Ohio Home-Based "cottage" Bakers -- Sales Tax?

Business By brendaonline Updated 22 Jul 2008 , 8:36pm by MichelleM77

brendaonline Posted 18 Jul 2008 , 8:10pm
post #1 of 28

I already have a vendor's license and do sales tax because I do sewing alterations, so it's not an issue of getting that paperwork set up.

If I (following the cottage baking rules) started to make cakes for paying customers, does it qualify as "take-out" food and therefore non-taxable, or is it taxable?

27 replies
skaggs1 Posted 18 Jul 2008 , 9:40pm
post #2 of 28

It would be non-taxable

MichelleM77 Posted 18 Jul 2008 , 10:56pm
post #3 of 28

Yep, non-taxable (unless you have a sit-down cafe). But I did hear from someone on here that you have to pay tax if you charge someone a delivery fee.

anikkim0915 Posted 18 Jul 2008 , 11:19pm
post #4 of 28

question about cottage bakers... (sorry to hijack the thread icon_biggrin.gif )

But as a cottage baker, can pets live in your home? I read somewhere on Ohio Dept of Ag, that pets are not allowed in the bakery (not sure if that applies to cottage bakers)

cakelady15 Posted 18 Jul 2008 , 11:49pm
post #5 of 28

In Ohio there is no sales tax on food unless you have a dine in area. To answer the question about pets, you are not allowed to have pets if you sell baked goods out of your home in Ohio. It's a little confusing on the agriculture website because it talks about getting licensed and you can't have pets, but I believe the rule applies even if you aren't licensed.

brendaonline Posted 19 Jul 2008 , 12:13am
post #6 of 28

We have 3 cats that aren't going anywhere, so I combed the pages on cottage vs. licensed. On the licensing page they mention the pets, but they don't say a WORD about it on the cottage page.

One would think that would be just as important as no refrigerated items, no selling out of state, and listing ingredients and a specific disclaimer, no?

IOW, their web pages look like a high school class project gone awry. Glad to see our tax dollars so hard at work.

Erdica Posted 21 Jul 2008 , 12:08pm
post #7 of 28

As far as pets goes....every time you ask someone, it's a different answer. I don't know if there is a specific yes or no to having pets. We have the cottage law because of how many Amish are in the state. And I'm sure they have pets around. So not really sure.

A couple of Ohio CC's have called or emailed and everyone seems to get a different answer. It's confusing.

tootie0809 Posted 21 Jul 2008 , 4:26pm
post #8 of 28

I'm not in Ohio, but I have checked out the cottage food laws for my state and talked to someone specifically about pets in the home. She told me if I have a kitchen where there is a door that can close off access to that room, then pets are okay. I'm going to be building a separate kitchen for cakes in my unfinished basement and will be putting self-closing doors so that no one but me goes in there and my dogs will stay out. In fact, they won't even be allowed downstairs at all. Not sure if this helps, but you might want to talk to someone in your dept of agriculture office specifically about pets in the home and see what they say. For me, it was a relief to have that cleared up. I want to have my own cake business desperately, but I love my dogs more (they're my kids), and wouldn't sacrifice giving them up for an in-home kitchen, so I'm glad I can still make it all work legally.

trulyscrumptious Posted 21 Jul 2008 , 9:19pm
post #9 of 28

I think the issue is more about keeping pets away from the food preparation areas then it is about not having them in the house at all. When the Ag. guy came to do my kitchen he took a quick look around and passed me- then spent an hour talking to me about the cake business and giving me tips. He also told me about a lady who wanted to be licenced, when he came and inspected she had several bird cages hanging directly over the countertops! icon_surprised.gif And she didn't understand why he said no! icon_eek.gif

~Truly

jolmk Posted 22 Jul 2008 , 5:55am
post #10 of 28

If I understand everything correctly. A cottage license is for the baked goods that you see at farmers markets, cookies, muffins, bread, etc. I do not believe that decorated cakes are covered by a cottage license, as you would be very limited as to what you could offer. Cakes can contain perishable items, cream cheese, mousse etc. It cost 10.00 and you have to have you home inspected, No pets in the house. Here's the catch, If you have your home inspected by the Ohio Dept. of Agriculture, and you pass they will give you a federal ID number. Then you have to file a schedule C form on you federal taxes. Yes, I live in Ohio and Yes, I am licensed. I hired an accountant.

shanasweets Posted 22 Jul 2008 , 6:28am
post #11 of 28

I am not in ohio, but moving to kansas. I emailed about cottage food laws there. and the response I got was I could bake as long as it wasn't perishable. so decorated cakes would fit that catagory as long as I don't use perishable items. so some obvious items are out, but still leaves open the premade filling sleeves. I don't use milk in my cake and buttercream is safe to be left out. I help a local baker out and all her cakes are left out. So I just am looking for receipes that are non perishable.

