Where the work happens
Updated
On this page5
Where you are allowed to make this depends entirely on which side of the cosmetic-or-drug line the product sits.
A home kitchen is usually allowed
Cosmetics have no equivalent of a cottage food law, because they never needed one: there is no general federal requirement that a cosmetic be made in a licensed or inspected facility.
FDA's own small-business material is written for people making cosmetics at home, and the obligations it describes are about the product being safe and properly labeled rather than about where it was made.
Which does not remove your own local questions. Zoning, a landlord, an insurer and a business license are separate matters from the federal position, and the insurer is the one people forget.
What the space has to do
Be cleanable, be separable from household activity while you are working, and give you somewhere cool and out of the light to store both raw stock and finished goods.
Ventilation for a heat source, and a surface that can take a hot pot.
And enough bench to rack a tray of tubes and leave it undisturbed for an hour, which is a bigger requirement than it sounds in a working kitchen.
The drug-side answer is different
If the product is an OTC monograph drug, manufacture falls under cGMP, 21 CFR Parts 210 and 211, and that has no exemption for the size of the business.
That is a pharmaceutical manufacturing standard: defined procedures, qualified equipment, controlled environment, records. It is not a stricter kitchen.
For many people this single fact settles the cosmetic-or-drug question on its own.
Practical layout
A heat station, a weighing station away from drafts and vibration, a filling station with the tray, and a setting area that nobody walks past.
Keep the label and packaging store away from the melt, because paper near a heat source and fat near a label stock are both avoidable annoyances.