NAICS Code for Soap Making Businesses (2026 Guide)
Not sure which NAICS code applies to your soap making business? We break down the main codes for handmade soap makers — whether you make cold-process bars, cosmetic products, or sell wholesale to boutiques.
This guide reflects NAICS codes as used by the IRS on Schedule C for soap making businesses in 2026.
If you make and sell soap — cold-process bars, hot-process soap, liquid soap, or cosmetic products like bath bombs and body scrubs — and you’re trying to file your Schedule C or register your business, you’ll need a Principal Business or Professional Activity Code. That code comes from the NAICS system, and for soap makers there are two main manufacturing codes, with the right one depending on what you actually make.
Choosing the right code matters. The IRS uses your NAICS code to benchmark your return against similar businesses. A soap maker with significant oils, lye, and fragrance costs filing under a retail code will look unusual compared to other businesses in that code — which is the kind of mismatch that draws unnecessary attention.
Let’s work through the options.
What is a NAICS code and why does it matter for soap makers?
NAICS stands for the North American Industry Classification System. It’s a six-digit code used by the IRS, Census Bureau, and state tax agencies to classify businesses by their economic activity. You’ll encounter it when filing Schedule C, applying for a business licence, or registering for sales tax in most states.
A few things this code affects:
- The IRS compares your return to others in your code. If most soap manufacturers in your code have substantial material costs (oils, lye, fragrance, colourants) and yours are minimal, that signals a mismatch worth investigating.
- State manufacturing exemptions are sometimes tied to NAICS codes. A manufacturing code may qualify you for sales tax exemptions on raw materials that a retail code doesn’t.
- Manufacturing vs. retail classification affects your COGS treatment. If you make soap from raw materials, a manufacturing code supports claiming those costs as COGS on Schedule C.
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Are you a manufacturer, a wholesaler, or a retailer?
Before picking a code, work out how your soap business actually operates. There are three distinct categories.
You’re a manufacturer if you buy raw materials — oils, lye (sodium hydroxide or potassium hydroxide), fragrance oils, colourants, additives — and produce finished soap or personal care products. This is the most common situation for handmade soap sellers on Etsy, at craft markets, or through their own website.
You’re a wholesaler if you primarily sell your finished soap in bulk to retailers, boutiques, gift shops, or spas — rather than directly to end customers.
You’re a retailer if you sell soap you didn’t make yourself (buying wholesale and reselling), or operate a soap store selling pre-made products to customers.
Most people reading this are manufacturers. That’s the classification to understand.
NAICS codes for handmade soap manufacturers
For soap makers, the right manufacturing code depends on what you’re making:
325611 — Soap and Other Detergent Manufacturing
If you make soap from scratch using a saponification process — cold process, hot process, or liquid soap — your primary NAICS code is 325611.
This code covers businesses that manufacture soap by combining fats, oils, or greases with an alkali (lye). It includes:
- Cold-process bar soap
- Hot-process bar soap
- Liquid soap and castile soap
- Shaving soap
- Laundry and household soap bars
| Code | Description | Best for |
|---|---|---|
| 325611 | Soap and Other Detergent Manufacturing | Soap makers who manufacture bar, liquid, or specialty soap from lye and oils |
On your Schedule C, this code appears in the Chemical Manufacturing section. The IRS will expect this business to have significant raw material costs — oils, butters, lye, fragrance — which is exactly the cost profile you want to support if you’re claiming these as expenses.
325620 — Toilet Preparation Manufacturing
If your primary products are cosmetic soaps, bath bombs, body scrubs, lotions, lip balms, or other personal care items — where the formulation isn’t primarily a saponification reaction — 325620 is the more appropriate code.
This code covers:
- Cosmetic and beauty soaps (melt-and-pour, glycerin base)
- Bath bombs and bath salts
- Body scrubs and exfoliants
- Lotions, body butters, and balms
- Lip care products
| Code | Description | Best for |
|---|---|---|
| 325620 | Toilet Preparation Manufacturing | Makers whose primary products are cosmetic soaps, bath bombs, scrubs, or personal care items |
Many soap businesses make both traditional soap and cosmetic products. In that case, choose the code that best represents your primary revenue source. If cold-process bar soap is your main product, use 325611. If bath bombs and body scrubs are the majority of your revenue, use 325620.
