1. I know there is a fine distinction between a hobby & business, but do I need a business license or tax registration certificate before I consider this endeavor?
No…you do not need a business license or tax registration to do what you are doing. So long as you are doing business under your own name (not a “trade” name or “doing business as” name DBA) then you can use your social security number for business purposes and file your taxes using a Schedule C or Schedule C-EZ at the end of the year under your social security number.
If you are using a name other than your own you can file a trade name registration with your state’s secretary of state office. Either way you can use your social security number to file taxes. Most people do not like having their social security number floating around these days so applying for a EIN (tax id) number is recommended, even for sole proprietors.
In order to file a Schedule C-EZ you will need to have less than $5000 in sales and have a net profit. Some micro business with limited sales and few expenses to deduct simply book the full sale as miscellaneous income on their 1040 but that avoids Self Employment Tax which can come back to bite you in a tax audit.
All of that being said…most businesses your size fly “Under the Radar” when they first start. I have spoken with many tax accountants and attorneys about this issue and the magic number seems to be around $5000 in sales. If you reach that point everything should be above the table so to speak (understand that this is not legal and/or tax advice…I am just noting that it happens).
2. Do I also need a seller’s permit?
The short answer is yes. The long answer is “it depends” on who you are selling to and if you pay sales tax on the products you buy. If you are retailing the products: i.e. selling to the end user then you must collect sales tax. If you are selling wholesale and the buyer is going to collect sales tax then you should get their Sales and Use Tax permit number on file and you don’t have to collect sales tax. In some instances, if you pay sales tax on the products you buy for resale (such as in vending candy/pop) then you don’t have to collect sales tax. But you buy materials and sell finished goods that you have added value to so technically you should buy your materials tax free and collect from the end user.
These laws vary by state and become even grayer when the internet is involved. If you are doing sales online (even on eBay) most states require that if:
- The sale is to someone outside of the state – no sales tax is required
- The sale is to someone in the state but outside of your locality (city) – state sales tax should be collected.
- The sale is to someone in your locality and state – both city and state sales taxes should be required.
The same rule applies for people who travel around and sell crafts and other products at trade fairs and farmers markets. You should collect the appropriate state and local sales tax that other retail business pay in that area and remit them to the appropriate taxing authority.
In practice neither of the last two rules is followed very closely (internet and tradeshows).
Here is an article on the tax implications for a hobby business www.irs.gov/newsroom/article/0,,id=169490,00.html 
Learn more about business registration in our Business Registration Overview  article.
I hope this helps.