I can't answer whether the FDA or FTC or both has jurisdiction over soap, but I'm sure it's clear that probably none of us have the ability to conform to cosmetic laws. That's very definitive that we can make no claims at all regarding medical or curative powers, and I take it to mean no claim that it's moisturizing or softening. I think we can get away with "formulated for dry skin" or "formulated for oily skin." I think we can also say, "Makes my skin feel really moist and soft." Please note however that I'm speculating.
Lane, I'm not a lawyer (obviously) but it has been my experience that what you call yourself generally has little to do with what the law considers you to be. I doubt there is any distinction between calling yourself a business or calling yourself a crafter. A skunk can claim to be a rabbit with racing stripes but it's still a skunk, right?
I can't tell you what to do but I can tell you what happens in practicality, particularly in Los Angeles. Here you just run your business and pay your taxes. If the city catches up with you and demands you get a business license you're going to have to get one, and you'll also have to pay any tax obligation you didn't meet by not getting the license previously. There may also be a small penalty, just guessing 10-20 percent, but you're not going to be fined or thrown in jail. In fact when I incorporated my business the city caught up with me and all they demanded was that I get a business license immediately. No back payments, no interest, no penalty, no fines.
I suggest that it would be prudent to find out what penalties may be in place in your city and your state, but unless you're running a major business I see no problem with just going about your business.
The one *BIG* thing you must not do however is to skip paying your income taxes. If you earn more than $400 per year you have to file a tax return and you will have to file Schedule C "Profit and Loss." You may also have to pay Social Security taxes over a certain amount of income.
One other thing you must not forget (okay 2 big things) is that you must collect state sales tax on sales within your state and also city sales tax if either applies. One benefit however is that to do this you will get a "resale permit" and that also allows you to purchase your raw ingredients and not pay taxes, so anything you buy locally won't require your supplier to add sales tax.
I'd advise to be very careful about any claims you make, skip the business license, but always pay your income taxes and collect sales tax on local sales. And don't call yourself anything. Let other people pick whatever labels they like. Just tell them you're good!
