Loop Hole To Being Illegal?

Lounge By CharmingConfections Updated 12 Apr 2008 , 2:21pm by MrsMissey

CharmingConfections Posted 8 Apr 2008 , 4:04am
post #1 of 237

As an at home cake decorator, you aren't legally allowed to charge for your cakes right?, but what if instead of "charging" you had a suggested "gift" amount that you accepted?? Would this still get you in trouble? I want to do things legally but I am overwhelmed trying to figure out the process to do so.
Thanks
Christy

236 replies
beccakelly Posted 8 Apr 2008 , 4:11am
post #2 of 237

the IRS/health department will consider you to be in business if there is an exchange of goods. you give some one a cake in exchange for : money, or supplies, or any other product. thats why having someone buy supplies for you to bake a cake is still not legal. it has to be completely free.

leah_s Posted 8 Apr 2008 , 6:29am
post #3 of 237

What becca said. "If it walks like a duck . . ."

FromScratch Posted 9 Apr 2008 , 12:13am
post #4 of 237

Most definitely.. you can't even make someone a cake in exchange for them mowing your lawn. You can give them a gift after you pay them, but you can't say I'll bake you a cake if you mow my lawn.. that is a business transaction. They can't bring you supplies and you bake the cake.. it's a business transaction.. they can't buy you the pans and you make the cake.. it's all the same.

FlowerGirlMN Posted 9 Apr 2008 , 2:38am
post #5 of 237
Quote:
Originally Posted by CharmingConfections

As an at home cake decorator, you aren't legally allowed to charge for your cakes right?, but what if instead of "charging" you had a suggested "gift" amount that you accepted?? Would this still get you in trouble? I want to do things legally but I am overwhelmed trying to figure out the process to do so.
Thanks
Christy




What is with the glut of questions trying to get around laws lately? If it's worth doing, it's worth doing right!

Call your department of agriculture and see what needs to be done to be legal.

amberlicious Posted 9 Apr 2008 , 4:15am
post #6 of 237

Some states make it nearly impossible to be legal without investing tens of thousands of dollars and doing it full time. Some of us can't or don't want to make that sort of commitment. I understand the reasons the laws are there- but I wish that some states (mine) were willing to inspect and license a home bakery. I can't afford to go out and build or buy a commercial kitchen (or even rent one) to do 2 cakes a month.

FromScratch Posted 9 Apr 2008 , 4:32am
post #7 of 237

I guess my question would be is the income you make from 2 cakes a month really worth the risk? If I couldn't do this legally from home I wouldn't. It wouldn't be worth risking the fines.

FlowerGirlMN Posted 9 Apr 2008 , 12:05pm
post #8 of 237

Well, many careers are impossible to get into without investing tens - or even hundreds - of dollars.

As far as I'm aware, there is no state out there that is SO strict that you have to invest tens of thousands of dollars. MN is one of the most strict, you know what it cost me to get legal?

$77 - inspection/agri license
$160 - Food safety course and exam
$35ish - health licensed

I didn't pay a cent towards my rental kitchen till I got orders (It's hourly, as needed).

It takes money to make money, but in the grand scheme of things.. if you're not willing/able to spend the less than $300 to get yourself legal, and the time, effort, and possibly creativity to find a rental space... why should you be selling cakes?

I'm guessing that getting fined would be more expensive than the <$300 it costs to get legal.

leah_s Posted 9 Apr 2008 , 12:57pm
post #9 of 237

Also, feeding the public is serious business. And with all the cases of food borne illnesses in the papers over the last year or so, the public is more aware of problems, and quicker than ever to point the finger at someone. If you do have a problem, and you are not licensed, then you might as well had over the keys to your car, your house and your bank account. Because it you get sued you have no defense. I would not be willing to put my family at that kind of risk for the income off of a couple of cakes a month.

amberlicious Posted 9 Apr 2008 , 4:14pm
post #10 of 237

As I understand it here (Utah) I can't be legal until I have a kitchen. Kitchens are expensive.

