Starting a jewelry business follows the same formation path as any small company — choose a legal structure, register with your state, get your tax IDs — but it also pulls you into a set of federal rules that other retailers never touch. The FTC dictates how you can describe metals and stones, the CPSC sets lead limits on anything sold for children, and FinCEN treats you as a regulated dealer once your precious-metals volume crosses a threshold. The steps below walk through how to start a jewelry business in the order they actually need to happen, from picking an entity type to meeting the industry-specific compliance obligations that catch most new owners off guard.
Pick a Legal Structure First
Your entity choice controls how much personal liability you carry, how you’re taxed, and how much paperwork you file each year. Three options cover almost every new jewelry business.
A sole proprietorship is the simplest. You and the business are the same legal entity, no state filing is required to start operating, and every dollar of business income lands on your personal return. The trade-off is exposure: your home, savings, and car sit inside the same liability pool as the business.
A partnership splits ownership, profits, and liability between two or more people. General partners are all personally liable for the business’s debts unless you form a limited partnership, which adds its own filing requirements.
An LLC puts a legal wall between your personal assets and the business’s obligations. If the company gets sued or can’t pay a debt, creditors generally can’t reach your personal property. LLCs also give you flexibility in how profits are taxed.
For a business handling valuable inventory, the asset protection an LLC provides is usually worth the filing cost. A lawsuit over a defective clasp or a slip at a trunk show could wipe out a sole proprietor personally; an LLC limits the exposure to what the business itself owns.
Register the Business With Your State
If you go with an LLC, you’ll file Articles of Organization (some states call it a Certificate of Formation) with the Secretary of State. Most states have an online portal. You’ll provide the company name, the owners’ names, a business address, and the name of your registered agent. Filing fees run roughly $35 to $500 depending on the state.
Every LLC and corporation has to name a registered agent — the person or service designated to receive legal documents and government notices on the company’s behalf. The agent needs a physical street address in the state where you’re registered. You can serve as your own, but many owners hire a service so they don’t have to be available at a fixed location during business hours.
Once the state approves the filing, you’ll get a Certificate of Organization or similar document proving the business legally exists. Online filings clear in as little as 48 hours in some states; mailed applications can take weeks.
Filing a DBA if You Stay a Sole Proprietor
Sole proprietors who want to operate under any name other than their own legal name need to file a “doing business as” registration, sometimes called a fictitious name filing. Some states handle DBAs at the state level; others do it by county. Skip the filing and you may find you can’t open a business bank account or enforce contracts under the trade name.
Get Your Tax IDs
Employer Identification Number
Federal law requires any person filing a tax return or statement to include an identifying number, and for businesses that number is the EIN. The IRS specifically says you need one if you hire employees, operate as a partnership or corporation, or pay excise taxes. A sole proprietor with no employees can technically use a Social Security number instead, but getting an EIN keeps your SSN off invoices and wholesale applications.
The IRS online application issues the number immediately, takes about 15 minutes, and costs nothing. You can also apply by phone, fax, or mail using Form SS-4, though those methods take longer. Save the confirmation letter — you’ll need the EIN to open a business bank account, file returns, and set up wholesale supplier accounts.
Sales Tax Permit and Resale Certificate
If your state charges sales tax, get a sales tax permit (sometimes called a seller’s permit) before you start selling. Once you have the permit, you can issue a resale certificate when buying inventory and raw materials, which lets you purchase those items without paying sales tax at the register. The logic is that you’re not the end consumer; you collect tax from your customer at the point of sale and remit it to the state.
Suppliers will ask for a copy of your resale certificate before granting wholesale pricing. Using the certificate to buy items for personal use rather than resale is fraud in every state that has a sales tax.
Meet the Federal Rules That Only Apply to Jewelry
This is where jewelry diverges sharply from most other retail businesses. Several federal agencies regulate how jewelry is made, described, and sold, and violations can result in fines, seized inventory, or forced recalls. Most of these obligations kick in based on what you sell, not how large your company is.
FTC Rules for Describing Metals and Gemstones
The FTC’s Guides for the Jewelry, Precious Metals, and Pewter Industries set the standard the agency uses to decide whether your marketing is deceptive. The thresholds every jeweler should know:
- Gold: you can only call a product “gold” if you include the correct karat designation, such as “14 Karat Gold.” Gold plating or electroplating must use gold alloy of at least 10 karat fineness.
- Sterling silver: at least 925 parts per thousand pure silver. “Coin silver” must be at least 900 parts per thousand.
- Platinum: only products containing at least 950 parts per thousand pure platinum can be labeled simply as “Platinum.” Products with at least 500 parts per thousand can use the word only with specific additional disclosures.
The guides also govern gemstone descriptions. Lab-grown stones cannot be called “real,” “genuine,” or “natural.” Lab-created diamonds, rubies, and sapphires must be clearly identified using terms like “laboratory-grown” or “laboratory-created” immediately before the stone name. Using the unqualified word “cultured” for a lab-grown diamond without a clear disclosure that it’s not mined is considered deceptive.
Gold and Silver Stamping Act
Under the National Gold and Silver Stamping Act, any manufacturer or dealer who stamps a quality mark on a gold or silver article must also stamp the piece with a registered trademark or business name. The trademark has to be applied using the same method as the quality mark, in lettering at least as large, and positioned as close to the quality mark as possible. Stamp “14K” on a ring and your identifying mark needs to sit right next to it.
Children’s Jewelry: Lead Limits and Third-Party Testing
If any of your products are designed or intended for children 12 and under, the safety rules get considerably heavier. The Consumer Product Safety Improvement Act caps total lead content in accessible components of children’s products at 100 parts per million. Children’s metal jewelry is specifically called out in the statute and is excluded from the used-product exemption that applies to many other children’s items, so even secondhand children’s jewelry has to comply.
