To start selling on Etsy all you need is a product. Etsy makes it really easy
by showing you how to set up your store. After that, you need to market it so
that you can make the sales.

I think that you are overcomplicating it by thinking ahead to business seller
permits and business licenses. You are right about wanting to start small and
doing it under a sole proprietorship until it gets going, then you can worry
about licenses and permits.

Regarding Etsy shops, I have some experience with them because my sister has
had one for a couple of years. She has been mildly successful with about 500
sales. This much I know:

1) She networks a lot and advertises her shop in a couple of forums she
frequents.

2) She has her own domain, which I hope she owns that way she might be able
to graduate away from Etsy to her own internet presence in the future.

3) She does not know it but I actually spent a couple of hundred bucks
advertising her shop a couple of years ago through PPC advertising "pay per
click". I think that helped get her started.

I have sold on Etsy. I can tell you I did it for a few months and did not
sell a thing. I also have an online store which I do sell many products from.
Although Etsy does do well in the search engine result pages, I have not
found success in selling at this particular online arena.

I would suggest you start yourself an online store. Etsy or anyone like them
charge you a monthly fee which is the same about if not more than if you
create your own hosting and started a website selling products. If you sell
at these stores, they do want you to keep your credit card info for future
charges on file, along with other ssn, and business information. I don't
think you need to have a business license when you are selling under the
umbrella of another company such as this.

In addition to the excellent resources of the SBA, you might want to get a
small business development book that will help you understand exactly what
you need to do for a California-based business. You can try something like
"The Small Business Start-Up Kit for California" by Peri Pakroo (Nolo, ISBN:
978-1413316827). You can get a book like this for $20. As you suggest in your
question, each state has its own quirks for starting and maintaining a small
business. It's well worth the investment to get one of these guides, and I
suggest one of the Calfornia-based guides would be best for you.

You may want to get started by reading our blog post entitled, Selling Online- Is it a Hobby or a Business? Which outlines some differences about online selling. To find out about LA county permit rules visit, obtaining business licenses and permits, section of the SBA.gov website. Hope this steers you in the right direction!