Legal Requirements for Selling Candles

Owning a candle business teaches you a few things along the way. This is what I wish I knew before I started making candles to sell.

Legal requirements for selling candles and best manufacturing practices are not the same. There is a responsibility to the public even with crafts we enjoy and at the smallest level.

BEFORE making candles to sell, remember you are manufacturing a product that is intended to burn in someone’s home. You are responsible as a manufacturer to know and understand all (city, state) legal requirements for that process and releasing that product to the public. 

Selling candles to the public, friends, or family, requires a well-thought-out plan. This article is intended to help you succeed if a candle business is your goal. You should always consult with your local professionals.

Often, we get lost in the creative fun with crafts and overlook all the not-so-fun things that can happen. Let us look at the process of planning to start a candle-making business.

Before I wrote this, I checked the internet to do some research and was horrified by what I found. My first advice is DO NOT TRUST everything you read from a google search.

So much of the information I found was inaccurate at the least and hazardous at worst. Not all was bad, but enough to be alarming. I cannot stress this enough.

Do you need a business license to sell candles? 

Any retail space you rent will require a business license. Some local cities require a business license or a permit to sell at a flea market or vendor show. Check with your city clerk’s office. Additionally, ask the organizer you have a sign-up with if you are doing a show.

Often, small crafters or small side candle businesses are covered under the building or show’s license. Ask for a set of rules or guidelines for doing business with them. I rented a table area at a flea market and part of the rules was “No Open Flames”.

I have also rented a small space inside a marketplace that did require a business license. Part of that required a city inspection from a coding officer and the Fire Marshall.

Always check with your city.

Making candles at home and selling online typically does not require a business license. Selling candles from your home can be in a grey area.

Most of the time traffic to your home for a business falls into the yard sale area. Operating a business open to the public from your home does not.

My city only allows me to do this twice a year and requires a permit that is good for seven days. Not following the city ordinance could land you with a hefty fine.

Do you need insurance to sell candles?

YES. I have to say this first. Insurance companies are your friend until you make a claim. Most homeowners’ insurance cover mishaps around the house because of personal hobbies. Make sure you check your policy for coverage.

Do not confuse homeowners insurance with commercial insurance. You may not be covered under your insurance making candles to sell from your home.

Do not confuse product liability insurance with property insurance. Take the time to learn about insurance coverage and policy.

As a small business, it is important to protect your investment. Most homeowners’ insurance will cover the structure but not the contents or equipment. The time to make sure you are covered is before you need it!

Candle Making Insurance

I am not an insurance agent and you should consult with one. You may want to consult legal advice as well. You need documentation of what you own. There are 3 different scenarios I would like to bring to your attention.

Renters Insurance

Before you operate a candle-making business from your apartment or residence that you do not own make sure that you have the owner’s written consent to do so. If your hobby or your business causes a fire, you are responsible for damages. This could be catastrophic or criminal.

If you are renting, often the property insurance your landlord has does not cover the content of the building. This means that in an event of a fire, pipe bursting, or theft, you are not insured. You should carry a renter’s policy that covers the contents of your dwelling.

Home Owners Insurance

Verify your insurance policy will cover you in the event you have an accident making candles at home either as a hobby, weekend seller, or as a small business. You may need to purchase a rider to cover the contents of your home.

As candle makers, we focus on our candles as a fire hazard, which they are. We often overlook other things at home that can go wrong. Burning a candle is not the only hazard.

Making candles is a hazard. The equipment we use can be a hazard. If you are operating as a business under your homeowner’s insurance property policy you may be in violation and in trouble if something happens.

Insurance policies do not cover illegal operations. They resist paying so make sure you are following the rules and guidelines. As a business, it is your job to find out what these are. No one tells you.

I have learned in the past that you need to prove ownership of lost property. Someone broke into my home and the first thing the insurance asked me was proof of what I owned and what it was worth.

I could not recover what I could not prove I owned. It was awful as I was not prepared.

