Question About Texas

Business By shannon100 Updated 12 Aug 2008 , 11:13pm by Mac

shannon100 Posted 4 Aug 2008 , 9:12pm
post #1 of 60

Hi. I was reading the forums last night, and I came across a message that I can't find again. I've searched and re-searched my entire history, and can't find this specific post! (maybe I dreamed it?) It was by someone in Texas about the legality of selling cakes. The way I read her post, there was some way that it was ok to sell some cakes out of a home kitchen. If you wrote that post, or know what I'm talking about, please let me know. Thanks for any help!

59 replies
kelleym Posted 4 Aug 2008 , 10:29pm
post #2 of 60

It is 100% illegal to have a food business from your home kitchen in Texas. However, the Williamson County health department rep told me I could "sell" cakes to friends and family. Not friends-of-friends or "word of mouth" - strictly to people I know. You would need to contact your county's health department to find out their stance on this issue.

Denise Posted 5 Aug 2008 , 2:36am
post #3 of 60

Every county in Texas is different. I live in a county that is not strict about home bakers. The health department employees/dirctor order cakes for the home bakers!

They would only come down on someone if they were turned in for serious health violations - I don't know of a single incident with a home baker that the health department has contacted. I am the pres of the local cake club and know a number of home bakers

SweetConfectionsChef Posted 5 Aug 2008 , 3:01pm
post #4 of 60

Yes, every county in Texas a little different but regardless you can NOT legally bake & sell out of a home kitchen....to anyone no matter what county you are in. If you fly under the radar you can't get a tax ID number (well you could, but it's fraud) or liability insurance, your home owner's insurance can be cancelled (for operating an illegal business), and if you don't turn in your earnings to the IRS then it's tax evasion. So ridiculous over freakin' cake and someone trying to make a couple of bucks...but in Texas...it's the way it is. thumbsdown.gif

joshalow Posted 5 Aug 2008 , 3:06pm
post #5 of 60

Another related question: Is it possible to change a portion of a 3 car garage into a separate kitchen, and then sell cakes from your home? We are looking into the possibility of moving to Dallas, and wanted to plan ahead.

kelleym Posted 5 Aug 2008 , 3:11pm
post #6 of 60
Quote:
Originally Posted by joshalow

Another related question: Is it possible to change a portion of a 3 car garage into a separate kitchen, and then sell cakes from your home? We are looking into the possibility of moving to Dallas, and wanted to plan ahead.




That depends on any Homeowner's Association regulations, and city/county zoning and ordinances. As far as I know, though, from the Health Department's point of view, a separate kitchen with an outside entrance and no direct access to the home is acceptable.

DebBTX Posted 5 Aug 2008 , 3:53pm
post #7 of 60

Welcome to Texas and baking!

One of my favorite websites for dealing with this question is to send people to Earlene Moore's web pages. She lives in Lubbock, Texas and is one of the leading cake artists in the country.
She has her kitchen off her home. It looks to me to be the size of a double car garage. Her husband made her cabinets, etc. and did a great job. She has always been very helpful when I had any questions.

Earlene has her kitchen pictures posted. It you study how she did things, it will give you some great ideas for getting the most out of a space. thumbs_up.gif

She also has Business articles that address the issues involved with having a legal home kitchen in Texas, as well as how to run that business.
There are two pages of kitchen pictures. I almost missed one of them because of where it is located.

www.earlenescakes.com

Go to Special Cabinets for the first page of kitchen pictures. After you are finished with it, look at the top heading of the same page where it says Cake Kitchen for the second page.

Don't forget to read all the Business articles. The button for them is located on the home page.

She will get you started. Somewhere on the site I remember she had a list of the actual things needed to make the Health Department think you are wonderful. (You know, things like the proper sinks, etc.)
Keep in mind that she did this quite a while back, so make sure you have the current rules.
It is fine to convert your garage if you follow the rules about home access. They don't want you to be able to walk directly into your living space. They want a separate entrance.
No pets in the cake kitchen.
Zoning is an issue, as well as your neighbors. I don't think I would begin a garage conversion until I knew from the proper folks that they were going to approve your paperwork and plan. I hate to waste money. icon_lol.gif

Do your homework and have fun baking.

-Debbie B.

P.S. - I just thought of another example with pictures, but I need to leave this page to go look it up. I'll be back in a minute.

DebBTX Posted 5 Aug 2008 , 4:04pm
post #8 of 60

Whew, okay I'm back.

My husband and I were in Fredericksburg, TX and ran across a home for sale from a cake artist who has retired.
Century 21, Sunset Realtors has it on their web site. The great thing is that you can see the inside of her cake kitchen that is located in her back yard. Feel free to hit the pause button if you want to study how she used her space for a legal home kitchen.

Century 21, Sunset Realtors
Go to virtual tour at the bottom of the home page.
The house is on page 8.
They named the listing "Get Cooking" # 0131-5453.

I can't believe I forgot to write down the website. I'll be back again.

-Debbie B.

DebBTX Posted 5 Aug 2008 , 4:09pm
post #9 of 60

Okay, I'm back again.

www.century21sunsetrealtors.com

That makes sense, doesn't it. icon_lol.gif

-Debbie B.

