Congratulations on your new Etsy store! For purposes of your federal and state tax returns, you are not required to have a business license to claim the income and expenses from your Etsy store business. Business licenses are a requirement of localities (city, county, town, etc). You should contact your locality as soon as possible to find out if you are required to have a business license if you are operating the Etsy store out of your home. If you have a separate office location, then you would contact that locality. Generally, if you do not obtain the business license when you are supposed to, you will be assessed penalties and interest when the locality gets information from your state tax return and knows you are running a business.
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