Retail or Product Insurance

I carry product insurance from soapguild.org because I also make soaps and bath products in addition to candles. Fire hazards are not the only thing that you need to worry about.

If you are renting retail space, you will need property insurance or general insurance that often does not cover product liability. Sometimes it is cheaper to buy a rider that adds to the property policy but not all agents carry product liability.

The biggest challenge I had was finding a retail spot that also allowed me to make products on the same premise. I spent years making products at home and loading them up at my store. Because of this, I made products during the week after work and opened my store on the weekends.

Preventing accidents goes a lot further than trying to recover. Take care in your candle-making processes to include:

Best manufacturing practices for candle making and safe care.

Here are a few suggestions.

Monitored smoke detectors from a place like Simplisafe.

I used them for years as an alarm system and the smoke detectors are monitored directly and dispatched to the local fire and police. I don’t have an affiliate but they are that good! It is easy to install at home or in a retail space. It is also affordable.

Do not use extension cords. 

They overheat. All of your equipment should be directly plugged in or on a surge suppressor.

Have fire extinguishers. 

Make sure you have the correct one and understand how to use it.

Have a first aid kit. 

Be prepared if you have an accident.

Have a spill kit. 

Have something set up in the event that you knock over a liquid candle or a spout comes off or whatever you may need quickly. Try to make a policy to not pour candles sitting down. The last thing you need is hot wax on your lap!

Dress appropriately. 

Use common sense. Don’t make candles in flip-flops and shorts. Hot wax burns and if you drop something it’s going to hurt. If you know how to get candle dye out of clothing, let me know.

Protect your customers. 

Even if you are set up at a craft show you are a temporary retail store. Think of all the stupid things a person (or kids) could do and it will happen. I have had people trip over the corner of my tablecloth because it drags the floor and almost knocks over my entire display.

Insurance policies are also meant to protect you in the event a product causes damage to the consumer. This leads us to the next question.

Do you need an LLC for a candle business? 

Forming an LLC defines the ownership of a business and what roles you or your partners or employees play. I registered an LLC to separate my personal assets from my business assets (and liabilities). This area can be tricky so consult a professional. In Michigan, I was able to file online for $50.

Should I Buy an LLC or Insurance for My Candle Business?

As a small crafter selling candles at vendor shows we do not think of ourselves as businesses in the true sense.

As soon as goods are exchanged, a business transaction has been made. Establishing an LLC defines that action to be other than personal. It defines that you are acting as an entity outside your domain. Most businesses carry insurance to protect that entity and assets.

The intention of forming an LLC is to separate personal and business assets. With the risk of candle-making in the worst case of burning someone’s house down or personal injury, I carry insurance and keep my assets separate.  

Everything is fun and joyful until things go wrong. The best time to plan is when things are going well, and you have a clear head. There is nothing worse than finding yourself in a bad situation and trying to figure out what to do next.

I have to follow that statement with the fact that I am not a lawyer or a CPA and you should always seek the advice of professionals in your area. The cost to establish an LLC varies by state.

However, I have been around the block for a time or two. I have learned that filing an insurance claim is not fun and they questioned everything. It was like they looked for any route out of not paying up! This is why I say it is better to understand what is covered and what you need to do now to fulfill that requirement so that you do not scramble if anything should happen.

The most overlooked scenario is a homeowner’s policy. Review your policy with your agent to make sure you are covered if you set your house on fire while making candles. As a hobby for yourself, you may be covered. Running a business out of your home, you may not be. Some cover damage to the structure but not the contents.

As a business, it is your responsibility to understand what you are required to do. Check with your local city clerk. Are there restrictions on chemical storage? Quantity? Air emittance? Are you required to have an ABC fire extinguisher within 20 feet of any working area? Are there exhaust requirements?

Establishing an LLC means you are a business. You do not have to establish an LLC to be a business. Businesses practice the best manufacturing processes to protect themselves. Insurance companies can be ruthless. If your homeowners will not cover fire as a result of a “company” accident you are in trouble! No one wants to go through that either.

