals and the amount you profit. Consider whether you are starting your Esty account with the intention to run as a full-scale business, or as a hobby. It’s important to note that not everyone is entitled to an ABN, and you can only apply if you meet certain requirements. You are entitled to an ABN if:

• You carry on an enterprise in Australia;
• Provide your Tax File Number (TFN);
• Your enterprise provides services or makes supplies connected with Australia;
• You have undertaken sufficient activities to start an enterprise; and
• You will be able to demonstrate that you have a business structure in place.

An Etsy business can be considered a hobby, which is not an activity that is considered an enterprise. If you would like to apply for an ABN, you must have a business structure in place and carry on in a business manner with records. This means that it is up to each business owner to determine how they wish to structure their Etsy store. In Australia, if your Etsy business generates over $75,000 in sales in a financial year, you must register for an ABN.

What kind of business structure can I have on Etsy?

One of the good things about Etsy is that there is no set of rules or restrictions around what type of business can sell on Etsy. Millions of businesses around the globe choose to use Etsy, and these range from large companies to small, individual owned businesses. If you are planning on starting a new store from scratch using Etsy, you should consider which business structure will best suit your business.

• Sole Trader: You are the only owner, and you are legally responsible for all aspects of the business. You can employ workers in your business.
• Partnership: A partnership is a group or association of people who carry on a business and distribute income or losses between themselves. The partners in a partnership are not employees, but the partnership might also employ other workers.
• Company: A company is a legal entity with higher set-up and administration costs. Companies also have additional reporting requirements. Setting up a company requires more work than the other options, however it is still possible if you believe this is the best structure for your business.

Are there any benefits of having an ABN?

If you decide you want to run a business, you need to keep track of your tax and reporting obligations. There are many benefits to having an ABN. Some of these benefits include:

• The ability to claim goods and services tax (GST) credits;
• Being able to claim energy grants credits ;
• You can register for the pay-as-you-go (PAYG) withholding system to avoid PAYG tax;
• You can offer fringe benefits to your employees; and
• The ability to identify your business to others when ordering and invoicing.

It’s important to note that you will still need to claim any profit you make from your store. It can be beneficial to apply for an ABN in the early stages of your business because if your business skyrockets quickly and you have not registered your ABN yet, you may find yourself in some trouble with the ATO. 

What are the next steps?

Starting a new business venture on Etsy can be an exciting time. It’s important to remember that there are several considerations to remain compliant with Australian business requirements. 

If you want to start selling your products but don’t know where to start, Etsy marketplace can help you. 

Legal advice

If you’re unsure about your obligations selling online, you should seek legal advice. Legal Kitz business specialists can assist with ensuring that your matter is as time and cost efficient as possible. We provide a FREE 30-minute consultation to set you in the right legal direction. Click here to book a FREE consultation with one of our highly experienced solicitors today or contact us at [email protected] or by calling 1300 988 954.