Here is what I have learned for legal requirements--and other good business stuff--for selling soap. I am only selling to family and friends right now, so my business is as small as it can get. Some of this I learned from Soapbuddy and others who have commented; some from speaking to friends who own small businesses here where I live.
1. I do not need a business licence for my city, since I do not have a store-front and sell "door-to-door" to friends, family, and possibly at craft shows. Check your city's ordinances.
2. I must collect and pay sales tax to the State of Texas--failing to do this is a crime punishable by a $500/day fine! I have to apply for a sales tax license and send taxes quarterly. Check with your state.
3. Though liability insurance is not a legal requirement, it is a good idea. The cheapest policy I could find for my extremely small business was $239 annually for $300,000 coverage. It was more expensive for $500,000 and 1 mil. The company is RLI and they only cover you if you make less than $5000 revenue the two years prior to a claim and operate only out of your home. That's me right now. Other insurance that covers higher revenue is twice that per year.
4. Get an EIN from
www.irs.gov--the application takes just moments and you get a number instantly. No, you don't need one if you don't pay employees, but you can use it to purchase ingredients and materials from wholesalers who require one. Hello, discounted oils! You can also use it for any business-related thing, like opening a business bank account, and on your taxes.
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