What Do I Need to Know Before Starting a Product Business?

By Bill Stilwell · Last reviewed October 16, 2026

The short answer

A product-based business sells physical goods, like candles, auto parts, baked goods, or clothing. Before you sell, check six things: how you’ll stock inventory, product safety rules, shipping rules, your return policy, any warranty, and sales tax. Federal agencies set some of these rules, and your state sets others.

What this means

The outline asks you to review inventory, product safety, shipping, returns, warranties, and taxes.

Inventory: how much stock you buy or make, where you store it, and how you track it. Inventory ties up cash before you sell (see 7.8.12 Cash Needed Before Customers Pay).
Product safety: the CPSC (Consumer Product Safety Commission) sets federal safety rules for many consumer products. The CPSC says it’s illegal to sell a recalled product. Children’s products, meaning products made mainly for kids 12 and younger, need third-party testing and a Children’s Product Certificate. Food, cosmetics, and some other products fall under other agencies (see 9.6.2 Product Regulation).
Shipping: the FTC (Federal Trade Commission) Mail, Internet, or Telephone Order Merchandise Rule requires a reasonable basis for any shipping time you state. If you state none, you need a reasonable basis to ship within 30 days.
Returns: your policy on what can come back, how long customers have, and how refunds work (see 11.1.8 Refund Policy). Return rules can vary by state, so check yours.
Warranties: any promise about how long the product will last or what you’ll fix (see 11.1.9 Warranty).
Taxes: most states tax sales of physical goods, and you may need a resale certificate to buy inventory without paying tax on it (see 10.2.2 Sales Tax and 10.2.5 Resale and Exemption Certificates).

Example: a woman makes wooden toys in her garage and wants to sell online and at a weekend market. Her toys are made for young kids, so the CPSC treats them as children’s products. She needs testing by a CPSC-accepted lab and a certificate before she sells, so she budgets for it before buying wood in bulk.

Why it matters

Unsafe or recalled products create legal risk. Selling a recalled product is illegal, even if you’re only reselling it.
Shipping promises are regulated. Missing a stated ship date without offering the buyer the choice to wait or cancel breaks the FTC rule.
No clear return policy leads to disputes. Customers file chargebacks when they can’t find the rules (see 10.7.7 Chargebacks).
Sales tax mistakes cost money. Your state tax department can tell you what happens if you should have collected tax and didn’t.
Too much inventory can sink cash flow. Stock on a shelf is money you can’t use.

Who this applies to

Anyone who makes, resells, or ships physical goods: retail shops, online stores, makers at markets, bakeries selling packaged goods, and service businesses that also sell parts or products.

If you sell only services, skip to 7.2.9 Service-Based Business.

How to do it

List every product you plan to sell and where it comes from.
Check whether each product has federal safety rules. Start with the CPSC Online Sellers’ Safety Guide, and check other agencies for food, cosmetics, and other regulated goods.
Check recall lists before reselling anything.
Decide how much inventory to start with, based on your cash and how fast it sells.
Set shipping times you can meet, and a plan for delays that gives buyers the choice to wait or cancel for a refund.
Write a return and refund policy, and post it on your website before checkout.
Decide if you’ll offer a warranty. If you do, write it down (see 11.1.9 Warranty).
Register for sales tax in your state, and check other states where you sell (see 10.2.2 Sales Tax).
Add products to your website with clear names, prices, photos, and availability (see 19.6.3 Product Structured Data).
If eligible, add products to your Google Business Profile (GBP) and look into Google Merchant Center free listings (see 14.9.2 Products on Your Profile).

What proof to keep

Supplier invoices and product source records
Test reports and Children’s Product Certificates, if required. The CPSC says to keep required records for at least 5 years.
Your posted shipping, return, and warranty policies, with the date each went live
Sales tax registration and filings
Records of shipping delays and the choices you offered buyers

Common mistakes

Assuming handmade items are exempt from safety rules. Children’s product rules apply to products made for kids 12 and younger, including handmade ones.
Reselling without checking recalls.
Saying “ships in 1 day” with no way to meet it.
Hiding the return policy in fine print.
Buying a year of inventory before you know what sells.
Product details that differ between the website, profile, and Merchant Center. Customers lose trust when the price on Google doesn’t match the checkout page.

When to get help from a pro

Attorney: for product safety, labeling, return rules, and warranty terms. Ask:

Which federal and state safety rules apply to my products?
Does my warranty wording create obligations I didn’t intend?

CPA or tax professional: for sales tax. Ask:

Where do I need to collect sales tax, and do I need a resale certificate to buy inventory?

Bill’s note

[Bill: add a short story or opinion here. For example, a product client whose items started showing on Google once product details were complete, or a seller who got caught by a return policy dispute.]

If you’d rather have this done for you, SiteSmarty builds websites and handles Google Business Profile setup.

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: whether SiteSmarty sells any physical product and how I set up the rules]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: a product on the profile or website, or a note on why this doesn’t apply]
[Result so far:]

Questions people ask

Do I need to test my products for safety? It depends on the product. Children’s products, made mainly for kids 12 and younger, need third-party testing and a Children’s Product Certificate. Check the CPSC’s guidance for your product type.

How fast do I have to ship? As fast as you say you will. If you don’t state a time, the FTC rule says you need a reasonable basis to ship within 30 days.

Should I post a return policy? Yes. Customers look for it, Google Merchant Center asks for one, and some states have their own rules. Check with your state attorney general’s consumer office.

How do my products show up on Google? Through your website, your Business Profile products, and Google Merchant Center free listings, which Google says can show in Search, Shopping, Images, and Maps.

Audit check

Question: Has the product business checked safety rules, set shipping and return policies, registered for sales tax, and posted accurate product details online?
Pass looks like: Safety requirements checked and records kept. Posted shipping and return policies. Sales tax registration on file. Product details match on the website, profile, and Merchant Center.
Fail looks like: No safety check. Recalled items for sale. No posted return policy. Shipping times with no plan. No sales tax registration.
Evidence to collect: Test reports or certificates, policy pages with dates, sales tax registration, and screenshots of product listings.

Where this fits

Do this first: 7.1.2 Core Offer, 7.1.8 Direct Delivery Cost

Do this next: 7.2.9 Service-Based Business

Sources

U.S. Consumer Product Safety Commission, "Online Sellers' Safety Guide" (checked October 16, 2026)
U.S. Consumer Product Safety Commission, "Children's Products" (checked October 16, 2026)
Federal Trade Commission, "Business Guide to the FTC's Mail, Internet, or Telephone Order Merchandise Rule" (checked October 16, 2026)
Google Merchant Center Help, "Free listings for products" (checked October 16, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.