C.O.
you do not need a business license for etsy or ebay. They are NOT free to list and sell - you will need to pay listing fees and final value fees. Well, for ebay for sure, i've NEVER sold on etsy but it is an ebay subsidiary.
You need to make sure you get REALLY good photos and good descriptions of your items. My sister-in-law sold baby bibs and blankets that she made on ebay and made at least $500 a month over and above the cost to make the items and listing/final value fees.
She started out at ebay - like I said - but ALSO made the items as gifts and when these people used them - other people saw and then contacted her for items themselves...She also sold at local fairs, flea markets and community markets. She had business cards made up so people could special order the pieces she sold.
She also got in touch with people who sold Mary Kay, Avon, Pampered Chef, Creative Memories, Tupperware, etc. and did open houses as GROUPS around the year so people could buy all sorts of stuff in one stop and not feel pressured.
Vistaprints can get you business cards for $10 or $20.
Word of mouth will be your best bet at first - make sure your items have your name tag on them - my grandmother (when she could see) and my SIL had them made (http://www.personalizationmall.com/Personalized-Sewing-La...)
you can do ANYTHING you set your mind to!!
good luck!