Do small businesses need to list their products with the FDA?

No — qualifying small businesses (< $1M average annual gross sales AND no high-risk products) are exempt from product listing. Non-small businesses must list all cosmetic products through FDA's Cosmetics Direct portal.

Do small businesses need to report adverse events?

Yes. All businesses must report serious adverse events to the FDA within 15 business days — there is NO exemption from this requirement. However, small businesses receive reduced record retention: 3 years (vs. 6 years for non-exempt businesses). Failure to report can result in FDA enforcement action.

How do I calculate if I qualify as a small business?

Calculate your average annual gross cosmetic sales over the previous 3 years. If this average is less than $1 million, and your products don't contain prohibited ingredients or make drug claims, you may qualify for the exemption.

What happens when I exceed the $1 million threshold?

When your 3-year average gross cosmetic sales exceed $1 million, you must register your facility within 60 days of when you no longer qualify for the exemption. You'll also need to comply with any GMP requirements that have been finalized by that time.

MoCRA Small Business Exemptions & Requirements

Q: What is the MoCRA small business exemption?

Under MoCRA, businesses with less than $1 million in average annual gross cosmetic sales over the previous 3 years (and that don't manufacture high-risk products) are exempt from facility registration, product listing, and GMP requirements. However, they are NOT exempt from adverse event reporting, safety substantiation, or labeling requirements. They also receive reduced adverse event record retention (3 years vs. 6 years).

Q: Do small businesses need to report adverse events?

Yes. All businesses must report serious adverse events to the FDA within 15 business days — there is NO exemption from this requirement. However, small businesses receive reduced record retention: 3 years (vs. 6 years for non-exempt businesses). Failure to report can result in FDA enforcement action.

Q: How do I calculate if I qualify as a small business?

Calculate your average annual gross cosmetic sales over the previous 3 years. If this average is less than $1 million, and your products don't contain prohibited ingredients or make drug claims, you may qualify for the exemption.

Q: What happens when I exceed the $1 million threshold?

When your 3-year average gross cosmetic sales exceed $1 million, you must register your facility within 60 days of when you no longer qualify for the exemption. You'll also need to comply with any GMP requirements that have been finalized by that time.

Understanding MoCRA Small Business Provisions

The Modernization of Cosmetics Regulation Act (MoCRA) includes specific provisions for small businesses. While MoCRA significantly expanded FDA oversight of cosmetics, Congress recognized that full compliance could be burdensome for small cosmetic businesses and included limited exemptions.

Key Point

Qualifying small businesses (< $1M average annual gross sales, no high-risk products) are exempt from facility registration, product listing, and GMP requirements. However, they are NOT exempt from adverse event reporting or safety substantiation requirements.

Understanding which requirements apply to your business is essential for proper MoCRA compliance.

Who Qualifies as a Small Business?

Under 21 U.S.C. § 364h, a small business is defined based on annual gross sales:

Small Business Definition Under MoCRA
Criteria	Threshold	Calculation Period
Average annual gross sales	Less than $1,000,000	Previous 3 years
Gross sales definition	Total cosmetic product sales	Before deductions
Calculation method	Average of 3 years	Rolling calculation

Important Qualifications

Per FDA Guidance for Industry (December 2024) and Section 612 of the FD&C Act, the exemption does NOT apply if you manufacture:

High-Risk Products That Eliminate Exemption

Products contacting mucous membrane of the eye (mascara, liquid eyeliner, eyelash adhesive)
Injectable cosmetic products
Products intended for internal use
Products altering appearance for more than 24 hours (permanent hair dye, gel/acrylic nails)

CRITICAL: Manufacturing ANY High-Risk Product

Manufacturing even ONE high-risk product eliminates ALL exemptions for your entire business — including exemptions for your other, non-high-risk products.

What Small Businesses Are Exempt From

Small Business Exemptions vs. Requirements
MoCRA Requirement	Exempt?	Notes
Facility Registration	EXEMPT*	Unless manufacturing high-risk products
Product Listing	EXEMPT*	Unless manufacturing high-risk products
Good Manufacturing Practices	EXEMPT*	When GMP rules are finalized
Adverse Event Reporting	NOT EXEMPT	All businesses must report within 15 business days
Adverse Event Records	REDUCED	3 years retention (vs. 6 years)
Safety Substantiation	NOT EXEMPT	Must maintain safety records
Labeling Requirements	NOT EXEMPT	All labeling rules apply

* *Exemption requires < $1M average annual gross sales AND no high-risk products

Common Misconception

Many small businesses incorrectly believe the exemption means they don't need to comply with MoCRA at all. This is FALSE. The exemption is narrow and most MoCRA requirements still apply.

