Before starting a manufacturing business, you will want to obtain the required licenses and permits from the federal, state, and local governments. Licensing and permit requirements for small businesses can vary, so contact your state and local government to determine the specific obligations of your new business.
Steps to Starting a Manufacturing Business
The steps to starting a manufacturing business are similar to other businesses but with a few additional considerations. Of course, every business has unique challenges and logistics to sort out. However, the basic steps are as follows:
- Do your research. Take a look at the other manufacturing companies in your area, and determine what consumer needs your new business could fulfill.
- Decide on a niche and production process. Take time to determine what you will manufacture, and how you're going to do it.
- Select a business name. Check with your state's business division and the U.S. Patent and Trademark Office to see if the name you want is available.
- Pick a business structure. You'll likely want to limit your liability by creating an entity like an LLC or a corporation.
- Draft a business plan. Your plan can help you organize your research, plan for the next steps, and secure financing.
- Register your business entity. Again, check with your state's business division to determine which forms you'll need to file.
- Apply for licenses and permits. Read on to learn more about which permits you should look into.
- Find a space for manufacturing. Be sure to check zoning laws before committing to a location.
- Get business insurance. It's important to protect yourself as soon as you start your business.
Common Manufacturing Licenses & Permits
The most common license and permit requirements for manufacturing businesses include:
- a basic business operation license from the city or county where your business will operate
- a federal employer identification number (EIN) -- also called a tax identification number -- from the IRS, and a similar tax ID number from your state's department of taxation or revenue
- a fictitious business name or "doing business as" (dba) permit, if you will operate under a name that is different from your legal entity's registered name
- zoning and land use permits that cover your manufacturing business's operations
- sales tax license to sell your manufactured goods
- health department permits if your manufacturing business includes the preparation or sale of food, and
- building permits.
Special Federal Manufacturing License Requirements
Special federal business licenses or permits are required if your business involves the following types of manufacturing:
- Drug manufacturing—contact the U.S. Food and Drug Administration for specific requirements
- Manufacturing tobacco, alcohol or firearms, or selling firearms—contact the U.S. Bureau of Alcohol, Tobacco and Firearms for specific requirements
Starting a Manufacturing Business at Home
If you're planning any sort of manufacturing at home, you must have a license to do so. Many neighborhoods don't allow at-home businesses of any kind.
With a home-based manufacturing business, even where they are allowed, there will be regulations and laws that you will have to follow. Any rules that apply to the big manufacturing companies, also pertain to starting a manufacturing company from home.
The rules and regulations primarily concern safety, pollution, and quality control issues. You most likely will be required to do significant work on your home to meet the regulations and set up the necessary equipment.
Depending on your circumstances, it might make more sense to run your business from your home but do the actual manufacturing in another location.
Next Steps for Your Manufacturing Business
After your business is up and running, you will have additional considerations as you expand your operations. For example, be sure to look into your legal obligations before hiring your first employee. As you work with new customers and vendors, you'll likely draft and follow business contracts. Finally, be sure to stay on top of annual filings for your licenses, permits, taxes, and state reporting requirements for businesses.