Laws for Starting an Online Cosmetic Business

Written by melinda gaines
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Laws for Starting an Online Cosmetic Business
Many retailers sell lipstick online. (cosmetics image by dinostock from Fotolia.com)

The U.S. Food and Drug Administration (FDA) is the federal government agency that regulates cosmetic businesses, including those that are based online. Although it is possible for an independent or artisan make-up business to thrive on the Internet, it's important to make sure your products and business practices do not violate FDA standards and regulations.

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Selling Permits

Most businesses that sell cosmetics online need to obtain licenses or permits from their municipalities. What you need will vary, and depends on where your cosmetics business is based. Contact your local small business development centre or Small Business Administration (SBA) office to see exactly what permits you are required to have. You may need one of more of the following: Resale permit, tax identification number, sales and use tax permit, employer identification number (EIN), assumed name certificate or doing business as (DBA).

Health Claims

The FDA prohibits cosmetic manufacturers and sellers from making health claims about their products without solid scientific evidence. For instance, you cannot claim that your foundation clears acne without data and research to prove it. If it can be proven, your foundation would then be classified as a drug instead of a cosmetic. However, claims such as "this lipstick will make you look radiant" or "this mascara will make your lashes pop" are fine to make, as they do not have anything to do with a person's health.

Shipping

Products that are made mostly of alcohol, such as some perfumes, can only be shipped via ground transportation. This is true for most shipping carriers, including USPS, UPS and FedEx. It is important to consider this when starting an online cosmetics business that sells such products. You will not be able to offer most methods of expedited shipping to your customers.

Labelling

The FDA has rules regarding what items need to be listed on a cosmetics label, which cosmetics need ingredient labels, and the order in which ingredients must appear. True soap does not need an ingredient label. Most other cosmetic and body care items do. The ingredients must be listed in descending order. When listing fragrances, you do not need to list your proprietary blend. Using the term "fragrance," "scent," "essential oil," "fragrance oil," "flavor" or "flavoring oil" is sufficient. For instance, if you have a scent blend that contains papaya, mango and clove fragrance oils, you do not have to list those individual scents, as the formula is considered proprietary.

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