I have a health card- but after that there is nothing else I can do until there is a kitchen to inspect.

FromScratch Posted 9 Apr 2008 , 4:37pm
post #11 of 237

YOu can certainly use another commercial kitchen if you can find one to rent. Do you have any local restaurants? Perhaps your local church has a licensed kitchen you could use? There is always a way to do it right if you want to. icon_smile.gif

amberlicious Posted 9 Apr 2008 , 5:25pm
post #12 of 237

But even renting a kitchen is jumping in more then I want to I think. If I'm renting hourly for $20 an hour even then I'm coming out making $0. I'd have to be making more then one cake at a time- which I don't do currently.

FlowerGirlMN Posted 9 Apr 2008 , 5:54pm
post #13 of 237

$20 / hour is what I pay. If you want to be a *business*, then you need to look at your expenses and price yourself accordingly.

If $20/hour for a kitchen and $300 or so in fees is "jumping in" too much for you, then you really should keep it as a hobby.

kelleym Posted 9 Apr 2008 , 6:13pm
post #14 of 237

I would like to be able to sell a small cake or two every week, and perhaps the occasional wedding cake, legally from my home. I strongly feel that every state should have some sort of cottage food law that provides for this, and also protects the public. Cakes and cookies are not high risk food items, as the states with cottage food laws acknowledge.

I have tried two different renting situations and found them completely unworkable, both for sanitary and time issues. The first restaurant I tried to use was filthy such as you have never seen. I came home one day and cried. The second was a rental kitchen which was cleaner than the restaurant, but not as clean as my home. I would have to get there and wash the mixer and wipe the countertops of dead bugs before I could start. Plus, cakes take time to cool and settle, and there was no way I could let a cake settle there overnight and come back and work on it the next day. I paid $10/hr to rent (a bargain, to be sure), plus $200 a year for my food purveyor's license. It was not a workable situation for one cake a week.

I don't think most people here want to "get around" the food laws. They just wish they could make food legally in their own kitchen (as you can in at least 18 states). Not everyone wants to make cakes a full time business - heck, one cake a week is barely even part time. But I would like to do it legally and be fairly compensated for my efforts.

indydebi Posted 9 Apr 2008 , 6:18pm
post #15 of 237
Quote:
Originally Posted by amberlicious

But even renting a kitchen is jumping in more then I want to I think. If I'm renting hourly for $20 an hour even then I'm coming out making $0. I'd have to be making more then one cake at a time- which I don't do currently.




It's the cost of doing business.

I have no weddings booked for April .. but I still have to pay rent on the shop.

You need to incorporate the cost of the rental kitchen into the cost of the cake. If you can do 4 cakes in one hour, then the cost is $5 per cake. If you only do one cake in one hour, then the cost is $20 per cake.

You need to decide if you are a business or a hobby and pursue it from that angle.

heycupcake Posted 9 Apr 2008 , 6:32pm
post #16 of 237

kelleym---thats sooo true...I think a lot of us cake decorators are feeling that way--all of a sudden you have people calling you to get a acake and you cant possibly do it for free...yet you risk the ---dum-dum -dum - **FINES

I completely understand the health dept. rules and all the laws....but i agree with kelleym...


catch22 i guess. icon_confused.gif

cuteums Posted 9 Apr 2008 , 6:42pm
post #17 of 237

Some states are arbitrary in their laws, and when you call even they aren't clear on the laws. From the way I understand it, in NY I can get a home exemption for my kitchen if I was selling wholesale but not 1 cake to an individual. That's right I can bring 24 muffins to my local deli to sell and it would be legal, or I can bring cupcakes to a farmstand, but if one of those customers asked me to bake them a cake I couldn't do it legally. Even if I used only non perishable fillings. I too have given up. I'd have to rent space at a very high price or open up my own bakery which I would have no idea how to do. I'd love to do it but I can't afford to lose money on every cake I make. That cost of business is just too high for me. I might as well just make them for free now. The money I'd lose on materials would be less than I would lose by renting a space.

