Starting a small business can seem daunting for many reasons. There are so many numbers to crunch, and demands to meet. There are also the legal aspects of small business. And let’s be honest, unless you’re a lawyer or have access to one, it can be tricky to make sense of all that. One of the most common questions I get from soapers who are thinking about turning their hobby into a business, is how to make it “official.” Do you need to register somewhere, or need a license? Is a trademark essential? Let’s talk about it.
First of all, congrats! You have want to start a business, and have a business name. Sometimes coming up with a business name is the hardest part. Now that you’re ready to make it official, the first step is registering the business name in your state with a business license. This process ensures there isn’t another business in your state with the same name, or something extremely similar. To get started, I recommend searching around online to see if anybody else is using your desired business name.
A business license protects you from other businesses creating a business with the same name as yours (or something extremely similar). Many states have an online search function to check if a business name is already registered (for example, see Washington’s Business License Lookup here). Keep in mind, registering your business only protects your business name in your state. The process of getting a state business license varies widely from state to state, and each state has different rules and guidelines. To learn more about the state permits you need, find your state here.
When applying for a business license, you will need to choose what type of business you’re registering as. The Small Business Administration has an overview about the different types of business structures (corporation, sole proprietorship, cooperative, etc). A sole proprietorship is the most common type of small business. According to the Small Business Administration, a sole proprietorship is “an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.” Amanda of Lovin’ Soap has a great article that dives a little bit deeper into two popular business structures for new businesses.
Another piece of making your business “official” is quickly grabbing your website domain. Even if you don’t plan on creating a website now (or ever) you want ownership of your business name online. I also highly recommend creating accounts of various social media channels like Instagram, Pinterest, Facebook and Twitter. You don’t have to be active on all these sites (although I recommend it!) but that way you have the most control over your business name online. For example, I didn’t get on Snapchat early-on because when it came out, it didn’t seem relevant to business. Then when their focus changed it was too late to get the name ‘brambleberry’ and the person that does have it (a) isn’t using it but (b) also doesn’t want to give it to me. So, we are ‘Bramble-Berry’ on Snapchat. Moral of the story, if you have a name, grab it everywhere as soon as you can.
Make sure to register your name on various social media channels ASAP, even if you don’t plan on using it.
After you have a business licence, the next level of legal protection is a trademark. A trademark protects a word, symbol or phrase on a federal level by the U.S. Patent and Trademark Office. A trademark is not essential for owning and operating a business. Whether or not you get a trademark will depend on the level of protection you desire. Some small business names are sufficiently protected at the state level. But if you want exclusive rights for the name of your business or product in all 50 states, you need to apply for a trademark. A federal trademark is important if your business will do business across state lines. In terms of soap businesses, this happens often if you sell online.
While the process of registering your business name on a state level is usually fairly easy, registering for a trademark is trickier. It can take a long time, and can also be expensive. The process can be done online via the Trademark Electronic Application System (TEAS). Get a breakdown of the trademark application process here. In general, obtaining a trademark usually takes about a year. Once you have a trademark, it is good for 10 years. After 10 years, you can renew your registration.
Although it’s not required, many applicants choose to hire a trademark attorney to guide them through the application process. I like Andrea Evans who knows soap and small business. Listen to her podcast with Indie Business Network here. When I first applied for a trademark for Bramble Berry, I went the DIY route to save fees on lawyers. This meant I did my own paperwork, and I did it wrong. The errors in the paperwork resulted in my application being denied. Afterwards I hired a lawyer, but it took more work and money to untangle the mess I had made. I definitely learned my lesson; DIY isn’t always the best route to take when it comes to legal processes. In the last decade, I’ve added several trademarks in multiple countries that Bramble Berry does business in, such as Australia, China and Canada.
During my early days of selling soap, I didn’t have a trademark. Many small businesses don’t obtain a trademark for several years.
So, which is right for you? This is a question only you can answer. It will depend on how “serious” your soaping business is, your plans for the future and how protected you’d like your business to be. If you are going to sell, you need to get a business license. It’s easy to do, and there are many benefits. One of the largest benefits, besides making you legal, is it shows you are serious about your business. Customers may feel more confident in buying products from a licensed business, and potential partners may be more likely to work with you. A business license also gives you a certain amount of protection, and is important for tax purposes.
Should you get a trademark? I’m not a lawyer (you should talk to a lawyer about any legal advice) so everything here is based on my experience. Many small businesses choose to get a trademark eventually (I did very early on, despite the hiccups on my poorly done DIY application). It may not make sense for your business in the first few months, first year, or even first few years of business. This is a decision that every business owner must make for themselves. However, I do recommend applying for a trademark for your business name or any unique product or product name that you’d like to make sure no one else will use. In general, when financially feasible, obtaining a trademark sooner rather than later is better.
Hello how long did you sell soaps before getting a business license?
I sell threw an app called mercari.
But i also sell to a few friends online. I lable my self a boutique. Should i lable my self as just some one with a hobby till i am ready for full business?
This is a question only you can answer. It will depend on how “serious” your soaping business is, your plans for the future, and how protected you’d like your business to be. If you are planning to sell your products, you need to get a business license.
Thank you for Sharing this very timely article. I am in the process of starting my own soap business and i want to do it the right way from the beginning. I feel like i am dragging my feet because I’m afraid to miss something important this article was helpful!
Oh you’re welcome, glad to hear that Michele.
