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The rules of Etsy state that you must follow the laws required where you live. so if you need a business license to operate a store in England, then you need one to sell on Etsy.
And I would strongly recommend that you have business insurance as well if you are selling soaps in the odd chance that someone has a reaction to a soap that you've sold and decides to open a lawsuit.
It doesn't happen often but if it does, it can mean the difference between losing your livelyhood and not.
Posted at 6:04 am Aug 8, 2012 EDT