If it is a cosmetic
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The category most handmade soap is actually in, and a perfectly good place to be once it is chosen rather than fallen into.
Not a failure
A soap that is a cosmetic is still soap. Nothing about the bar changes.
What changes is which set of rules applies, and the cosmetic set is well documented and entirely workable at small scale.
What changes on the label
An ingredient declaration, by INCI name, in descending order of predominance. This is the big one: exempt soap needs no ingredient list and a cosmetic soap does.
Which means Sodium Olivate, Sodium Cocoate, Sodium Shea Butterate rather than olive oil, coconut oil and shea butter, because after saponification the oils are not in the bar; their sodium salts are.
Plus the identity, the net quantity, your name and address, and any warning needed for safe use.
What changes off the label
MoCRA facility registration and product listing, with small-business exemptions that many soap makers qualify for by revenue.
Safety substantiation, which has no small-business exemption and which makers often have never heard of.
Adverse event record keeping.
And the regulator changes: a cosmetic sits with FDA rather than with CPSC.
Why makers often should choose it
Because the claims are the product. A maker who cannot say the bar is gentle, moisturizing or good for dry skin has given up most of what differentiates a handmade bar from a supermarket one.
The cosmetic route costs an ingredient list and a registration and buys the ability to describe the product honestly.
The exempt route costs the claims and buys a simpler label. Both are legitimate; what is not legitimate is making the claims and using the exempt label.