MichelleM77 Posted 22 Jul 2008 , 1:15pm
post #12 of 28
Quote:
Originally Posted by sltoklahoma

I am not in ohio, but moving to kansas. I emailed about cottage food laws there. and the response I got was I could bake as long as it wasn't perishable. so decorated cakes would fit that catagory as long as I don't use perishable items. so some obvious items are out, but still leaves open the premade filling sleeves. I don't use milk in my cake and buttercream is safe to be left out. I help a local baker out and all her cakes are left out. So I just am looking for receipes that are non perishable.




This is how I understand it (and emailed the DOA to confirm as well). You can't do cheesecake, you can't do whipped cream, you can't do mousse or ganache, but you can still sell cakes. I use jam for fillings (according to Smucker's, jams/jellies don't have to be refrigerated, but it makes the product last longer).

tootie0809 Posted 22 Jul 2008 , 2:53pm
post #13 of 28

This is how I understand it (and emailed the DOA to confirm as well). You can't do cheesecake, you can't do whipped cream, you can't do mousse or ganache, but you can still sell cakes. I use jam for fillings (according to Smucker's, jams/jellies don't have to be refrigerated, but it makes the product last longer).[/quote]

So for your icing choices then you can only do shortening-based BC or fondant, right? Wow, I never thought of the fillings that need to be refrigerated and that that would not fall under the laws for cottage foods. How do you do wedding cakes with only a jam or american BC filling? I can't imagine filling a cake with american BC.

MichelleM77 Posted 22 Jul 2008 , 3:51pm
post #14 of 28

I don't do wedding cakes.

Well, there wouldn't be American BC if American's didn't eat it.

I haven't filled a cake with plain BC anyway.

I have a hi-ratio/butter BC and an all-butter BC recipe.

Yes, I cover all of my cakes with fondant because that is what I like to decorate with, not because I have to because I don't.

jolmk Posted 22 Jul 2008 , 3:56pm
post #15 of 28

I guess that I should have said that some cakes do fall under a cottage license, but again you are very limited to what you can offer.

MichelleM77 Posted 22 Jul 2008 , 4:04pm
post #16 of 28

I don't mind being limited. Makes it easy on me and makes it easy on the customer.

Personally, I hate walking into a place with a list of 100 choices. I would probably stand there for hours trying to figure out what I want or I would walk out without placing an order.

tootie0809 Posted 22 Jul 2008 , 5:36pm
post #17 of 28

When I talked to the woman who does the cottage licensing in my state, she said that I couldn't sell "cheesecakes, and things like that." I do want to be able to offer SMBC since no one I know likes the regular BC (shortening-based), but I hadn't even thought about the refrigeration requirements for SMBC, ganache, and other perishable fillings and icings, so when I read this thread it got me thinking. I just figured that since I won't be doing cheesecakes, I won't have a problem with the cottage food limits. I didn't think about all the other things that can go into a cake that do require refrigeration. She did say if I put in a separate entrance into my basement, then I could do a commercially licensed kitchen and then could sell whatever I want. I am thinking about how I could do that.

I'm not licensed yet and haven't sold any cakes at this point. I wanted to be perfectly legal before going into real business, so we were starting the plans to do a cottage food kitchen in my basement, but now I'm thinking it might be best to plan for a commercial kitchen down there so I won't be limited and can grow the business without worrying about what I can and can't offer. It's hard to make these big plans though without being able to legally "test the waters" so to speak to see if this is even going to be something I can make money at.

MichelleM77 Posted 22 Jul 2008 , 6:19pm
post #18 of 28

Cottage Foods only allows you to have one oven, one kitchen, etc. If you were to put in a kitchen in your basement, I believe that would be considered a bakery and different licensing.

Are you in Ohio? Maybe that's why we aren't agreeing on what we can and cannot do?

tootie0809 Posted 22 Jul 2008 , 7:01pm
post #19 of 28

I'm in Utah, so there could very easily be some differences in cottage food policies between the states. I am going to call the lady I spoke to before to try to get a clearer understanding of what is and is not allowed. I told her about turning part of my basement into a separate kitchen, and she said that sounded like a great idea. Didn't mention anything about additional licensing requirements. I'm sure laws differ from state to state.

