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Many people starting up or considering starting up their own Etsy shoppes often ask me what advice I can offer them. Here is some basic business advice I can give to those thinking about opening up an Etsy shoppe:
Off the top of my head, once you are sure you want to invest in setting up an online business, don't neglect the not-so-fun parts (accounting, etc) of the business or the work may pile up on you and be a pain to get done. Allot a portion of your time to business development, a portion to filling orders, and another portion to bookkeeping tasks.
Be sure to register your online business with your local and state governments. You usually register with the local government at the city court house closest to you - they will tell you what fees you need to pay (which is probably about $5-10 or so, although they may require you to publish a legal notice in the newspaper as part of the requirement to register which can run about $75) and if you need to fulfill any other requirement particular to your local government to register your business. This will keep your business legal with the local authorities in your area.
You also need to register with the State you live in. When you do this you will receive a business tax ID (costs nothing if I recall correctly, although this may vary from state to state) enabling you to pay quarterly State sales taxes on any sales you make to residents living in your home state.
You will have to file and pay quarterly state sales taxes, which usually aren't too much unless you make a large volume of sales to people in your own state. Set up your Etsy shoppe to automatically collect the sales tax amount you will need to pass on and pay to your home state. You only have to collect and pay state sales taxes on sales made to people who live in your state (or more specifically, on sales shipped to addresses located in your state) - in other words, you aren't required to collect state sales tax on sales you make to customers living in any other state but your home state.
You can currently set up a free secure bookkeeping account online at Outright (although there may a small monthly fee after the free trial). Set up a business Paypal account, and get a Paypal debit/credit card so that you can access the money in your Paypal account anywhere to make business related purchases. Link your Paypal account to your Outright bookkeeping account - this will help you at tax time.
Along with filing quarterly state sales taxes, you will have to file an extra form with the IRS when filing yearly income taxes even if you don't have any profits. If you set up your bookkeeping with Outright, it will automatically create the form you need to provide to the IRS or give to your income tax preparer in April.
As for your offerings, make stuff you love to make and what is meaningful to you. Be who you are and invest your heart into your offerings. Other shoppes may have more sales selling things that broadly appeal to the masses, but in the long run, being true to your own vision brings greater satisfaction even if sales are more modest. Develop your own style and run with it.
Last but not least, read the Etsy policies page to learn what you may and may not sell on Etsy and how items should be properly tagged. While many on Etsy do not adhere to those policies and continue to profit while flagrantly violating them in the face of all of us, you will rest well in the knowledge that your shoppe is run with integrity. You should also read the Etsy policy section which pertains to copyright law, as there do exist unscrupulous elements within the Etsy marketplace who may seek to use your limited knowledge of copyright law to intimidate you from selling your product on Etsy if you are perceived to be a business competitor and a threat to their profit margin. Don't allow yourself to be intimidated by these elements - educate yourself about copyright law and stand your ground.
Good luck and blessings to you,