You generally don’t need a license to make and sell cosmetics from your home in the USA, UK, and most countries in the EU. However, may need a license to run your business. You will have to check with your local regulatory bodies too, as licensing requirements can vary on a region by region or state by state basis.
While the US Food and Drug Administration (FDA) heavily regulates the use of certain cosmetic ingredients, it does not require brands to obtain a special license to sell safe and compliant products. To ensure products are safe and compliant, it is necessary to ensure you meet labeling requirements.
This includes being truthful and not misleading and avoiding health claims that cannot be backed up by evidence. Some states may require cosmetic sellers to apply for a local state license to distribute products. It is always advisable to check local legislation in the state you are operating in. You also need to register with the Federal Government to trademark your products.
You might also need to register for a business license in order to legally operate under a brand name and, depending on your location; you may also be required to apply for a Seller’s Permit for tax purposes. You can register your business with your Local County or City Government.
Indeed, formulating in your kitchen brings risks with it. You don’t want to mix food and cosmetic ingredients (even if many of your natural ingredients, particularly oils, butter, and hydrosols, are the same as those found in your food).
Note that it is your responsibility to manufacture products in an environment that will not cause them to become contaminated or adulterated. For that reason, it is imperative you embrace cosmetic Good Manufacturing Practice (GMP) in your artisan labs.
Most countries around the world permit artisan formulators to work and manufacture from home, as long as their manufacturing facilities meet GMP requirements. It can be challenging to achieve GMP standards in a kitchen that is heavily used by a family for food preparation, as you have to completely clean down the kitchen before and after formulating, every single time.
Howbeit, there are plenty of other spaces that formulators use in their homes, instead of their kitchen. You might use one room in your home which functions solely as your cosmetics lab. You may use a bespoke shed in the garden or even rent a room somewhere else, just for manufacturing purposes.
Once you know what type of beauty formulations you want to create, you can also invest in separate equipment that is only used for your business. Designing your cosmetics lab is not as difficult as it might initially sound, as long as you can adhere to GMP and as long as you have properly defined areas that you’ll use for people, products, and raw materials.
Licenses Needed to Formulate and Sell Homemade Cosmetics
The great news is that most countries around the world permit artisan formulators to create cosmetics at home, as long as they comply with GMP. In the United States, here are licenses and permits you will need to start and sell your homemade cosmetics;
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General business license
Irrespective of the type of home-based business, most cities and counties will require new businesses to obtain some form of general business license. Since you will be selling your homemade cosmetics from your home, this general business license may be referred to as a reseller’s or tax certificate.
This general business license permits an entrepreneur to legally undertake commercial activities within the boundaries of an existing town, city, or county. Take your time to sit with a tax collector for more information about business licenses and tax certificates.
Zoning permit or waiver
In most cases, areas zoned residential don’t allow for businesses. However, if your business doesn’t require a sign, increase traffic, or involve dangerous items, you can likely get a waiver. You are advised to contact your city or county’s zoning department to find out what, if anything, you need. Don’t jump this step. If you fail to get the proper zoning, you might end up paying fees or having to close down if your locality finds out about your business.
Check your HOA, deed, or lease restrictions.
Aside from local zoning laws, your neighbors may be worried that your home-based cosmetic business may create added traffic and noise, parking problems, unsightly signage, and distracting lighting that will impair their ability to enjoy their homes.
In most neighborhoods, your condo, co-operative, or homeowners’ association may have instituted additional deed covenants that limit or prohibit home-based businesses. Therefore, if you are renting a property, your lease may include restrictions on home-based businesses to protect the interests of other tenants.
Sales tax permit
Since you will be selling tangible goods (items you can hold in your hand), note that your state will collect sales tax, and you’ll need to obtain a sales tax permit through your state’s tax comptroller or tax office. You can probably apply and submit sales tax you collect from customers online.
Federal Employer Identification Number (EIN)
Have it in mind that an EIN is like a social security number for a business. It is free and can be obtained online. Sole proprietorships don’t need one, but it is recommended so you don’t have to use your social security number for business purposes (i.e. to fill out W-9 if you are a freelancer or doing contract work). LLCs and other business structures, especially if you have employees, require an EIN.
Permits for your commercial sign
Ideally, a well placed commercial sign may help to direct your customers or market your homemade cosmetic business to the public. However, before spending any money on a sign, determine what permits and rules apply to commercial signs in your neighborhood.
In many communities, you may need to apply for and obtain an applicable permit before posting a commercial sign. Note that this permit may also spell out further limitations, such as the sign’s size, placement, wording, materials, and lighting on your property. Get in touch with your local zoning board or commission for rules and restrictions on signage.
A homemade cosmetics business is likely to become a lucrative venture, as people increasingly seem to prefer natural and homemade products. Although the FDA does not require sellers to obtain a dedicated cosmetics license, it does encourage beauty brands to register their products under the Voluntary Cosmetic Registration Program (VCRP).