SweetConfectionsChef Posted 5 Aug 2008 , 6:19pm
post #10 of 60

DebBTX, not to pick apart your post....but Earlene does not have a "home kitchen"....it is a licensed kitchen and the seperate entrance makes it seperate from her home. I know this sounds ridiculous but I'm sure you don't want to sound misleading to anyone! icon_redface.gif

DebBTX Posted 5 Aug 2008 , 6:55pm
post #11 of 60

Okay, I see what I said.
Early in the post I did say Earlene had her kitchen off her house. (It is a converted garage that does have a separate entrance.) But later I did talk about the business articles and a legal home kitchen. Sorry about that.
SweetConfectionsChef, thank you for bringing that up. You are right. There really is a difference here between being home in the kitchen and being home in the garage kitchen. icon_biggrin.gif
You are a good cake friend to keep me out of trouble. icon_lol.gif

I'm sorry for any confusion I may have caused.

-Debbie B.

DianeLM Posted 5 Aug 2008 , 7:29pm
post #12 of 60
Quote:
Quote:

My husband and I were in Fredericksburg, TX and ran across a home for sale from a cake artist who has retired.




Do you happen to know if this used to be Oma's Cake Kitchen? I used to have her website bookmarked, but it's gone now. Just curious...

shannon100 Posted 5 Aug 2008 , 7:29pm
post #13 of 60

Thanks for all your helpful responses. I'll check with my local health department and see what they think.

DebBTX Posted 5 Aug 2008 , 8:09pm
post #14 of 60

I think that it might be.
I loved Oma's web site. I think they named the shop that because in German it meant grandmother.
I had emailed her when her website was still up to ask about faux frosting or something along those lines. I think her name was Barbara. She was very sweet and helpful. She had announced on her page that she would be retiring and the site would no longer be up after a certain point. (Which is really sad because I loved looking at her wonderful cakes.)
We ran across this house around the same time the shop closed and the web site ended, I felt that it was the same family. Fredericksburg is a very small community. (But, boy do they have fantastic old-fashioned shops and real German food. icon_lol.gif )
I wish that I had called to get permission to drop by and talk about cakes for a minute. The cake ladies that have been doing things for all those years have so much to share.

Anyway, "I'm not sure" is the Reader's Digest answer. icon_lol.gif

-Debbie B.

DebBTX Posted 5 Aug 2008 , 8:18pm
post #15 of 60

Diane,
I just compared Oma's Cake Kitchen's address with the realtor's listed address. It is the same. So now we know.

-Debbie B.

sweetcakes Posted 5 Aug 2008 , 8:55pm
post #16 of 60

it is possible to convert a garage space but make sure you check with your city and health dept first. id also like to add, that an owner of a retail bakery in town personally told me she would turn in anyone she finds that bakes out of their home. (i think she was feeling me out at the time, but i was legal, phew!).

SweetConfectionsChef Posted 5 Aug 2008 , 9:52pm
post #17 of 60
Quote:
Originally Posted by DebBTX

Okay, I see what I said.
Early in the post I did say Earlene had her kitchen off her house. (It is a converted garage that does have a separate entrance.) But later I did talk about the business articles and a legal home kitchen. Sorry about that.
SweetConfectionsChef, thank you for bringing that up. You are right. There really is a difference here between being home in the kitchen and being home in the garage kitchen. icon_biggrin.gif
You are a good cake friend to keep me out of trouble. icon_lol.gif

I'm sorry for any confusion I may have caused.

-Debbie B.




Thanks for not slamming me....that makes you a GOOD cake friend! I just wanted to point out the difference. thumbs_up.gif

DianeLM Posted 5 Aug 2008 , 9:53pm
post #18 of 60

Barbara!!! Thank you! I was wracking my brain trying to remember her name. I first became aware of her years ago on another message board. The times they are a'changin!

Denise Posted 7 Aug 2008 , 7:17am
post #19 of 60

Earlene's cake kitchen is separated from her house by a screen door and a regular outside door. The class room meeting room is separated from the kitchen by the same door setup. I have been a guest in her home so I saw it for myself. She said that the inspector said that was ok. So you can go right from her house kitchen straight through a door into her cake kitchen.

I do pay taxes on my cakes...the last people I want to get on the bad side of is the IRS. I am way more wary of them then the health department any day of the week. My taxman is a cake decorator and owns a cake shop. He is pretty darn strict too! Hopefully next year I will have a "legal" kitchen but it is not because of the health department raising a fuss. I just want a separate kitchen!

SweetConfectionsChef Posted 7 Aug 2008 , 12:52pm
post #20 of 60
Quote:
Originally Posted by Denise

Earlene's cake kitchen is separated from her house by a screen door and a regular outside door. The class room meeting room is separated from the kitchen by the same door setup. I have been a guest in her home so I saw it for myself. She said that the inspector said that was ok. So you can go right from her house kitchen straight through a door into her cake kitchen.

