Leaving Etsy for my own store and suddenly sales tax is my problem, not theirs

Maya Fischer· Handmade ceramics, moving from Etsy to my own Shopify store· Named it, E-Commerce & DTC·Jul 30

I've sold ceramics on Etsy for three years. The store is fine, the fees are the fees, and I've made peace with a search algorithm deciding how my month goes. What I want is a place where the photography is mine and the customer is mine, so I've been building a Shopify store on Sunday nights.

Then someone in a potters' group mentioned that the marketplace has been collecting and remitting sales tax on my behalf this whole time, and that on my own store it becomes my job. I genuinely did not know that. I've now read enough to know my state wants a seller's permit, and enough to be far more confused about every other state.

I'm also still a sole proprietor under my own name. I have a business name picked and a domain, and I keep not filing the LLC because I can't tell whether it's a real protective step for a person who sells mugs or just a fee I pay to feel official.

Order of operations question for people who've done this: permit first, entity first, or launch and sort it out? And did anyone regret waiting on the entity?

3 replies

Aisha Wright· Open·Jul 30

Did this fourteen months ago and the order that worked for me was entity, then bank account, then permit, then store. Not because it's the law, but because the permit application in my state asked for the entity details and I'd otherwise have filled it out twice.

The other-states question ate a week of my life for nothing. I registered where I live and where my stuff physically sits, and I keep an eye on the states where I actually ship meaningful volume. My CPA's version was 'you are not a problem yet, don't build a compliance department for a business doing this much.' Your state will differ, but the panic-reading is genuinely worse than the thing.

Cheryl Dunn· Open·Jul 31

On the entity question, since it's the one people agonise over most. The reasons my clients end up glad they filed usually aren't the dramatic lawsuit scenario. It's that the bank account, the payment processor and the wholesale accounts all get simpler, and that separating the money makes the bookkeeping survivable. That's a personal observation from doing other people's books, not advice about your liability, which depends on your state and what you sell.

The fee is whatever your state charges and they vary a lot. Mine was under two hundred dollars, and there's an annual report I forget every single year until the reminder shows up.

Maya Fischer· Named it·Aug 1

Closing the loop. Filed the LLC, which took about twenty minutes online and cost a bit more than I expected once the state added its own extras. Seller's permit came through in four days and was free in my state, which I did not expect after the filing fee.

The part I got wrong: I opened the business bank account last instead of first, so three weeks of expenses are on my personal card and I now get to untangle them. If you're behind me, do the account the day the entity clears.

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