BTW, I used to be an MT. icon_smile.gif Don't miss it at all! LOL!

aswartzw Posted 22 Jul 2008 , 7:12pm
post #20 of 28

Wow! I'm shocked that ganache isn't allowed. If that's the case, then I guess SMBC isn't too. I've been told that ganache is stable and can be left at RT for several days. Therefore, it would be legal by the cottage laws perishable explanation. Same thing for SMBC. But Michelle, you've been told you can't have ganache?

I can understand cream cheese and pudding fillings but I don't get the ganache or SMBC.

I guess my view is even bread is bad in a week. So why is SMBC or ganache any different?

MichelleM77 Posted 22 Jul 2008 , 7:22pm
post #21 of 28

It's not that ganache isn't allowed, but it requires refrigeration, so I can't use it. Same with SMBC. At least how I read the recipes for both of those.

I wish I could say I used to be an MT. Just started a new job at a hospital and have an at-home job as well. Can't wait to quit them both! icon_smile.gif

aswartzw Posted 22 Jul 2008 , 7:24pm
post #22 of 28

Just a thought....

I really want to do this right but I'm no longer a fan of american BC. So what makes SMBC perishable by DOAs standards? Is it the eggs or butter or both? If it's the eggs, would substituting powdered eggs for the egg whites make SMBC safe? I'm almost to the point of sending the recipe to DOA to see what they say.

Or some people substitute high-ratio for the butter. Hmmm.... Maybe we can make this work. We are determined CCers.

Does this mean in a regular BC recipe that no coffee creamers or milk can be used but only water?

I'm new to this and the rules are so abstract! It is confusing. icon_cry.gif

Sigh...

MichelleM77 Posted 22 Jul 2008 , 7:39pm
post #23 of 28
Quote:
Originally Posted by aswartzw

Just a thought....

I really want to do this right but I'm no longer a fan of american BC. So what makes SMBC perishable by DOAs standards? Is it the eggs or butter or both? If it's the eggs, would substituting powdered eggs for the egg whites make SMBC safe? I'm almost to the point of sending the recipe to DOA to see what they say.

Or some people substitute high-ratio for the butter. Hmmm.... Maybe we can make this work. We are determined CCers.

Does this mean in a regular BC recipe that no coffee creamers or milk can be used but only water?

I'm new to this and the rules are so abstract! It is confusing. icon_cry.gif

Sigh...




I'm not saying the DOA said that SMBC is perishable. I'm saying that the DOA said we cannot sell items that need to be refrigerated, and according to the recipes I've seen for IMBC and SMBC it needs to be kept refrigerated. I could be wrong and I'm only going by what the recipes say. I have recently been corrected that SMBC can be left out for a few days, but I haven't found a recipe that says it can be yet, so more research on my end yet. icon_smile.gif

Milk and butter can be used in regular BC because of the amount of sugar.

aswartzw Posted 22 Jul 2008 , 7:50pm
post #24 of 28

Something on refrigeration of ganache...

http://www.baking911.com/chocolate/ganache_truffles.htm

and SMBC/IMBC (way, way, down.....)

http://www.baking911.com/decorating/cakes_buttercream.htm

And a section on fillings/BC....

http://www.baking911.com/decorating/icing_glaze_choices.htm


Judging by this...I think I'm on a search for ganache and SMBC recipes that don't satisfy the requirements. I think I might just use pasteurized eggs for the SMBC to eliminate any food scares.

brendaonline Posted 22 Jul 2008 , 8:03pm
post #25 of 28

aswartzw, the links you made aren't working. The thing between WWW and COM seems to be missing.

aswartzw Posted 22 Jul 2008 , 8:10pm
post #26 of 28

Hmm.... weird. Does CC have the site blocked?

The missing part is b a k i n g 9 1 1


without the spaces

aswartzw Posted 22 Jul 2008 , 8:25pm
post #27 of 28

Michelle,

Here's a SMBC recipe that says can be stored at room temperature for 2 days.

http://www.marthastewart.com/portal/site/mslo/menuitem.fc77a0dbc44dd1611e3bf410b5900aa0/?vgnextoid=58cdb276b490f010VgnVCM1000003d370a0aRCRD&vgnextfmt=default&rsc=rf_result14&autonomy_kw=swiss+meringue

I hope this link works! thumbs_up.gif

BTW, I love your avatar. Makes me drool everytime I see it. The only reason I still watch Prison Break!

MichelleM77 Posted 22 Jul 2008 , 8:36pm
post #28 of 28

you have to be a paid member to read most things on b a k i n g 911.

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