Business laws vary from state to state, but you can start selling on Etsy as a sole proprietorship. This is the easiest and least-expensive way to operate a business. You don’t need to file legal forms or pay any fees, but depending on what you sell and where you’re selling it from, you may need to obtain certain business licenses. You can determine whether you need a business license by checking with your state or city. If your business takes off and you decide to form a limited liability company (LLC), you’ll need to file certain legal forms with your state. This costs more, but it reduces your exposure to personal liability.