tracycakes Posted 9 Apr 2008 , 6:43pm
post #18 of 237

Personally, I don't understand the whole thing. I don't want to do this as a business right now. I don't want to rent a kitchen. I don't even make many cakes at all. But, the law wants to come after me because my mom asks me to make her a cake for her Sunday School class and pay me for it? Crazy. What if she likes my lasagne and asks me to make it? She wants to pay because the ingredients are high and it takes a lot of time to make. I just make it better than she does.

Same thing goes if I pay the neighbor kid to mow my lawn. Does that mean he has to have a "business" because I pay him. Actually, I don't, my husband mows the lawn but it could be the same thing.

I know what you guys are saying about being legal, etc., but it's not a business. In my situation, it's doing a favor and someone wants to pay me for my time because they appreciate me doing this. I'll hush now.

indydebi Posted 9 Apr 2008 , 7:05pm
post #19 of 237

tracy, it's what I call "crazy making". If you try to make sense of it logically, you'l go crazy! dunce.gif

Amia Posted 9 Apr 2008 , 7:06pm
post #20 of 237
Quote:
Originally Posted by tracycakes

Personally, I don't understand the whole thing. I don't want to do this as a business right now. I don't want to rent a kitchen. I don't even make many cakes at all. But, the law wants to come after me because my mom asks me to make her a cake for her Sunday School class and pay me for it? Crazy. What if she likes my lasagne and asks me to make it? She wants to pay because the ingredients are high and it takes a lot of time to make. I just make it better than she does.

Same thing goes if I pay the neighbor kid to mow my lawn. Does that mean he has to have a "business" because I pay him. Actually, I don't, my husband mows the lawn but it could be the same thing.

I know what you guys are saying about being legal, etc., but it's not a business. In my situation, it's doing a favor and someone wants to pay me for my time because they appreciate me doing this. I'll hush now.




This is confusing. So whenever I used to buy ingredients and take them to my grandma to make me a cake, that was illegal? Ridiculous. And if that is not illegal, then there is no difference in someone buying my ingredients and my making their cake. I think Texas is another state that won't allow in-home baking. I don't want to do this as a business yet, but I can't afford to be a hobbyist. It really sucks that I cannot do what I love. I understand why the laws are there (especially after reading that thread about the lady serving a cake her dog LICKED!) but I also think there should be compromise. No one wants to do things illegally, and really its not like we're dealing drugs here, we just want to do things at a lower cost, and there isn't anything wrong with that. I have two kids, so its not just renting a kitchen, I'd have to pay for childcare too and buy/rent equipment etc etc. That would make my cakes so expensive that no one would buy them...at least until I built up a good client base and who knows how long that would take! icon_cry.gif

FlowerGirlMN Posted 9 Apr 2008 , 7:24pm
post #21 of 237

Well, why not look at it from another point of view?

There are many of us who invested the time and money to start our *businesses*.. and incur expenses that you wouldn't believe. You know, for our *businesses*.

I have a friend who is operating in an area where she is the only licensed custom cake person (I'm not counting the grocery store), and there is an unlicensed person operating freely - even doing wedding shows! - even though it's completely illegal for her to do so.

Of course, that person is able to charge WAY less than my friend, as she has far less expense.

I don't see why any of us who have invested in our *businesses* should have to compete with illegal hobbyists. Your "building up a client base" and "being paid for a hobby" seriously devalues custom cakes in general.

kelleym Posted 9 Apr 2008 , 7:33pm
post #22 of 237
Quote:
Quote:

I don't see why any of us who have invested in our *businesses* should have to compete with illegal hobbyists. Your "building up a client base" and "being paid for a hobby" seriously devalues custom cakes in general.




That is why every state should have a cottage food law, so "hobbyists" need not be illegal.