If you are renting a retail space, for example, you may be required to obtain a business license locally through the city. Some require an insurance policy to be presented at the time of application. I rented a space once that required I have a 24-hour smoke detector monitored by the fire department.

Additionally, if your candle causes harm to someone or their personal property they can sue you. Not too many friends maintain that relationship after their living room went ablaze. Someone will need to fix it and make it right.

Your candle business bank account and your bank account and the record-keeping should be separate. You should be demonstrating that it is a stand-alone business.

Where is the best place to buy insurance for my candle business?

Most insurance policies that sell to homeowners can also add on liability insurance for candle making. I buy mine through the Handcrafted Soap & Cosmetic Guild at soapguild.org and it is a good resource.

Without going too far on a tangent, some candle makers also make soap and bath bombs. This community covers everything and is the logic for my choice. The cost of candle making insurance should be less than $250 a year.

Read through the policy to understand what it covers and take the time to make a list of contingency plans should you need them. It is worth the time and effort to plan your candle making process so that you work safely and efficiently. Your equipment is an investment that could take years to build and should be protected.

One type of insurance that we did not cover is healthcare. Most will cover an accident as long as you do not have employees. This is a completely different setup. Most state laws require that you carry workman’s comp insurance if you employ workers to help you make candles. This can also get tricky if you have hired someone to help you in your home even if it is part-time and they get injured.

Asking a professional these questions now is far better than when you are in a panic paying someone else’s medical bills because they spilled hot wax down their arms dropping a pouring pitcher. You may want to only hire helpers that are 18 because of the hazards.

What are the best candle making practices for your insurance?

Strive to work safely. You should be working inappropriate attire and using protective gear when needed. Protect your hand’s face and feet. Wear closed-toe shoes. Determine the risk associated with your activity.

Pouring from a small bottle of fragrance is very different than pumping from a 55-gallon drum. Should you be wearing safety glasses to protect your eyes from splashing? It may seem like overkill until you need to rinse your eye!

Make a list of PPE – Personal Protective Equipment

• Closed-toe shoes, long sleeves, long pants
• Safety Glasses or splash shield
• Apron
• Gloves or oven mitts

Make a list of work area safety needs, and keep your area clean and organized

• Fire extinguisher, smoke detector
• Paper towels, rags, spill kit
• Trash can with lid
• Ventilation
• First aid kit

Some best manufacturing rules for candle making

• Keep everything properly labeled
• Keep containers closed when not accessing them (open containers spill)
• No open flames
• Keep work areas organized by function, ie: do not mix candle making with shipping
• Setup appropriate storage areas, no piles
• Document and keep records of your activities

Manufacturing practices that help to protect the consumer and you

• All candles should be labeled correctly including a warning label
  • Make sure the container meets the labeling laws
  • Can the consumer contact you?
  • Did they receive care instructions?
• Select containers that can withstand the heat of burning
• Inspect the glass containers before using them for cracks
• The only thing meant to burn in your candle is your wick, adding anything flammable like dried flowers or embellishments is adding risk. I have to stop and mention that if you put something in a candle that should not be in and you create a “fireball”, and as a result, someone’s house burns down, you may have a hard time getting your insurance to cover the damage. You are intentionally making a hazardous candle. This type of candle is very popular for a spell and ritual candles. Make sure the warning is clear.
• Your products should be tested by size, type, and manufacture and records kept.
• Keep manufacturing records, what batch did you make and when, with what, etc.

Make some contingency plans for your candle business

This does not have to be anything fancy. A notebook works just fine. Some of this depends on how big your business is. If it does not apply you can skip this section, but it may be something to consider at smaller levels as well. (I speak from the heart of experience)

• Do you have a backup copy of your information? Printed copy?
• Do you have a list of multiple suppliers and their contact information? What if one supply runs out of containers? Or wax? Have you tested alternate sources?
• What if your computer crashes? How would you make labels? How would you ship?
• Do you have support if you get behind?

What are the labeling requirements for selling candles? 