Hi! This article was sooooooo helpful! I have gotten my business license for my state and I am in the process of filing for my trademark. My question is do I also need to patent my soap designs and my special formulas? Also, the business license is registered under my own name is it a hard process to switch to an LLC.
I’m not sure if you are able to patent a soap design. This article from Etsy has more information on copyrights, patents, and trademarks: https://www.etsy.com/help/article/263
You can also talk to an attorney to see if that’s something they recommend. They can also talk to you about how to switch your LLC.
Thank you for your advice!
So, I’m just starting up my small business. And I got the business license. And trade mark yet.
I want to make sure, do I need more special license for the products (soap, scrub, bomb …). Do I sell them before trade mark approves? And If I wand to sell to export?
Thank you so!
You can sell soap without a trademark. As for exporting and any other licenses, that does depend on your local and state laws. I would recommend talking with a lawyer to find out more.
-Kelsey with Bramble Berry
I want to do Bath bombs I have a question about the Federal food , Drug, and Cosmetic Act what all does this consist of? Also, what does it mean color additives ? Like food coloring ? How can i color my bath bombs?
You can use La Bomb Colorants and micas for bath bombs. Both are approved for use in cosmetics. This post tells you how to add them: https://www.soapqueen.com/bath-and-body-tutorials/bath-bomb-questions-answers/
La Bomb Colorants: https://www.brambleberry.com/For-Bath-Bombs-C50.aspx
Micas: https://www.brambleberry.com/Micas-C46.aspx
-Kelsey with Bramble Berry
This was very helpful . DO i have to apply for a special DBA for soap making ?
thank you!
According to sba.gov, you need to register for a DBA if:
-Sole Proprietors or Partnerships – If you wish to start a business under anything other than your real name, you’ll need to register a DBA so that you can do business as another name.
-Existing Corporations or LLCs – If your business is already set up and you want to do business under a name other than your existing corporation or LLC name, you will need to register a DBA.
Learn more here: https://www.sba.gov/starting-business/choose-register-your-business/register-your-business-name
-Kelsey with Bramble Berry
This is an awesome post for any just starting out or thinking about starting. I too did a lot of digging to determine which was the best route for me. It’s the not so fun part of owning a small business but definitely a necessity & as uou mentioned, it’ll pay off in the long run! Thanks for these posts!
You’re very welcome Tonya! 🙂
-Kelsey with Bramble Berry
I’m curious….I have heard of many soapers that do not have the product liability. Why would I want to pay $500 per year for product liability insurance if I only sold $100 in a year. That seems like an impossibility to me.
Would a LCC be more logical when on such a small level?
Your opinion?
Hi Betty!
It’s definitely up to you, but we believe insurance is a good idea to get liability insurance because it protects you from losses related to being in business. That is the case even for a smaller business! The company you use for homeowners insurance may offer it. You can also get insurance through the Handcrafted Soap Maker’s Guild and the Indie Business Network. 🙂
Find out more about business insurance here: https://www.soapqueen.com/business/business-insurance-for-the-handcrafted-industry/
I would also recommend talking to your insurance provider or an attorney. They can talk with you about your current situation and offer some ideas!
-Kelsey with Bramble Berry
I have been researching this topic–specifically the difference between a business license and a trademark/patent–for MONTHS, and this is by far the most honest, concise, and helpful article I have read! I can’t really afford to do all the things a new small business owner probably *should* do, but I’ve been wanting to know what I should do first, and what I can likely survive without until I CAN afford it. I want to be as legal and honest as possible, but doing the full monty can be so expensive! I’ve since moved forward with filing my DBA and registering to pay sales and use tax in my state, and I feel better about taking the rest one small bit at a time. Thank you so much!
You’re very welcome Audrey, so glad you found the post helpful! Thanks for saying so. It means a lot to us. 🙂
-Kelsey with Bramble Berry
What about liability insurance? I’ve read you should obtain that as well.
Insurance is a good idea because it protects you from losses related to being in business. The company you use for homeowners insurance may offer it. You can also get insurance through the Handcrafted Soap Maker’s Guild and the Indie Business Network. 🙂
Find out more about business insurance here: https://www.soapqueen.com/business/business-insurance-for-the-handcrafted-industry/
-Kelsey with Bramble Berry
Thank you!
You’re welcome! 🙂
Thank you, for a well laid out post! Wonderful information. It seems like such a big, giant step for me & i’ve been dragging my feet some. This really helps! 🙂 <3
So glad this helps Eva! Thanks for saying so, it means a lot to us. 🙂
-Kelsey with Bramble Berry
What is the definition of a “business”? I am a crafter and only sell at the occasional craft fair I do not have an online presence nor do any marketing or advertising.
Hi Michael!
A business is the activity of making, buying or selling goods or providing services in exchange for money. So even without an online presence, selling goods is considered a business. Whether you apply for a business license is definitely personal preference. If you feel like it will benefit you, I would recommend looking into it more!
-Kelsey with Bramble Berry
But can you sell soap without having a business license? For example, if I sell soap only to people I know, friends, and friends of friends, what are my responsibilities as far as declaring income, etc…?
It depends on what state you live in! Some states require a business license, even for selling small amounts. You can check your state’s Department of Revenue website to learn more. 🙂
-Kelsey with Bramble Berry
Very timely as I have registered with the state and am charging taxes.
When you did the trademark it was for your name only?
Thanks for all you do for us.
Debra
That is correct! The name Bramble Berry is registered in the categories that we sell items for. We registered the logo as well, but that was a separate process. Also, glad you found the post helpful Debra. 🙂
-Kelsey with Bramble Berry