If you think soap-making is ideal for you, then you will certainly like to know how to get started. Besides registering it in your state, you will have to complete other formalities.
You will have to take care of how to plan your business properly and comply with all legal requirements. Here is how to start a soap-making business.
1. Make a Plan
You need to have a good plan if you want your business to be successful. Your plan should cover all specifics of your business. It will also help you discover issues that you need to be aware of.
Some important considerations are as follows.
- What is the cost of starting the business?
- How much will the running costs be?
- What name will you keep for your business?
- What prices should you charge customers?
2. Make a Legal Entity
You will have to choose a legal structure for your business. Some of the most common examples include corporation, limited liability company (LLC), partnership, and sole proprietorship.
But why would you want your business to be a corporation or LLC? The big advantage of these legal forms is that you will not be held personally liable if your business is sued.
You may think about making your business an LLC since you just have to pay minimal state costs for the LLC.
3. Tax Registration
You must make sure that you have registered your business for federal and state taxes. You will need to get an EIN to register for taxes. This is an easy process.
4. Small Business Taxes
Depending on the kind of business structure you have selected, you will have to pay different taxes. For instance, certain kinds of businesses can receive tax benefits if they choose to be an S corporation.
You will also have to understand specific local and state taxes that will apply to your business. Make sure that you know all about state sales taxes so that you can pay your business tax.
5. Open Your Business Bank Account and Get a Credit Card
If you want to protect your assets, you will need to get a business bank account and credit card.
If you are using both business and personal assets for your business, then your personal assets will be at risk in case there is a lawsuit against your business.
If you get a business credit card and use it smartly, you will build a good business credit history. You can then enjoy financing benefits like a greater line of credit, lower interest rates, and so on.
6. Start Business Accounting
You will need to record your income and expenses to get a clear idea of how much profit your business is making. Keeping accounting records is also necessary for tax purposes. Your annual tax filing will become much easier with updated and accurate accounting records.
7. Obtain all Required Licenses and Permits
If you fail to obtain the necessary licenses and permits, then you could face big fines. Your business may even be forced to shut down.
You may need certain state permits as well as licenses for your soap-making business. You will also have to check up on state rules for cosmetics and various body care products. You can visit the SBA site to know more about your state permits and licensing requirements.
To know all about licenses and permits, you must also check with the county, city, and town officials.
You will have to look at labor safety requirements and follow all the Occupational Safety and Health Administration rules.
You will also need to get a certificate of occupancy or a CO if your business is operating out of a certain location. The CO verifies that you are fulfilling all regulations, zoning laws, and building codes.
To protect your brand name, you should get registered for copyright and trademark. This is especially necessary if you are using a unique formula for your soap. In this case, it is prudent to protect your business interests with trademark and copyright.
7. Business Insurance
In addition to getting licenses and permits, you will also require insurance to operate legally. Business insurance is vital for protecting your business finances in case of a covered event that leads to losses.
There are all kinds of business insurance plans that cover specific risks. If you are not sure what your business risks are, you can go for general liability insurance. This is the most commonly used coverage for business, so starting from here is a good idea.
If your business has employees, then your state may also require you to have workers’ compensation coverage.
8. Choose Your Brand Identity
Your brand helps to convey what your business is about. Consumers can instantly recognize your business if you have a strong brand identity.
Branding is necessary for differentiating your business from your rivals and creating a good impression in the minds of consumers.
9. Create a Business Website
After creating a brand and logo for your business, you also need to display it on your business website. You should set up a business website so that your customers can find you online.
Optimize your site for SEO. For example, if your brand is about making organic soap, this is one of the target keywords you will be using so that people looking for such a product can find you.
10. Get a Business Phone
To separate your personal life from your business, you need a business phone number. This helps to give legitimacy to your business and also allows you to implement good customer service.
This simple guide on how to start a soap-making business showed the basic steps needed. You should do your research to find all the necessary details that needs to be done.