I have a lot of experience with this, and I would definitely recommend it. In
most areas it is very inexpensive to register an LLC or Sole Proprietorship,
so even just for the purpose of securing your 'brand' and locking in a
business name that correlates to your website URL, I would recommend it. A
lot of areas are transitioning more to online business registration services,
so here in Utah I can get my LLC all registered and confirmed on the web
without having the do any manual paperwork, and then they send me the
certification in the mail...

If you are listing to sell them online (through another service like imagekind.com/sell/) that service will hold accountability for processing payments, and in turn they will pay you. The payments you receive from them can be declared as personal income, and you can skip the need to register a business. Keep in mind personal income is taxed higher than if you were to pay a dividend through a private corporation, but to most, it's the easier route. :) -- This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

Most likely, it depends on the city in which you live. When I lived in Bentonville AR, they did not require a business license. But now, we live in Southern California, and needed a business license. It also depends on who the customer makes the check out to, you or a business name. I don't know what the implications are if you sell the products without a business license.

www.calbusiness.ca.gov/pdf/cbguideinvestor.pdf?   Go with this link and find your requirement.

selling artwork digitally can be tricky though, as once you've sold the piece (or rights to download it) you have little control over how many times it gets passed on, and even if you did manage to find copies of the work, you'd have little or no way of finding out who had sent it on. Just a thought to consider.

Yes you can have a sole proprietorship -I would register that name with you state... And check your states sales tax rules too - you will need to charge them for in state transactions        

In order to get a seller's permit you will first need to register your business name and entity type. Once you do that, it probably won't matter whether you apply for the seller's permit or the busienss tax registration form first. You could apply for both at the same time to make it simple.

Hi Yernar, If you are starting a online business, you will need to register and pay taxes. Learn more about how to start an online business here.

Different states have different state tax laws. Call your state's department of revenue services and ask about it.