NAICS codes for soap wholesalers
If you sell primarily to other businesses — boutiques, spas, gift shops, or health food stores — rather than directly to individual customers, a wholesale code may better describe your business:
424690 — Other Chemical and Allied Products Merchant Wholesalers
This code covers wholesale merchants of soap, cleaning preparations, and related chemical products. If your business sells finished soap to retail outlets in bulk, this is the code to consider.
If you both make the soap and sell some wholesale, choose the code that best represents your primary activity by sales volume. Most small independent soap makers will still be a better fit under 325611 or 325620 (manufacturing) even if they do some wholesale, because the manufacturing activity defines how the business operates.
NAICS codes for soap retailers
If you sell soap you didn’t make yourself, or operate a soap and apothecary store selling pre-made products to customers:
| Code | Description | Best for |
|---|---|---|
| 446120 | Cosmetics, Beauty Supplies, and Perfume Stores | Soap retailers selling pre-made products in a store, at markets, or by appointment |
| 454110 | Electronic Shopping and Mail-Order Houses | Online-only soap resellers |
446120 covers specialty retailers of cosmetics and personal care products — including small shops and market stalls selling soap they purchased wholesale.
454110 applies when you resell soap exclusively online without a physical retail presence.
If you make your own soap, avoid these retail codes. A manufacturing code (325611 or 325620) better reflects your cost structure and supports your COGS deductions.
Special cases worth knowing
Melt-and-pour soap makers
If you use a pre-made melt-and-pour soap base rather than making soap from lye and raw oils, your classification depends on what you do with that base. If you melt it, add fragrance and colourant, pour it into moulds, and sell finished bars — you may be closer to 325620 (Toilet Preparation Manufacturing) than 325611, since the core soap chemistry was done by the base supplier, not you. Either way, you’re still a manufacturer — you’re transforming a material into a finished product.
Cosmetic vs. soap regulation crossover
The FDA treats soap and cosmetics differently. If your soap makes cosmetic claims (moisturising, anti-bacterial, anti-ageing), the FDA may classify it as a cosmetic or drug rather than soap, which affects labelling requirements. From a tax perspective, the NAICS classification isn’t about FDA categories — it’s about your primary economic activity. A soap maker whose products are regulated as cosmetics still files under a manufacturing code.
Contract soap manufacturers
If you manufacture soap for other brands under a contract (private label production), you’re still a manufacturer. Use 325611 or 325620 depending on your primary product type. Contract manufacturing is explicitly within scope for these manufacturing codes.
Soap makers who also teach
Many soap makers offer classes or workshops. Teaching is a separate business activity from manufacturing. If you file a single Schedule C, use the code that represents your primary revenue. If you earn more from classes than from soap sales, consult your accountant about whether to file separate Schedules C for each activity.
How to choose the right code
Here’s a simple way to decide:
- Do you make soap from lye and oils? → Use 325611 (Soap and Other Detergent Manufacturing)
- Is your primary product cosmetic — bath bombs, scrubs, melt-and-pour? → Use 325620 (Toilet Preparation Manufacturing)
- Your sales go mostly to retailers and boutiques, not end customers? → Consider 424690 (Chemical Merchant Wholesalers)
- Selling soap you didn’t make yourself? → Use 446120 (Cosmetics Stores) or 454110 for online-only
- Mixed product line — traditional soap and cosmetic products? → Use whichever code matches your largest revenue source
If you make cold-process or hot-process bar soap from scratch and sell it — through Etsy, craft markets, your own website, or direct to customers — 325611 is almost certainly the right code.
For a broader view of NAICS codes across different handmade niches, the NAICS codes for handmade businesses post covers jewelry, candles, woodworking, and more.
Tracking your costs once you’ve chosen your code
Choosing 325611 tells the IRS you’re a manufacturer with significant inventory costs. That means your Schedule C should reflect real material expenses — the cost of the oils, lye, fragrance, colourants, and packaging that go into each batch.
