No federal or state license is needed to make soap. A soap business needs the ordinary layers, a registered business name, a sales tax registration, a local business license where one applies, a home occupation permit where zoning asks, plus one question that decides which federal rules reach you: is it true soap? A bar that's mostly alkali salts of fatty acids, cleans because of them, and is sold only as soap isn't a cosmetic, so FDA's cosmetic rules don't apply. Claim it moisturizes, or make a lotion, and you're making a cosmetic: labeling rules apply, and under MoCRA so does facility registration and product listing with FDA, unless your average cosmetic sales are under $1,000,000 a year and you make none of the higher-risk products. Every cosmetic maker reports serious adverse events within 15 business days. In the example below, a Tennessee goat milk soap maker works through the list. Below are the layers, the soap rules, the example, and a free checklist.
The short version
- No soap-specific license; the general business layers apply.
- Business name, sales tax registration, a local license where required, a home occupation permit where zoning asks.
- True soap: mostly alkali salts of fatty acids, cleaning because of them, sold only as soap. Not a cosmetic.
- A cosmetic claim, or a lotion, body butter or scrub, puts the product under FDA's cosmetic rules.
- MoCRA: cosmetic facilities register and products are listed with FDA, every two years and yearly.
- Small businesses under $1,000,000 in average yearly cosmetic sales are exempt from registration and listing, except for eye-area, injected, internal-use and long-wear products.
- Serious adverse events from a cosmetic are reported to FDA within 15 business days, by every maker.
- TaroStack gives each batch a lot and holds it while it cures. More below.
The layers
| Layer | Who issues it | What to check |
|---|---|---|
| Business name | State or county | An LLC filing, or an assumed name (DBA) for a sole proprietor |
| Sales tax | State tax department | Registration before you sell |
| EIN | IRS | Free online; needed with employees or a multi-member LLC |
| Local business license | City or county | Some require one; others don't |
| Home occupation permit | City or county zoning | Rules for making soap at home |
| Market and event permits | Market organizer | Vendor applications and stall fees |
The IRS issues an EIN online for free. Every state and city differs; this is general information, not legal advice.
The soap rules
| Product | What it is | What applies |
|---|---|---|
| A bar labeled and sold only as soap | True soap, under 21 CFR 701.20 | Not FDA's cosmetic rules; the Consumer Product Safety Commission oversees products like it |
| A bar that claims to moisturize or deodorize | A cosmetic | Cosmetic labeling and MoCRA |
| Lotion, body butter, scrub, bath bombs | Cosmetics | Cosmetic labeling and MoCRA |
| A bar that claims to treat acne or kill germs | A drug | FDA's drug rules |
Under MoCRA, cosmetic facilities register with FDA and renew every two years, and each product is listed with its ingredients and updated yearly. 21 U.S.C. 364h exempts makers whose average gross annual US cosmetic sales over the past 3 years are under $1,000,000, adjusted for inflation, unless they make products that touch the eye's mucous membrane, are injected, are for internal use, or alter appearance for more than 24 hours. The full test is in FDA soap regulations, and the exemption in MoCRA small business.
An example: a goat milk soap maker
Sequatchie Valley Goat Soap, the made-up maker in Dunlap, Tennessee, I use in these examples, milks two Nubian does and sells goat milk soap and lotion at markets and in shops:
| Layer | Sequatchie Valley | Notes |
|---|---|---|
| Business name | Registered | |
| Sales tax | Registered with the Tennessee Department of Revenue | |
| EIN | Not yet: no employees | Free when needed |
| Local business license | Checked with the county clerk | |
| Home occupation | Checked with county zoning | |
| Goat milk soap | True soap: labeled "goat milk soap" with no claims | Outside FDA's cosmetic rules |
| Lotion | A cosmetic | Cosmetic label; under $1,000,000, so exempt from registration and listing |
| Adverse events | Applies to the lotion | A serious one reported within 15 business days |
| Insurance | Product liability for markets and shops |
The maker took "soothes dry skin" off the soap's market sign, because a moisturizing claim would have made the bars cosmetics too. What the business earns is in goat milk soap business plan, and how a soap business starts in how to start a soap business.
Get the checklist
Download the soap business license checklist. One sheet: each layer and product rule, who issues it, what it is, whether you need it, what it cost, when it was done and when it renews, with a status that stays yellow until it's done. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
Licenses are done once. The product side keeps going: every batch cures for weeks, the lotion's ingredients have to match its listing if you ever register, and an adverse event report needs the label and the batch.
How TaroStack does it
TaroStack gives each batch a lot and holds it while it cures.
Each batch a lot. A batch of goat milk soap gets a lot with its dates, lot labels print with it, and a batch still curing can be held, kept out of what can be sold until it's ready.
Recipes by version. The soap and lotion recipes are versioned, so the ingredients in each batch are on record.
Where it went. Market and shop orders record the lots each customer got, so one recall report shows where a batch of lotion went.
| The job | Notebook | In TaroStack |
|---|---|---|
| Bars still curing | A sign on the rack | A hold until ready |
| Which recipe a batch used | Remembered | A recipe version on the batch |
| Who got a batch of lotion | Not recorded | One recall report |
Lots, batches, recipes and orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.