[soapbox]
I do not think there needs to be an either-or situation of "become a full time business" or "do cakes for free as a hobby". People in other arts-and-crafts hobbies, such as quilting, can do them "on the side" when they feel like taking on work, without having to worry about being called "illegal hobbyists" and fined or even JAILED (in Texas, yes, you can be jailed). Of COURSE this is because nobody can get sick from eating a quilt. But the chance of someone getting sick from a cake or cookies is remote - that is why these items are "low risk" or "non-hazardous" as categorized by various states' cottage food laws. I am PASSIONATELY in favor of every state having some law to allow people to make cakes and cookies from home (even in a limited capacity) legally.

[/soapbox] icon_wink.gif

heycupcake Posted 9 Apr 2008 , 7:36pm
post #23 of 237

Well from what I understand--you wont be getting in trouble if someone doesnt complain--I try to keep my cakes going only to friends and family--but Im getting referrals like crazy...now afraid to accept them icon_wink.gif

I know personally of at least 3 other bakers where i live who have been in biz for 10+ yrs...and have never --ever--even been asked if theyre legal.

Its all very frustrating.

leah_s Posted 9 Apr 2008 , 7:37pm
post #24 of 237

Hear, hear FlowerGirl. I don't mind competing in the maretplace for business, as long as the playing field is even. Some people will like me and my cakes, others won't. :shrugs: But when I've remodeled my kitchen, purchased professional equipment, gone to certification class and paid my annual fees, which of course has to be incorporated into my pricing, and then I have to compete against a hobbyist who has virtually no fees other than ingredients, it is no longer an even playing field.

amberlicious Posted 9 Apr 2008 , 7:49pm
post #25 of 237

As I see it though- because of those things you can advertise, go to bridal shows and make more money. You can charge more because you have a business. As a home baker people expect a deal knowing you don't have overhead.

heycupcake Posted 9 Apr 2008 , 7:54pm
post #26 of 237

very true amberlicious!

so..wait a second---all of you licensed--legal cakers...none of you took caes on before you were legal? If not, then how did you get started? Hpw did you build your business? Im curious---Im not being sarcastic at all.

In my mind...it seems crazy to start a iz before you have any clients--unless you work under someone. ???

FlowerGirlMN Posted 9 Apr 2008 , 8:07pm
post #27 of 237

I didn't do any cakes for order before becoming legal. I just did friends bdays, dinner parties, a few wedding cakes as gifts.. really never thought to charge.

I started my business with no clients whatsoever. Why is that crazy? If you've got something good to offer and conduct yourself as a legit business, the clients will come!

q2wheels Posted 9 Apr 2008 , 8:07pm
post #28 of 237

Well....I'll throw my personal issue into the mix for your consideration. On top of livng in NY, which makes it difficult to be legal, if I wanted to do so, I'd have to find a rental kitchen (in a very RURAL area) that is wheelchair accessible. I'd venture to guess, not many are and then there'd likely be issues related to having a chair user in the kitchen.

Added to the financial situation, as much as I would like to be legal.....it's not happening for me any time.

Toni Ann

heycupcake Posted 9 Apr 2008 , 8:16pm
post #29 of 237

I do plan to "get legal" as soon as I can...

I guess the whole financial part of it---renting a place, advertising, commercial equipment.....is a little overwhelming. But then again...I never thought about renting a church kitchen...

I have heard Nevada laws are crazy in this area...Ive wanted so bad to contact a lady who owns a cake biz here in town...ad just pick her brain...but the fear of getting shot down b/c I could be her "competition" has kept me from making the call....hahaha

amberlicious Posted 9 Apr 2008 , 8:31pm
post #30 of 237

I used to be in NV. I was good friends with a caterer/cake decorator there who'd been doing it for years without a commercial kitchen with no problems. She'd even done events FOR THE COUNTY and was upfront with them about her status- they said it was fine as long as she filled out a W-2 so they could take out taxes.

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