Should I register my Etsy shop as a 'business' or an 'individual' if I have a Illinois LLC?

If you have an EIN and file taxes as a business entity (not a disregarded entity), register as a business. Etsy then verifies the entity name and EIN against IRS records, so the name has to match your Illinois Articles of Organization. A single-member Illinois LLC taxed as a disregarded entity can register as an individual and provide an SSN or ITIN.

What happens if I do not complete Etsy's seller verification?

Etsy withholds payouts until verification is complete, whichever state the shop's LLC comes from. If you miss the deadline shown in your Shop Manager dashboard, you have 90 days before the shop may be closed.

I do not live in Illinois. Can I still use a Illinois LLC on Etsy?

Etsy does not check where you live, only that the Illinois entity is validly registered and that the details you enter match Illinois's record. The catch is not Etsy, it is the state you actually operate from: states require an out-of-state LLC to register as a foreign LLC before it transacts business there, which is a second filing and a second fee on top of Illinois's $150. Forming in Illinois while working somewhere else usually means paying both states, not one.

Do I need a Illinois sales-tax permit before my first sale through Etsy?

Not for your Etsy orders themselves. Illinois charges a 6.25% state rate and, like every sales-tax state, has a marketplace-facilitator law that makes Etsy collect and remit it for you. You need your own Illinois registration once you also sell off-marketplace and either have physical presence in Illinois or cross its remote-seller threshold of $100,000 in sales in the previous 12-month period (no transaction-count threshold).

Marketplace Verification

How to pass Etsy verification with an Illinois LLC

What Etsy asks for at signup, and which Illinois LLC documents satisfy each requirement.

By Edmond Hui · Last updated: August 4, 2026

Edmond Hui · Founder, MyStateLLC

Edmond Hui is a software engineer and serial entrepreneur based in New York who has founded multiple online businesses across e-commerce, media, and information publishing. Before transitioning into tech, he spent years as a commercial real estate professional closing deals totaling over 100,000 square feet, giving him firsthand experience with business formation and entity structuring. He built MyStateLLC to provide the free, state-specific LLC guidance he wished existed when forming his own companies.

A Illinois LLC is generally eligible for Etsy verification — you will need to provide your Articles of Organization, EIN, beneficial-owner ID, and a valid US business address. Nothing about forming in Illinois blocks approval, and nothing about it guarantees approval either: the final call is Etsy's.

Etsy requires sellers using Etsy Payments to complete identity and tax verification before receiving payouts. For a Illinois LLC registered as a business (not a disregarded entity), Etsy collects the entity name as it appears on your Articles of Organization, the legal address, the EIN or other taxpayer number, and verifies this information against the IRS database. Etsy also requires a government photo ID and selfie via its identity-verification partner Persona, plus a bank account linked to receive Etsy Payments disbursements.

In Illinois the entity behind that check is an LLC created by filing Articles of Organization, which costs $150. Illinois does not publish a processing time for LLC filings, so treat state approval as the open-ended step in your timeline rather than the Etsy review. Because Illinois names a member or manager on a routine public filing, the owner name Etsy asks you to confirm is already a matter of public record.

Illinois has 83,615 solo retail trade businesses with no employees, averaging $44,608 in annual receipts (U.S. Census Bureau, Nonemployer Statistics (NES), 2023).

Not legal advice: Verification requirements change, and so do Illinois's filing fees and forms. Confirm current platform rules with Etsy, and current filing rules with the Illinois filing office, before you file. Etsy's requirements were last reviewed 2026-07-21, and Illinois's figures on this page come from its own published schedule.

What Etsy requires, and how a Illinois LLC meets each

Requirement	How your Illinois LLC satisfies it
LLC entity name verified against IRS	Use the exact LLC name as Illinois recorded it on your Articles of Organization; it must match your bank account holder name.
Employer Identification Number (EIN)	Provide your federal EIN (free from the IRS; non-US founders without an SSN must apply via Form SS-4 by fax or phone rather than the online tool) — independent of Illinois.
Taxpayer information and IRS verification	Complete the tax interview. A Illinois LLC owned by US persons typically submits a W-9 using its EIN; non-US owners of a disregarded-entity Illinois LLC generally use a W-8 form instead.
Government photo ID and selfie (via Persona)	Provide a government ID for each beneficial owner named in your Illinois filings. Illinois names a member or manager on a routine public filing, so at least one name already matches state records.
Bank account for Etsy Payments disbursements	Link a US business bank account opened with your EIN and your Illinois Articles of Organization.

