Starting a successful candy business takes more than knowing how to make delicious treats. Starting a new business requires completing several steps, and obtaining licensing is important as it may impact your ability to operate legally.
The question, “What business license do I need to start my candy business?” is a common one, but in reality, your business will likely need multiple licenses, permits, and registrations from federal, state, and local agencies.
Let’s look at which licenses to consider when starting a candy business.
Related: Guide to Starting a Candy Business
What Licenses Do You Need to Start a Candy Business?
State Licensing
State laws for candy producers will vary depending on the state, the types of candies being produced, where the candies are being sold, and the volume of candies being sold. Some states will require a food service license, while others can operate under cottage food laws.
Local Health Department
Generally, the local health department is the enforcement agency for food producers, and regulations vary greatly depending on where the business is located. Depending on the location, volume, and types of candy the health department will likely have oversight on kitchen requirements and even food sanitation regulations. Some health departments will require a health permit, while others will not.
A business making any edible foods will typically, at a minimum, require that employees have a food handler certificate or food sanitation certification, in addition to the facility being randomly inspected.
In addition to food-related licensing, there are several other licensing requirements for starting a candy business at the federal, state, and local level. While licensing requirements vary by location, here are a few of the common licenses and permits that a candy business may need:
Business Structure
When starting a business, the legal entity of the business needs to be selected. A legal entity refers to how a business is organized to operate. There are four main types of entities: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).
Each type of entity has its own pros and cons, such as liability protection, costs, and administrative requirements.
Related: What is the difference between a sole proprietorship, partnership, Corporation, or LLC?
Business Name Registration
While not necessarily a business license, it’s worth noting that to use a name for a business, many states require the registration of that name. Making matters more complicated, the process of name registration is different by state and the type of business entity.
For instance, sole proprietorships and partnerships generally need to register a business name (also referred to as a Doing Business As, DBA, trade name, fictitious name, or assumed business name).
Learn: How to register a DBA
Corporations and LLCs are a little easier to register because the name is registered when the entity is formed with the state.
General Business License or Permit
Depending on where the business is located, a general business license or permit may be required. A few states require a business license; however, they are more commonly found at the city level.
Learn more: Business license requirements by state
Federal Employer Identification Number
The Federal Employer Identification Number (also referred to as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that identifies a business with the Internal Revenue Service (IRS).
For any business with employees or those that form a partnership, corporation, and, in many cases, an LLC, the business will need to get an EIN.
Sole proprietors and single-owner LLCs without employees can instead use the owner’s social security number.
Learn: How to get an EIN
Sales Tax Permit or Business Number
In order to sell products and/or offer certain services, a state sales tax permit (also referred to as a business tax number or tax ID number) may be needed. This permit creates an account number with the state’s Department of Revenue (or similarly named state taxing agency) to collect and remit sales tax.
Learn: How to get a sales tax permit in each state
Resale Certificate
When buying inventory that is being resold to customers, such as sugar, packaging, and other supplies, the business can purchase these items tax-free. A resale certificate (sometimes referred to as a seller’s permit) allows a business to purchase inventory, and instead of paying the sales tax to their vendor, they charge the sales tax to the end-user of the product.
A resale certificate only allows a business not to pay sales tax for items being resold, and sales tax will still need to be paid for supplies or equipment.
Learn: How to get a resale certificate
Certificate of Occupancy
In most communities, a candy business will likely need to secure a Certificate of Occupancy (CO) before operating in a commercial building. This certificate is typically obtained from the city and/or the county, allowing a business to occupy and operate from a building. Before the certificate is issued, the building will need to comply with zoning regulations, building codes, and any other local requirements.
A home occupation permit may be required if the candy business will be operated as a home-based business.
Before purchasing or leasing a location for your candy business, check with the local zoning department to ensure the business can legally operate there.