Requirements That Still Apply to Small Businesses

Small Business Exemptions Summary

Qualifying small businesses are EXEMPT from facility registration and product listing. However, you MUST still comply with adverse event reporting, safety substantiation, and labeling requirements.

1. Product Listing (For Non-Exempt Businesses)

Under 21 U.S.C. § 364, non-small businesses must list all cosmetic products with the FDA:

Product Listing Requirements (Non-Exempt Businesses)

List all products through FDA's Cosmetics Direct portal
Include complete ingredient lists
Provide responsible person information
Update listings within 60 days of changes
List new products within 120 days of market entry

Small businesses meeting the exemption criteria are EXEMPT from product listing unless they manufacture high-risk products.

2. Adverse Event Reporting (NO EXEMPTION)

Per 21 U.S.C. § 364a, ALL businesses must report serious adverse events:

Report serious adverse events within 15 business days
Include contact information on product labels for consumer reports
Submit follow-up information within 15 business days if received within 1 year

Record Retention Requirements:

Standard businesses: 6 years
Small business exempt entities: 3 years

No Exemption from Reporting

There is NO small business exemption for adverse event REPORTING. However, small businesses do receive reduced record retention (3 years vs. 6 years). Failure to report serious adverse events can result in FDA enforcement action regardless of business size.

3. Safety Substantiation

Under 21 U.S.C. § 364d, ALL businesses must:

Ensure adequate safety substantiation exists for each product
Maintain safety records
Make records available to FDA upon request
Retain records for market period plus 3 years

How to Calculate Your Revenue

Calculating Small Business Qualification

Identify Cosmetic Product Sales

Calculate total gross sales of cosmetic products only. Do not include non-cosmetic products like supplements or non-beauty items.

Calculate Gross Sales

Use gross sales figures before any deductions for returns, discounts, or expenses. This is the total amount invoiced to customers.

Average Over 3 Years

Add gross cosmetic sales from the previous 3 calendar years and divide by 3. For newer businesses, use available years.

Include All Channels

Include sales from all channels: direct-to-consumer, wholesale, online marketplaces, retail partners, and international sales of US products.

Consider Affiliated Entities

If your business is part of a larger corporate group, combine sales from all affiliated entities that manufacture or sell cosmetics.

Example Calculation

Sample Small Business Calculation
Year	Gross Cosmetic Sales	Notes
2023	$750,000	First full year
2024	$900,000	Growth year
2025	$1,100,000	Exceeded threshold
3-Year Average	$916,667	Still qualifies as small business

Compliance Timeline for Small Businesses

Key MoCRA Deadlines for Small Businesses
Requirement	Deadline	Status
Product listing (existing products)	December 29, 2023	Passed - list now if not done
Product listing (new products)	Within 120 days of market entry	Ongoing
Adverse event reporting	Within 15 business days	Ongoing
Safety substantiation	Now required	Ongoing
Fragrance allergen disclosure	PENDING	FDA missed deadline; proposed rule expected May 2026

Common Mistakes Small Businesses Make

Avoid These Errors

Based on FDA guidance and industry experience, these are the most common compliance mistakes:

Common Mistakes to Avoid

Assuming all MoCRA requirements are waived for small businesses
Not listing products because of perceived exemption
Failing to report serious adverse events
Not maintaining safety documentation
Miscalculating revenue by excluding certain sales channels
Not planning for growth beyond the threshold
Ignoring labeling requirements

Planning for Growth Beyond the Threshold

What happens when your business grows beyond $1M in average annual gross sales?

Preparing to Exceed the Threshold

Monitor Your Revenue

Track your 3-year rolling average quarterly. When you approach $800,000 in average sales, begin preparing for full compliance.

Register Your Facility Early

Consider registering your facility before you're required to. This ensures you're not scrambling when you exceed the threshold.

Implement GMP Practices

Begin implementing Good Manufacturing Practices before they're required. This creates a smooth transition and improves product quality.

Document Everything

Ensure your safety substantiation, adverse event records, and product listing information are well-organized and FDA-ready.

Budget for Compliance

Factor compliance costs into your growth projections. Registration, GMP implementation, and testing all have associated costs.

Small business exemption applies to businesses with < $1M average annual gross cosmetic sales AND no high-risk products

Exemption covers facility registration, product listing, and GMP requirements

ALL businesses must report serious adverse events (no exemption) and maintain safety substantiation

Small businesses get reduced adverse event record retention: 3 years (vs. 6 years)

Manufacturing even ONE high-risk product eliminates ALL exemptions

Calculate eligibility using 3-year rolling average of gross sales

Need Help Understanding Your MoCRA Obligations?

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