Illinois-specific things to watch

Illinois names a member or manager on a routine public filing, so Etsy's beneficial-owner check will line up with public state records — you still upload a government ID for each owner. (Illinois does not permit anonymous LLC formation; management is disclosed on public filings.)

Illinois sales tax & nexus rules for Etsy sellers

Illinois charges a 6.25% state sales-tax rate, and like every state with a sales tax it has a marketplace-facilitator law — Etsy collects and remits Illinois sales tax on your marketplace orders for you. You still need your own Illinois registration if you also sell off-marketplace (your own site, invoices) and either have physical presence in Illinois — an in-state location, inventory, or employees — or cross the state's remote-seller economic-nexus threshold of $100,000 in sales in the previous 12-month period (no transaction-count threshold).

Illinois is one of the more complex states for sales tax. It uses both 'origin-based' and 'destination-based' sourcing depending on whether you have physical presence, which can change your effective rate. Home-rule cities like Chicago add additional taxes. SaaS and digital subscriptions are taxable in Illinois. Chicago also imposes its own separate city tax on certain transactions. Note: Illinois repealed its 200-transaction economic-nexus trigger (effective 2026); only the $100,000 sales threshold now applies.

How to verify your Illinois LLC on Etsy

LLC entity name verified against IRS. Use the exact LLC name as Illinois recorded it on your Articles of Organization; it must match your bank account holder name.
Employer Identification Number (EIN). Provide your federal EIN (free from the IRS; non-US founders without an SSN must apply via Form SS-4 by fax or phone rather than the online tool) — independent of Illinois.
Taxpayer information and IRS verification. Complete the tax interview. A Illinois LLC owned by US persons typically submits a W-9 using its EIN; non-US owners of a disregarded-entity Illinois LLC generally use a W-8 form instead.
Government photo ID and selfie (via Persona). Provide a government ID for each beneficial owner named in your Illinois filings. Illinois names a member or manager on a routine public filing, so at least one name already matches state records.
Bank account for Etsy Payments disbursements. Link a US business bank account opened with your EIN and your Illinois Articles of Organization.

Non-US founders with Illinois LLCs

Non-US sellers can use Etsy Payments in supported countries, but a Illinois LLC's seller account must be linked to a US bank account or an eligible payment method. Non-US beneficial owners of a Illinois LLC must still complete identity verification via Persona with a valid government ID.

Frequently Asked Questions

: If you have an EIN and file taxes as a business entity (not a disregarded entity), register as a business. Etsy then verifies the entity name and EIN against IRS records, so the name has to match your Illinois Articles of Organization. A single-member Illinois LLC taxed as a disregarded entity can register as an individual and provide an SSN or ITIN.
: Etsy withholds payouts until verification is complete, whichever state the shop's LLC comes from. If you miss the deadline shown in your Shop Manager dashboard, you have 90 days before the shop may be closed.
: Illinois charges $150 to file Articles of Organization, and that is the state's fee to create the LLC. Illinois does not publish a processing time for LLC filings, so treat state approval as the open-ended step in your timeline rather than the Etsy review. Etsy charges nothing for verification itself, so the $150 filing fee and Illinois's ongoing obligations are the real cost of getting verified as a Illinois entity.
: Etsy does not check where you live, only that the Illinois entity is validly registered and that the details you enter match Illinois's record. The catch is not Etsy, it is the state you actually operate from: states require an out-of-state LLC to register as a foreign LLC before it transacts business there, which is a second filing and a second fee on top of Illinois's $150. Forming in Illinois while working somewhere else usually means paying both states, not one.
: Not for your Etsy orders themselves. Illinois charges a 6.25% state rate and, like every sales-tax state, has a marketplace-facilitator law that makes Etsy collect and remit it for you. You need your own Illinois registration once you also sell off-marketplace and either have physical presence in Illinois or cross its remote-seller threshold of $100,000 in sales in the previous 12-month period (no transaction-count threshold).