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So You’d Like to Start a Home-based Baking Business: Now What?
Martha Stewart famously entered the food service business with her basement-based catering company in the 1970s – but it takes hard work and lots of homework to make it that far. While a home-based baking business comes with many perks, like the flexibility of working from home and a lower-risk entry into the competitive food service space at your own pace, it’s important to understand the rules and regulations around the production of food for public consumption in an in-home environment before you get started.
While food production from your home is heavily regulated, it’s far from impossible. If your passion involves turning your baking skills into a home-based business, here’s what you need to know to succeed.
Laws, Permits, and Licenses
While there are several steps you need to take to ensure that your home-based baking business is considered legal, laws can vary from state to state, so be sure to do your homework regarding what is legal in your area.
First, what do you want to call your business? Will you go for something unique, or for a more generic name like “Sarah’s Bakery” or “Corner Café?” The later are generic enough that they aren’t protected, but that can be a double-edged sword – while another business with a generic name like yours cannot take legal action against you, it also means that your business isn’t protected if someone wants to use the same name. If you want to find out if a name is already registered, you can check the Trademark Electronic Search System. There is also information available on sba.gov about registering your DBA (doing business as) name and other helpful steps like obtaining a tax ID number and securing your permits and licenses.
Second, keep in mind that even if you’re starting your business from home, your business is still subject to license and permit laws. To get started, you can select your state from this list to find out which licenses and/or permits you will need, as well as the information to guide you through the application process. You’ll also want to visit your city or county government website to secure a general business license, which legally entitles you to operate your business and typically includes a small fee. Some city and county zoning and planning agencies also require home-based businesses to secure a home occupation permit. If a permit is not required in your city, the zoning office can tell you whether or not your neighborhood is zoned for a home-based baking business. (Click here for more helpful information on sba.gov about zoning laws for your home-based business.) You may also need to check with your homeowners association, as it may have rules that restrict the type of business activities you can conduct within
Third, let’s talk taxes. If you sell your baked goods in a state that charges a sales tax, you may need to apply for a tax permit or otherwise register with the state revenue agency. If you need more info on sales taxes for small business owners, check out this blog post.
Health, Safety, and a Fully-equipped Kitchen
In addition to business licenses and permits, you may also need a permit or an inspection from a local fire department since your business will likely require the use of flammable materials. Some communities also monitor air and water pollution by businesses, so check with your state EPA to see if these rules apply to you.
Your county government is typically responsible for issuing your health department permit, especially because your baking business involves selling food to the public or to other businesses. Your state may require additional permits for food service or food preparation.
Once you’ve locked down the business side of things, there are health codes and regulations to consider regarding your kitchen space.
While this isn't necessarily your first step as a home-based baker, your kitchen is something you need to consider before you move forward with your new venture. If you already know what product(s) you intend to produce, check to ensure that you have the right equipment with which to adequately prepare, cook, store, and transport your baked goods.
If your kitchen/equipment situation isn’t what you need it to be, you may want to consider investing in a separate kitchen and/or additional equipment to scale your business. Also keep in mind that commercial kitchens and local restaurants may be available to help, especially if those businesses don’t hold extended hours, as you might be able to rent kitchen space during odd hours. It may seem like a larger investment, but baking in a kitchen that is already health department-approved will also save you time and money, and it gives you the flexibility to bake when your orders come in and stay home when there aren’t orders to fulfill.
Some states do forbid the use of residential kitchens for commercial food production, and some local governments also restrict at-home commercial food production, so be sure to check out local zoning laws and contact your local Public Health Department before getting started.
If you do your homework, you can absolutely succeed in what can be a very rewarding segment of the home-based business market. Happy baking!
I am an author and moderator for the the SBA.gov Community. I'll share useful information for your entrepreneurial endeavors and help point you in the right direction to find other resources for your small business needs. Thanks for joining our online community here at SBA.gov!
Category: Home business