That’s where many soap makers run into trouble at tax time. If you’ve been tracking materials informally — receipts in a folder, a rough spreadsheet — calculating accurate COGS is harder than it should be. Especially for soap, where a single batch might use ten different oils in specific weights, and you need to calculate cost per bar from a batch that made 36 bars of varying sizes.
Craftybase’s soap making software is built for exactly this. You set up recipes (bills of materials) for each soap formula, track your oil and lye inventory by weight, and the software calculates your cost per bar automatically. At tax time, your material costs and COGS figures are ready from real data rather than estimates.
If you’re not ready for software yet, the soap making inventory spreadsheet page has a free template to get you started.
Frequently Asked Questions
What is the NAICS code for soap making?
The primary NAICS code for soap makers who manufacture soap from lye and oils is 325611 — Soap and Other Detergent Manufacturing. If you primarily make cosmetic soaps, bath bombs, or personal care products rather than traditional saponified soap, 325620 — Toilet Preparation Manufacturing is the more appropriate code. Both apply if you make your products from raw materials — you're a manufacturer, not a retailer.
What NAICS code should I use if I sell handmade soap on Etsy?
If you make the soap yourself from raw materials, use 325611 — Soap and Other Detergent Manufacturing (or 325620 if your products are primarily cosmetic). You're a manufacturer, not a retailer — even though you sell through Etsy. Using a manufacturing code supports claiming your material costs (oils, lye, fragrance, colourants) as COGS on Schedule C. Only use a retail code if you resell soap you didn't make.
What is the difference between NAICS 325611 and 325620 for soap?
325611 is for businesses that manufacture soap through a saponification process — combining oils or fats with lye to create bar or liquid soap. 325620 is for businesses whose primary products are cosmetic or toilet preparations — bath bombs, body scrubs, melt-and-pour soap, lotions, balms. If cold-process soap is your main product, use 325611. If bath and beauty products dominate your revenue, use 325620. When in doubt, choose the code that matches your highest revenue product type.
Is soap making classified as manufacturing for tax purposes?
Yes. If you take raw materials and transform them into finished soap or personal care products, you're classified as a manufacturer under NAICS. This is actually advantageous for tax purposes — a manufacturing classification tells the IRS that your business has significant inventory costs, which supports deducting materials as cost of goods sold rather than as a simple business expense. It also aligns your return with what the IRS expects for businesses in your code.
Does my NAICS code affect how I report COGS on Schedule C?
Yes, indirectly. A manufacturing NAICS code (325611 or 325620) signals to the IRS that your business has significant inventory and material costs. This supports completing Part III of Schedule C to calculate your cost of goods sold — including the oils, lye, fragrance, and packaging that go into each batch. A retail code signals a different cost structure, and using it when you're actually manufacturing soap can create a mismatch that raises questions.
What NAICS code do I use if I make both soap and bath bombs?
Use the code that best represents your primary revenue source. If cold-process or hot-process bar soap accounts for the majority of your income, use 325611. If bath bombs, scrubs, and cosmetic products are your bigger earners, use 325620. You can only select one NAICS code per Schedule C, so choose the one that reflects where most of your sales come from. Both are manufacturing codes — either supports your material cost deductions.
Quick reference: NAICS codes for soap making businesses
| Business Type | NAICS Code | Description |
|---|---|---|
| Cold/hot-process soap maker | 325611 | Soap and Other Detergent Manufacturing |
| Bath bomb / cosmetic soap maker | 325620 | Toilet Preparation Manufacturing |
| Soap wholesaler | 424690 | Other Chemical Merchant Wholesalers |
| Soap retailer / market seller | 446120 | Cosmetics, Beauty Supplies, and Perfume Stores |
| Online-only soap reseller | 454110 | Electronic Shopping |
Once your NAICS code is sorted, the next step is making sure your books support the manufacturing classification you’ve claimed. That means tracking the true cost of every batch you make — oils, lye, fragrance, colourants, packaging — so your Schedule C reflects real numbers at tax time.
Craftybase’s soap making software handles exactly this: set up a recipe for each formula, track your ingredient inventory by weight, and your cost per bar is calculated automatically. Start a free 14-day trial and see how much easier tax time gets when you’re tracking properly from the start.
