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 want to 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 going to 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 lot of great success. I'm going to 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 lot of 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 how much.
There's a lot of questions 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 going to do it online and I want to 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 want to start from home, create some spice blends. Most of the states in the U.S. allow you to do spices because they're a low-risk product that doesn't have a lot of potentially hazardous materials or ingredients in them, 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 that it has a low investment. If you're doing it from home, you don't have to go out and get a commercial facility, get all these different licenses and insurance, have inspections, and go through this whole process if you're going into a commercial facility compared to a home-based business. Yes, you could do it from the comfort of your own home using your cottage food laws.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, and this is where it gets a little tricky, will require a business license as well as a home inspection or some kind of approval as well as a license to operate.Other states, though, 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 legitimately, 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 running a business selling food. Although they don't require it, you need to find out for sure if you can get your incorporation, get a business license, even get a business food business policy or insurance policy to protect you from any potential risks that could come up. Now, number two, if you're not doing it from home, then you can get into a commercial facility.
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 going to come in and inspect your facility. They're going to have criteria and guidelines. You're going to need that license. You're going to have to have whatever permits or business licensing that the 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, or 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 or any facility that does any of the following that 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. If there are any problems, they can come and sort of, there is 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 people are 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 kind of stays safe. Number three: permits, sales tax-exempt, and any other licensing. Now, this is going to 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, that you need to also make sure you get a sales tax exemption from the idea of being taxed twice.
Let me explain what this means. When you, as a business, purchase an ingredient and you bring it together and you put a lot of other ingredients together, like a spice blend, 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, bring together all of the spices, and create a finalized product, because then you're going to collect the tax when you sell it.
So that way, there's no double taxation on it. Number four is the EIN. Make sure that 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 going to be for the IRS and tax purposes and those reasons. Make sure that you get that because that is a specific ID that is going to be for your spice business. Make sure you get your EIN. The next one is remitting your sales tax. Now, you also have to collect the sales tax. As I kinda just briefly mentioned about the sales tax exemption when you're buying the ingredients, when you sell them, you have to collect the sales tax and then you have to remit that. You've got to 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 it 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. A business license is a normal thing across the board, aside from permits and any other inspections that you may have from other government agencies and entities. 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. The health department traditionally inspects 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 is in order. Because you are creating a food product, even spices are considered a food product, and you're selling them. 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, and everything else 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 with these annual renewals.
Because these certificates normally have to be shown, they have to be put on the wall, visible for people to see when they come and do the inspections. All right, if you have 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 kind of clarifies it, definitely give us a big thumbs up. If you have 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 in our next video.