How to Legally Launch a Hair Business

From an idea comes the planning and the execution to legally launch a hair business.

Congratulations on starting a hair extension dropshipping business. It is a beautiful career path because you are solving problems on style and beauty, as well as empowering people to look their best. 

But before you start stocking up the best bundles and closures, there’s some groundwork you’ll need to lay to ensure your business is legally compliant.

To put it in simpler terms: Documenting all your processes. 📜 

Think of this as the foundation that will keep your business standing tall. You want to be sure that you do not face any troubles down the road in terms of your name, product, and more.

So, what do you need to do in the eyes of the law? Here, we will break it down into simple, actionable steps to make the legal setup as smooth as possible.

Choose and Register Your Business Name

Your business name is your brand’s identity, so take your time to come up with something unique and memorable.

Once you’ve got that winning name, you’ll need to ensure it’s not already taken. 

Head over to the United States Patent and Trademark Office (USPTO) website to search for existing trademarks.

Avoid names that are too similar to existing ones or those tied to abandoned trademarks. These could still cause legal headaches.

After confirming your name’s availability, secure it by registering as a trademark. This protects your brand from copycats and solidifies your ownership. You never know; you might be the next big thing. Protect yourself first. 

Get a Matching Domain Name

Your online hair store website will be the face of your business.

To keep everything cohesive, check if your business name is available as a domain. Websites like GoDaddy or Namecheap let you search for and purchase domain names. 

Make sure it has a clean, professional URL without unnecessary symbols or abbreviations.

Once your domain is secured, lock in matching social media handles on platforms like Instagram, TikTok, and Facebook.

This keeps your branding consistent and makes it easier for customers to find you.

Register Your Business Structure

To make your hair dropshipping business official, you’ll need to register it with your state.

Most people would rather form a Limited Liability Company (LLC), and you should, too. Why? Because an LLC protects your personal assets in case of business liabilities.

To register your LLC:

• Check your state’s Secretary of State website.
• Search for your desired business name to confirm it’s available.
• Follow the prompts to register your LLC.

The fees and processing times vary by state, but expect to pay around $50-$150. Some states offer expedited services if you’re in a hurry, but patience can save you money.

Obtain an EIN (Employer Identification Number)

Your EIN is like a social security number for your business.

It’s used for tax purposes and is often required to open a business bank account. The good news is that you can get your EIN for free from the IRS website in just a few minutes.

It’s straightforward and doesn’t require a tax professional—you’ve got this!

Secure the Necessary Licenses and Permits to Legally Launch Your Hair Business

Different states and counties may have specific requirements for operating a business.

Research what’s needed in your area to avoid fines or shutdowns. The common licenses include:

• Business Operating License: Ensures you’re legally allowed to run a business in your location.
• Resale Certificate: This allows you to purchase inventory tax-free since you’ll be collecting sales tax from your customers.

Check your local government’s website for a full list of requirements.

Understand and Fulfill Tax Obligations

Taxes might not be glamorous, but they’re a very important part of running a legal business.

Here are some taxes to keep in mind:

• Sales Tax: As a dropshipping business, you’re responsible for collecting sales tax in states where you have a nexus (like a physical location or significant sales volume). Platforms like Shopify often have built-in tools to simplify sales tax collection.
• Income Tax: Keep track of your profits and expenses throughout the year to accurately report your income during tax season.

Hiring a CPA or using tax software can help you navigate these waters more confidently.

Open a Business Bank Account

Once your LLC and EIN are in place, it’s time to separate your personal and business finances.

You do not want to dip into your business profits; it is not good for business. 

Opening a dedicated business bank account helps keep your finances organized and simplifies tax filing.

Look for a bank you already trust or one that offers perks like no monthly fees or cash-back rewards.

While you’re at it, consider applying for a business credit card. This can help with cash flow and build your business credit over time.

Draft a Privacy Policy and Terms of Service

If you’re selling closure wigs and clip-in extensions online, you’ll need clear policies to protect both your business and your customers.

A Privacy Policy explains how customer data will be collected, used, and stored, while the Terms of Service outline the rules of engagement on your website. 

Many platforms offer templates you can customize, or you can consult a legal professional for tailored guidance. Once you get it, have it pasted very clearly on your website. 

Partner with Reliable Dropshipping Suppliers

While this isn’t a legal aspect, it is also very important.

Choosing trustworthy suppliers is vital to avoiding disputes and maintaining a positive reputation. Work with suppliers who provide clear contracts.

They should also have transparent policies on shipping and returns.

If they are overseas, they should also be compliant with regulations. Having a solid agreement in place can save you from potential legal troubles down the road.

Insure Your Business

Accidents happen, even in the hair business.

Even as a dropshipping business, you might face issues with bulk orders. Consider getting business insurance to protect against unforeseen events like lawsuits or product liability issues.

Talk to an insurance agent to find coverage that suits your needs and budget.

Stay Compliant with Advertising Laws

As you start marketing your hair extensions, be mindful of advertising laws.

Avoid making false or exaggerated claims about your products. Instead, be transparent. It builds trust and is crucial for long-term success.

Keep Records and Stay Organized

From tax filings to supplier agreements, maintaining accurate records is essential.

Physical evidence is a lifesaver. Every single piece of documentation you have should be saved and stored properly. 

Also, use accounting software or hire a bookkeeper to help you stay on top of everything.

Organized records not only keep you compliant but also make scaling your business easier.

Legally Launch Your Hair Business

This might seem like a lot of information at once. But each step brings you closer to launching your dream venture with confidence on the best e-commerce platform.

Plus, once you’ve checked all these boxes, you’ll have peace of mind to focus on your business. 😉

Good luck!