This is the most overlooked aspect of crafting businesses. Laws vary by country, state, and city. As much as I would like to be your one-stop shop for answers, check with reputable sources like candle.org and the U.S Consumer Safety Commission.

Some of the basics are labeling requirements under the fair labeling and packaging act. Also, the safety of consumer products by addressing “unreasonable risks” of injury (through coordinating recalls, evaluating products that are the subject of consumer complaints or industry reports, etc.); developing uniform safety standards, etc. I found these through the FDA.gov site.

In some countries, candles cannot look like food (Europe). Make sure you know what you can do. If you make candles or wax melts that look like food absolutely make sure there is a warning label that tells the consumer that it is not edible.

Most fragrance oils will ruin the finish of furniture. If you are making a wax craft like the aroma bears I make, put a warning label letting people know this. I put mine on a clear plastic plate and tell people to not place them directly on a service.

Take the time to educate the customer. Have them click a box at the checkout that they have read the hazard and care instructions and they understand the risk. Make sure your product is labeled with this information too.

Insurance companies may not pay off if you do not follow the best manufacturing processes and create a defective or hazardous product.

You will never look at a candle the same way again!

How to start a candle making business at home

You need a plan. It is so cliché and not the glam side of crafts but write down what it is you want from this adventure and what it looks like. Everyone enters a small business with a skill set at different levels.

Starting a candle business when you have never made a candle before can be very expensive. Following a plan can help you succeed. With a plan, anyone can start a candle business with little cost.

How much does it cost to start a candle business? 

Let’s reverse-engineer this. How much do you want to make? I have probably said this a hundred times to people asking this question.

Candle making equipment and supplies

1. Minimum Example (purchased in small quantities, does not include labor)    Total   $179
2. Candle molds or containers start at on average $10
3. Candle Wax comes in 10-pound bags on average $21
4. Candle Wicks come in a bag of 100 on average $10
5. Pot to boil water and a pouring pitcher to melt wax on average $12
6. Fragrance Oil as 10% of wax on average (10#) 5 variety of 4-ounce bottles $50
7. Scale $20
8. Thermometer $6
9. Misc (labels, glue, paper towel, spoons, etc.) $50

How much money do you make selling candles?

You can only make as much money as you have a product to sell. There is a distinction between what you spend and what you earn. “Treat it like a hobby and it will cost you like a hobby.

Treat it like a business and it will pay you like a business.” For your business to grow, the profits must be put back into the business. I pay myself 30% (or less) of the profits and the rest goes back into the business. 

Research and Testing

The example above is based on someone who has never made candles before. If you have never made candles from scratch, then you need to do some pre-launch activities. This includes testing to make sure you have paired the correct wick with the containers you plan to use as an example.

Not all fragrances are created equal. Not all wax is the same. Combinations of wax and fragrances respond differently. Candle making is not any different than launching any other product. You need to develop your skills, learn what works, and practice the best manufacturing processes.

Can a candle-making business be profitable? Start small and keep growing.

Stick with your plan. Selling candles at markets is different than selling candles as a side business renting a retail space. As your business grows so does the need for bigger and better equipment, supplies, and the need for added labor.

Going into debt to launch will take planning a timeline before the business turns an actual profit. You get to decide what phase or scale is comfortable for you.

Types of candle businesses

• Sell candles online from home (sell to family, and friends)
• Sell candles at weekend markets (craft and vendor shows) – the best way for starting out or marketing
• Sell candles as a side business (part-time or full-time, in retail space)
• Sell candles wholesale (bigger production runs)
• Sell candles as a private label (manufacturing for someone else)
• Sell candles and then have a candle business for sale

What is a marketing strategy for a candle business? Part of starting small and selling to friends and family is word-of-mouth advertising. Get feedback from your customers to improve your product.

One of the benefits of selling at craft and vendor shows is marketing. People love to smell candles, and this gives them a hands-on opportunity. Make sure to give them something like a candle care card with re-order information on it to an online store. You want people to find you later when they want more candles.

As your business grows so will your marketing and advertising needs. In the beginning, your biggest asset is craft shows.