Do you want to know the legal requirements you need to start a makeup line business? If YES, here is a checklist of makeup line licenses, permits & insurance.
Having provided you with a:
- Makeup Industry Overview
- Market Research and Feasibility
- Makeup Line Business Plan
- Makeup Line Marketing Plan
- Makeup Line Name ideas
- Makeup Line Licenses and Permits
- Cost for Starting a Makeup Line
- Makeup Line Marketing ideas
We will consider what it takes to get operating license and permit for your makeup line business including insurance coverage and intellectual property protection.
Starting a Makeup Line – Licenses, Permits & Insurance
- Best legal entity to use for a Makeup Line
No doubt starting a makeup line is indeed a serious business which is why the legal entity you choose will go a long way to determine how big the business to can grow. Choosing a legal entity for a business such as a makeup line is some worth straightforward especially if you decided to grow the business big.
When it comes to choosing a legal entity for your make up line, you have the option of choosing from a general partnership, a limited partnership, an LLC, a “C” corporation, or an “S” corporation. It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice on the legal structure to build your private security outfit on.
These are some of the factors you should consider before choosing a legal entity for your make up line; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and tax issues. If you take your time to critically study the various legal entities to use for your make up business, then you will agree that limited liability company; an LLC is the most suitable.
You can start your make up line as a limited liability company (LLC) and in future convert it to a ‘C’ corporation or even a ‘S’ corporations especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will afford you the opportunity to grow your make up line so as to compete with major players in the cosmetic industry; you will be able to generate capital from venture capital firms, stock market, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures as well.
Is Professional Certification Needed to Start a Makeup Line?
Apart from degrees in cosmetic science and cosmetic chemistry, the only certification available is CIDESCO. The CIDESCO Diploma is the world’s most prestigious qualifications in the field of esthetics and beauty therapy. With more than 230 CIDESCO schools around the world, including eight in the U.S., interested students have a wealth of educational choices worldwide.
List of Legal Documents You Need to Run a Makeup Line Business
In The United States of America and of course all over the world, the FDA does not check for bad products testing but can recall a shut down a facility if any discrepancy is discovered in a product. If you are considering starting a make-up line, then you are expected to meet the legal documents requirements as stipulated in the constitution of your country.
These are some of the basic legal document that you are expected to have in place if you want to start a make-up line in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Memorandum of Understanding (MoU)
- Employment Agreement (offer letters)
- Operating Agreement
- Company Bylaws
- Operating Agreement for LLCs
- Insurance Policy
The Best Insurance Needed for a Makeup Line
Buying insurance is essential if you want to start your own business and cover any mishaps caused by the cosmetics. Like food, cosmetics can cause irritation, allergies and can provide an environment for growing bacteria. You don’t want to be at the receiving end of a lawsuit without coverage for potential liability. Now, you also need to further protect yourself.
Whether you’re the formulator, manufacturer, or Skincare Company, get insurance. There are two basic types to be considered – Property Insurance and General Liability Insurance. Property insurance is just that – it protects your property, like rental insurance would. In the event of, let’s say, a fire, everything related to the retail aspect of your business (computers, your product inventory) are covered.
Anyone serious about any form of cosmetic business should have is general liability insurance. And, unfortunately, this is the expensive one. This insurance is in the event that someone experiences an adverse reaction to your product, or slips and falls on your property.
The cost of this insurance is typically based on how much sales your business has during the year. The limits are set so that the insurance company will pay a total of X amount of dollars (general aggregate limit), and will only pay a certain number of occurrences or claims.
The higher your sales, limits and occurrences; the higher the monthly premium. Formulators should have this insurance in case their formulation is the reason for the occurrence and likewise for manufacturers – if something they did during the manufacturing process contaminates the product and causes the adverse reaction, they are responsible.
Sometimes, if you work with contract manufacturers and or contracted formulators they will “umbrella” the cosmetic company on their policy. This means that the manufacturer or formulator’s insurance company is including your products on the insurance. It does not mean that you are insured individually as a cosmetic company. That is why it is important for your company to have its own insurance.
Manufacturers can be insured until kingdom come, but ultimately responsibility falls on your company for the safety of the products. If the product doesn’t perform the advertised claim, or you do something to make the product unsafe, you are responsible. Selling homemade products is a huge risk – and any adverse reaction can potentially cost you thousands or millions. So, you just have to weigh the odds.
Finally, the last thing to consider about insurance. If your dream is to get your product into a large retailer – most major companies require proof of insurance before selling your product, as they will assume no liability. Insurance costs will depend on lots of factors but a rough estimate is ~$100 per month per $1,000,000 of insurance.
- Intellectual Property Protection and Trademark
You can protect your business name and design with a trademark, Start by doing a search in the US Patent and Trademark database to make sure the name is not already trademarked. Register your business name with your city or county clerk and obtain a business license from your local government office.