Beyond the lead limit, children’s jewelry must be tested by a third-party lab accepted by the CPSC, and the manufacturer or importer must issue a Children’s Product Certificate documenting compliance. The certificate has to identify the product, cite the specific safety regulations it was tested against, and include the name and contact information of the certifying company and the testing lab. Selling children’s jewelry without a valid CPC can trigger recalls and penalties.
Rough Diamond Imports
If your business involves rough (uncut) diamonds, the Clean Diamond Trade Act prohibits importing or exporting any that haven’t been certified through the Kimberley Process Certification Scheme. Every shipment must arrive in a tamper-resistant container with an original Kimberley Process Certificate. The ultimate consignee has to retain the certificate for at least five years and report receipt of the shipment to the foreign exporting authority within 15 calendar days of arrival at the U.S. port of entry. These rules don’t apply to polished diamonds or finished diamond jewelry, only rough stones.
Anti-Money Laundering Program
If you both purchased and sold more than $50,000 in precious metals, precious stones, or jewels during the prior calendar or tax year, you’re classified as a “dealer” under FinCEN’s rules and must develop a written AML compliance program approved by senior management.
Separately, any business that receives more than $10,000 in cash from a single buyer in one transaction (or related transactions) must file IRS Form 8300 within 15 days. That obligation applies whether or not you hit the $50,000 dealer threshold. Cash-heavy sales of fine jewelry or precious metals trigger this more often than new owners expect.
Sales Tax When You Sell Online
Collecting sales tax used to be simple: if you had a physical store in a state, you collected tax there. The Supreme Court changed that in 2018 in South Dakota v. Wayfair, ruling that states can require remote sellers to collect sales tax without any physical presence as long as the seller has a “substantial nexus” with the state, typically measured by sales volume or transaction count.
Most states have adopted economic nexus thresholds, commonly set at $100,000 in sales or 200 transactions within the state during a calendar year. Some states use only the dollar figure; others require both. Once you cross a state’s threshold, you have to register for a sales tax permit there and start collecting and remitting on shipments into that state. For an online jewelry business selling nationally, that can mean tracking obligations in dozens of states. Shopify, Etsy, and similar platforms handle some of this automatically, but the legal responsibility is yours.
Protect the Name and the Designs
Before you commit to a business name, search the USPTO’s Trademark Electronic Search System to confirm nobody has already claimed it or something confusingly similar. A comprehensive clearance search covers not just exact matches but similar-sounding names and related product categories. Skipping this is how businesses end up with a cease-and-desist letter six months after launch, forcing an expensive rebrand right when they’re gaining traction.
Original jewelry designs can be protected two ways. Copyright law covers jewelry as sculptural works, provided the design meets a minimum threshold of creative authorship — meaning it goes beyond standard shapes and commonplace arrangements. A ring with a genuinely original sculptural element qualifies; a plain band doesn’t. Copyright protection exists automatically when you create the piece, but registering with the U.S. Copyright Office strengthens your ability to enforce it.
Design patents work differently. Where copyright covers artistic expression, a design patent protects the ornamental appearance of a functional article. The USPTO grants design patents for novel, non-obvious ornamental designs, and the application requires detailed drawings or photographs showing every angle. A design patent lets you stop others from making or selling jewelry that looks substantially similar.
Set Up the Money Side
Open a dedicated business bank account as soon as you have your EIN and formation documents. Mixing personal and business funds is the fastest way to lose the liability protection an LLC provides — courts call it “piercing the corporate veil,” and it happens when owners treat the company’s money as their own. A separate account also makes bookkeeping much easier at tax time.
The IRS requires businesses that sell physical products to value their inventory at the beginning and end of each tax year using a method that conforms to generally accepted accounting principles and clearly reflects income. The three main approaches are cost, lower of cost or market, and the retail method. Within those, you’ll pick an identification method (specific identification, FIFO, or LIFO) and stick with it from year to year. For high-value pieces where each item has a distinct cost basis, specific identification is often the most practical choice. Damaged or unsellable inventory such as a cracked stone or a bent setting that can’t be repaired gets valued at its bona fide selling price minus the cost of selling it, regardless of the method you use for everything else.
Standard business insurance policies often don’t cover the risks a jewelry business actually faces. Inland marine insurance, despite the name, covers inventory in transit or stored away from your primary business location, which matters if you sell at trade shows, trunk shows, or pop-up markets. Premiums depend on the total value insured and the security measures at your storage location. For a business dealing in loose diamonds or gold, this coverage is not optional in any practical sense.
Taxes You’ll Owe as the Owner
Sole proprietors report all business income and expenses on Schedule C, which flows into the personal return. Net profit from Schedule C feeds into Schedule SE for self-employment tax. Single-member LLCs follow the same process unless they elect to be taxed as a corporation.
Self-employment tax runs 15.3%, covering both the employer and employee halves of Social Security (12.4%) and Medicare (2.9%). This sits on top of your regular income tax, and it surprises many first-time owners who are used to seeing only the employee half deducted from a paycheck. The Social Security portion applies up to an annually adjusted wage base; the Medicare portion has no cap.
Nobody withholds anything for you when you’re self-employed, so the IRS expects quarterly estimated payments:
- Income earned January 1 through March 31: due April 15
- Income earned April 1 through May 31: due June 15
- Income earned June 1 through August 31: due September 15
- Income earned September 1 through December 31: due January 15 of the following year
Missing these deadlines triggers an underpayment penalty even if you end up owed a refund at filing. First-year owners commonly skip estimated payments, planning to settle up in April. The penalty isn’t devastating, but it’s entirely avoidable.