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Do You Need a License To Sell Soap on Etsy?

License To Sell Soap on Etsy

Crafting handmade soaps is enjoyable, affordable, and can potentially become profitable. Many people make their own unique soaps and sell them on sites like Etsy. However, it’s important to make sure that you know about all of the laws and regulations that apply to any business you start. For example, do you need a license to sell soap on Etsy?

Questions About Needing a License to Sell Soap on Etsy

There are two different issues to address here:

  • Do you need a business license to sell items on Etsy?
  • Do you need any specific type of license related to selling soap specifically?

Furthermore, it’s important to understand the nuances of the answers to these questions.

Do You Need a Business License to Sell Soap on Etsy?

Etsy does not require you to have a business license in order to sell soap, or other items, on their site. You’re allowed to sell items as an independent person. So, as far as legal requirements, no, you don’t need a business license. However, there are benefits to getting a business license any time that you start a small business. You should take those into consideration.

Do You Need a Special License to Sell Soap on Etsy?

There are many different types of businesses. Some of them are more regulated than others. Soap is an interesting category in the United States. The Craft Industry Alliance explains that there are two different regulating bodies that might oversee soap businesses:

  • Consumer Product Safety Commission
  • Food & Drug Administration

Made Urban further explains that soap can fall into two different categories. If soap has certain ingredients in it, or makes certain claims, then it falls under the category of drugs. FDA rules apply to drugs. SocializedPR elaborates that soap intended only for cleaning is soap whereas soap offering medicinal benefits is a drug.

All of that said, you still don’t need a special license to sell soap on Etsy.

Special Considerations for Etsy Soap Sellers

Although you don’t need any special license, as a smart business person, you should err on the side of caution. What does this mean?

First and foremost, it means that you properly label your soaps. Make sure that you don’t make any claims that they’ll improve your health. For example, as Made Urban emphasizes, you shouldn’t say that your soap cures or treats anything such as acne, rash, sun damage, or wrinkles. You also shouldn’t claim that it kills germs. All of these things are medicinal and are therefore subject to FDA regulation.

Business Sense

Second, you should consider the benefits of treating your Etsy store as a fully legitimate small business. This might include:

  • Registering your business and securing an EIN
  • Properly paying all taxes including sales taxes for sales made on Etsy
  • Acquiring business insurance
  • Contacting the Consumer Product Safety Commission and/or a local business attorney with any additional questions about business licenses and other best practices for selling soap on Etsy.

If you’re just getting started, you can go one of two routes. First, you can start small and make these decisions as you grow. Since you don’t need a business license to sell soap on Etsy, you aren’t required to take any of these steps. You may not be ready. Alternatively, though, you can do that groundwork first to get your business off on the right foot before it grows. Which path is right for you?

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