Do you Need a License to Sell Spices

Posted by Damian Roberti on

All right, they are easy to sell, come in a multitude of different flavors, and have been around for thousands of years. And you might be thinking, "What in the world is this?" It is actually spices and you wanna know, do you need a license to sell spices? It's a huge question that we've been getting on our other spice videos and I'm gonna address that here in this podcast. And how do I sell spices? If you're brand new to Marketing Food Online, welcome, my name is Damian Roberti. I am a food entrepreneur and I bring you tons and tons of resources to help you get your food business up and running.

 

My wife and I started our e-commerce business a multitude of years ago and we have had a lotta great success. I'm gonna dive into a handful of different questions today in regards to spice businesses. But more specifically, do you need a license to sell spices? Because a lotta people are not really sure because they're starting most of these businesses from home, which believe it or not, cottage food laws come into play when you're selling food from home. And it also dictates where you can actually sell your spices and limits you as to how much. There's a lotta question as to, "Well, if I'm doing it from home, do I need a license to sell spices or how do I sell spices if I'm gonna do it online and I wanna start in a commercial kitchen or a facility?" Let's dive into this. It's a really great question.

So number one, if you're getting into the cottage food business, you wanna start from home, create some spice blends, most all of the states in the U.S. allow you to do spices because they're a low product that doesn't have a lot of potentially hazardous materials or ingredients to it, so they're actually considered a product that you can make from home. They're not something that you have to cook, you have to bake, and then keep at a certain temperature or they're time-sensitive. Spices from home, creating a spice business from home is one of the best ways to do it. Another reason why is because it has a low investment. If you're doing it from home, you don't have go out and get a commercial facility, get all these different licenses and insurances, have inspections, and go through this whole process if you're going into commercial facility compared to a home-based business.

Yes, you could do it from cottage food laws from home. Now, the question was about licenses. This will be dependent upon your state. If you start making spices at home, most likely, you'll have to fall in line of course with your local city and county's ordinances and regulations. Some of them, this is where it gets a little tricky, some of them will require a business license and a home inspection or an approval of some kind and a license to operate it. Other states, though, they don't have anything.

Some states will allow you to do any type of food business except for, of course, potentially hazardous food products, you can pretty much create anything at home, but you don't have any inspections. You don't even have any licensing or even business licenses required. But to do this legitimate, I highly recommend you also protect yourself. If you're doing it from home and your state says, "Hey, you know what, Damian, you can create spices from home, but you don't need to have any business licenses.

You're under the cottage food law. You can sell it locally. You can sell it at farmers' markets and local events. That's fine, but you don't have to have a license or insurance or any of that sort," I personally would say you need to get something to protect yourself. Because you could get into some serious trouble personally if someone were to get sick or ill. That could pose some legal issues for you as regards to running a business selling food. Now, although they don't require it, you need to find out for sure if can get your incorporation, get a business license, even get a business food business policy, insurance policy to protect you from any potential risks that could come up. Now, number two, if you're not doing it from home, well then you can get into a commercial facility.

 

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Now, do you need a license to sell spices that way? Yes, when you get into a commercial building, if it happens to be a food facility, you've got it decked out and the Department of Agriculture's gonna come in and inspect your facility, they're gonna have criteria and guidelines. You're gonna need to have that license. You're gonna have whatever permits or business licensing that that city or county where you're opening the spice business will require from you. It's not something you can just simply rent a building and start producing a food product. You have to also make sure you have insurance, business insurance, of course, for a commercial food facility. If you're handling, packaging, distributing, selling online from that commercial facility, you also need to register the facility with the FDA.

If you're handling food products in that case, the FDA does require that any warehouse, any facility that does any of the following of what I just said, that is something that you need to make sure you register with. Why do you have to? Well, the FDA wants to make sure that they know where the products are coming from. Down the road if there happens to be any issues, they can come and kinda, there's a traceability involved with this. So they know and the FDA can say, "Hey, you know what's coming from that facility," so they need to check it out and see why are people getting sick, why is there a problem, why is there a recall if there happens to be.

Having an FDA registration with them is to ensure that they know where the product's coming from so everybody kinda stays safe. Number three, permits, sales tax-exempt, and any other licensing. Now, this is gonna vary. If you're in a commercial facility, obviously, and you're creating a commercial business and you're mass producing spices and you're doing that, the licenses you would need as well, but remember, also, you need to also make sure you get a sales tax exempt from the idea of being taxed twice. Let me explain what this means. When you as a business purchase a ingredient and you bring it together and you put a lot of other ingredients together, like a spice blend, so you're bringing multitude of things together, make sure that you're not paying taxes on purchasing it.

You need to make sure that you have that sales tax exempt so you can show the business that you're actually purchasing it from, bringing together all of the spices, and creating a finalized product, 'cause then you're going to collect the tax when you sell it. So that way, there's not a double taxation on it. Number four is the EIN. Make sure that you, when you start your spice business, one of the licenses or registrations that you need to have is the EIN. That's an employer identification number.

That's actually gonna be for the IRS and tax purposes and those reasons. Make sure that you get that because that is a specific ID that is gonna be for your spice business. Make sure you get your EIN. The next one up is remitting your sales tax. Now, you also gotta collect the sales tax. As I kinda just briefly mentioned about the sales tax exemption when you're buying the ingredients, when you sell it, you have to collect the sales tax and then you gotta remit that. You gotta send that to the state that you're in. You need to make sure you have your tax ID number with the state that you're actually operating in so you can remit or send, either every six months, annually, or every three months, every quarter, however your state will set up your business, but you need to send them the sales tax you've collected. Number six is just obviously a common thing, a business license.

Now, aside from permits and any other inspections that you have from other government agencies and entities, a business license is a normal thing across the board. You have to have a business license to operate your business in order to be legal and, of course, legitimate. Number seven, next up, you will probably, most likely, 99.9% of the time be inspected by the USDA. The Department of Agriculture has satellite offices in every single state. They have departments in every single state that will come and look at your facility and of course inspect it to make sure that things are up to standards. Health department traditionally will inspect actually restaurants, cafes, and food service. If you're serving food, that normally falls under the health department. If you are a food sales establishment, the Department of Agriculture will be the one that will come in and make sure your facility.

Because you are creating a food product, even spices are considered a food product, and you're selling it. That's a food sales establishment. The Department of Agriculture would fall in line with that. Keep that in mind as well. Now remember, all of these permits, licenses, inspections, everything about what I just said have to be renewed annually. Keep that in mind. That's not something you just do once and then you're good for 20 or 30 years. These are things that have to be constantly renewed, so make sure that you, of course, have funds available.

Make sure, of course, that you are keeping up to these annual renewals. Because these certificates normally have to also be shown and they have to be put on the wall visible for people to see when they come and do the inspections. All right, if that has any questions about the idea of do you need a license to sell spices and how do I sell the spices, those are two great questions and I thank you guys for definitely sending them in. If this kinda clarifies it, definitely give us a big thumbs up. If you had any questions about this, let us know down below and check out our podcast links as well and we'll upload this onto YouTube. I'll see you on our next video. Listen to "Marketing Food Online Food Entrepreneur" on Spreaker.

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