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First, does the free version of WordPress offer hosting, and can you run a small business of if it?
Also do you think the free WordPress offers enough tools to make a basic website and shop?

You have to buy hosting and yes you can run a small or big company and online shop on it.
But I think maybe it’s best to go with Shopify if you aren’t tech savvy or can’t afford the costs that’ll eventually start to add up.
Hosting costs around $12 to $50 per month.
SEO SaaS keyword research costs $150 to $250 per month.
SEO plugins cost more.
Themes cost… upfront.
So the costs can add up.
You might even want to consider using an SEO agency so you don’t have to deal with settings, research, content creation or plugins, since they’ll do all that for you.
Another option to try is Squarespace because I think they only charge a percentage of sales and have all the required settings out the box, unlike Shopify. But Shopify is easier to integrate into a lot of social media apps like Pinterest and Instagram so you can make direct sales on there.
WordPress can be a nightmare. Most people using WordPress are either techies or have huge budgets. But the nice thing about WordPress is that you can do everything at low or once off costs if you know what you’re doing and it all belongs to you with no terms and conditions. Even though it’s hard, it’s your actual intellectual property and digital asset that no one can hold claim to.
I’m going to assume that when you say “free WordPress” you mean “The free plan on [WordPress.com](https://WordPress.com)” and not the free open-source WordPress software you can download from [WordPress.org]) or the free WooCommerce software. This might be a useful read for you to start out with:
[https://en.support.wordpress.com/com-vs-org/])
Websites generally aren’t free. Servers and the staff to run/support them cost money. That money is charged to you, the customer.
WordPress.com offers a couple plans that are “limited” versions of WordPress (Free/Personal/Premium). These are useful for people who just need a basic informational or personal website/blog. What kind of a site are you meaning when you say “run a small business”? If you are just looking to have an informational site for your business and talk about services, hours, and contact info. These plans will work great.
But if you are looking to set up an online store on WordPress.com, you’ll probably want to use WordPress.com Business. WordPress.com Business is what most folks call “managed WordPress hosting”. It’s going to cost more than hosting from Bluehost/Knownhost/etc, but it offers the ability to offload various backup/updating/security and other maintenance tasks to the host’s team. And they will have a dedicated WordPress specific support team who can help you if you get in a jam. Most hosts just assist with hosting issues. Other companies offering managed WordPress hosting include WPengine, Kinsta, Pressable,com, and others, and they are all priced similarly as premium hosting.
That said, the WordPress and WooCommerce software are free. There is no reason you can’t find a hosting provider and set up your own WP/Woo based store. Many of us have learned to do it. There are thousands of resources on the internet these days that will walk you through the process. The best way to learn is to do.
But be aware that this won’t be “free” either. Shared hosting from somewhere like Bluehost is cheaper than managed WordPress hosting, but it’s still something you have to pay for. Registering your domain name is something you’ll have to pay for.
If you want a totally free way to sell where you just pay a percentage of what you actually sell, you’ll probably have to look into a platform like Etsy or something similar.