Do you want to start a beauty supply store business? If YES, here are 5 important licenses, permits and documents you need to open a beauty supply shop. According to reports, there are over 13,500 businesses that sell and supply beauty products across the United States. These businesses, just in 2017 alone, generated over $10 billion in cosmetics sales, beauty and perfume supplies.
The needed requirements to start this business tend to depend on the state in which your store is located, the type of legal structure the store uses and general business laws. You may also have to follow certain rules set by the suppliers of the products you plan to sell, such as giving some suppliers exclusivity in particular product lines. In the United States, there are state rules that regulate the registration and licensing of businesses, as well as zoning laws.
You are expected to choose a suitable legal structure for your business and register it through the office of your secretary of state. If you register as a sole proprietor, you are expected to do the business under your own name instead of a fictitious business name. But as a limited liability Corporation, things tend to become more complex, but it offers better protection against debt or legal action.
When looking to start any business in the United States, it is always advisable to check the rules on business licenses for your state on the U.S. Small Business Administration’s website. The SBA database contains links to each state’s individual statutes, where you will find information about the type of License or permits you need and whether there are local ordinances with which you must comply.
In addition, federal business rules in the United States include the need to register a “doing business as,” or DBA name, which may be different from your company’s legal name. For instance, if your store will operate as “Mandy’s Beauty Supplies,” you are expected to register this name through the SBA. The SBA has business rules and regulations that apply to advertising, privacy, online sales, and workplace health and safety.
Also have it in mind that the IRS has specific financial rules for retail businesses in the United States. This is to ensure that you are in line with tax laws. Register your business with your state’s IRS office for business and sales tax. If you plan to employ staff, you will also need to register for an Employer Identification Number. Some states also have rules regarding sanitation and the regulation of food and drugs, including cosmetics.
Note that if your beauty supply store stocks cosmetics for retail, you will need to abide by these rules. For instance, Missouri’s Revised Statutes, Chapter 329 states that any individual who helps customers choose cosmetics by testing the products is expected not to have skin-to-skin contact with the customer, and all applicators must be either single-use or cleansed before each use.
Also note that the state reserves the right to inspect your beauty supply store at any time to ensure your compliance with these rules. Below are licenses and permits you are expected to acquire when starting a beauty supply store in the United States. Note that these licenses are not specific to just beauty supply stores but tends to apply to almost any local business.
5 Licenses & Permits You Need to Open a Beauty Supply Store
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1. Retail Seller Permit
Note that your state may mandate you to acquire a specific permit in order to sell retail. For instance, the California Department of Tax and Fee Administration (CDTFA) expects your beauty supply store to request a specific permit when you sell or lease any merchandise.
A seller’s permit normally does not cost anything. However, you may be expected to place a security deposit to cover any un-paid taxes in case the business closes. The amount of the deposit will be determined at the time of application.
2. Business Operation License
Every state in the United States requires that you have a business license. Note that to apply for your business license at you state department you can go to The U.S. Small Business Administration. You only have to fill out a form with your social security number and profession. A business license normally costs around $100 but the cost can range from $50 to $400. Note that an additional processing fee of about $25 can also be added.
A Doing Business As (DBA) License offers you the opportunity to operate your business under a name other than your own — for instance, if you are going to use the company trade name “Mandy Beauty Supply,” it subjects you to having to file a DBA, LLC or corporation. A DBA is not mandatory, but since it fulfils some requirements for opening a business bank account, it is definitely something to consider getting. If you would like to register for a DBA, you must file with your county or state.
4. Federal Employer Identification Number (EIN)
Note that every state collects sales tax on products you sell to a consumer. Normally you pay 8% of your retail price in state tax. You are expected to go to your state’s tax office to register for this free Tax Identification Number. You will also need to provide your business operation license, personal details, and a description of the items you are planning to sell.
Online incorporation services charges around $75 for an EIN. Nonetheless, the IRS does not charge anything for it so you can get this yourself for free by going directly to them. You can apply for a Federal Employer Identification Number online at the IRS.
5. Certificate of Occupancy
You are also expected to validate that your property is fit for the supply store you are planning to set up. A beauty product related business is expected to meet specific water installation and treatment of chemicals requirements so you want to make sure you have the property inspected before you setup your business.
The Certificate of Occupancy is more or less a document that is issued by a local government agency or building department that certifies that your property is compliant with the requirements for the type of business you are planning to run.
Note that you are expected to request this certificate before any work is done on the property. The cost for a Certificate of Occupancy is around $20 to $80 depending on where your business is based and the size of your property.
Commercial business spaces less than 1’500 sq. ft. are typically around $30 where bigger ones goes up to $80. Note that this certificate will be issued when all inspection checks have been done. These inspections include an electrical inspection, plumbing inspection, fire safety inspection and a general building inspection.