I do pay taxes on my cakes...the last people I want to get on the bad side of is the IRS. I am way more wary of them then the health department any day of the week. My taxman is a cake decorator and owns a cake shop. He is pretty darn strict too! Hopefully next year I will have a "legal" kitchen but it is not because of the health department raising a fuss. I just want a separate kitchen!




That's exactly what we're saying....her kitchen is not her home kitchen...it is seperate! And just to ask...how do you pay taxes on your cakes for a business that doesn't exist?

DebBTX Posted 7 Aug 2008 , 2:01pm
post #21 of 60

I think the issue of taxes is a good subject.
Concerning cakes only, not catering:

When you claim hobby cake money profits as income on your personal income taxes you are increasing your personal income level, with the potential to increase the amount you owe in taxes. So even without a legal business, you are trying to be honest by not letting that money go under the table so to speak. True?

For an actual business, I realize you have to work with the Comptroller and would have a Tax ID number. I didn't think you would have to charge the customer taxes on a cake in Texas unless you owned a bakery, etc. that served the bakery items "in house". Any time food items are eaten on the premises you would pay the taxes.
But, for a cake that is delivered to another location to be consumed, it is my understanding that no taxes are to be charged.

How do you Texas girls interpret the law?
What does your tax accountant say about these matters?

I appreciate all of us having the ability to get together to work these things out. It is such a help to so many people.
Please let me know if I am misunderstanding this issue.

- Debbie B.

Mac Posted 7 Aug 2008 , 2:20pm
post #22 of 60

Debbie--
I talked with the Comptroller's office when I was starting. They told me that I don't charge tax if it is something they don't eat on your premises. I could even sell a cookie and they eat it there without charging tax. But if I had actual walk-in business (which I don't), and someplace for people to sit, I would have to charge tax.

DebBTX Posted 7 Aug 2008 , 2:40pm
post #23 of 60
Quote:
Originally Posted by Mac

Debbie--
I talked with the Comptroller's office when I was starting. They told me that I don't charge tax if it is something they don't eat on your premises. I could even sell a cookie and they eat it there without charging tax. But if I had actual walk-in business (which I don't), and someplace for people to sit, I would have to charge tax.




Then we are in agreement and on the same page.

Thank you Mac,

-Debbie B.

sweetcakes Posted 7 Aug 2008 , 2:46pm
post #24 of 60

my kitchen is in part of my garage. so i walk out my kitchen door, into the hall of my garage, in through another door takes me into my laundry room, in another door takes me into my living area space. or i can come out the kitchen and go out the back door to outside.

As for taxes i dont charge any on the cakes, but if i sell a couple of boards, or boxes, or rent out a cake stand i do. if you charge delivery your supposed to tax that, so its better to have it in the total cake price. i have to submit my tax $ by Jan 20th each year.

Denise Posted 7 Aug 2008 , 5:58pm
post #25 of 60

My taxes are paid in with my regular income tax as additional income. So I do have an existing business - I just don't have a separate kitchen at this time. I make sure that I keep good records on what I charge and my milage and expenses.

I hope to have a separate kitchen next year and am saving money for it now. I will consult Mr. Z (Taxman / cake decorator) exactly how to maximize my income and still pay the correct amount of taxes. As I said, I never want to be on the wrong side of the IRS. They couldn't are less how you make the money as long as you pay taxes on it.

SweetConfectionsChef Posted 7 Aug 2008 , 6:33pm
post #26 of 60

If you are engaged in business in Texas you have to file for a sales tax permit. To do that you have to have a legal business. For you to have a legal business you have to work out of a licensed kitchen with a licensed food manager on duty. So to say that all you are lacking is the licensed kitchen is ridiculous. That's the back bone of what makes you a legal viable business.

As for the sales tax....if you are serving something ready to consume with eating utensils it is taxable. If you are giving the customer a whole cake or cookies/cupcakes in a box then it is non-taxable. It doesn't matter if they are actually eating it on premises...prepared ready to eat food is taxable in Texas. Now I must say, until 2007 whole cakes were taxed. They changed the law in September of that year and didn't notify anyone...which they never do anyway. That was a bookeeping nightmare.

As for sending in hobby income to the IRS trying to be as legal as possible...if you are running a full fledged "business" with advertising, website, phone numbers, business cards, contracts (even though they are not binding), and keeping accounting books....that is NOT a hobby. That is running an illegal business operation.

Denise Posted 7 Aug 2008 , 10:17pm
post #27 of 60

I am sorry that I seem ridiculous to you. I pay taxes and am in a county that is well aware that I am here. It is a non issue with them and as well as to me. I do not sell cakes by the slice. It is whole cakes only.

It seems to me that you have a problem with home bakers. Sorry this has hit a sore spot with you.

Mac Posted 7 Aug 2008 , 10:28pm
post #28 of 60

Actually, most of these questions are better answered by a professional that deals with the IRS, the people at YOUR local comptroller office as well as any other LOCAL licensing office.

As you can see, even in the HUGE state of Texas, there are still varying answers to all these questions. There is no need to get on a soapbox (either way). icon_biggrin.gif

DebBTX Posted 7 Aug 2008 , 11:03pm
post #29 of 60

I want to apologize for starting a problem between you girls. I really didn't intend to talk about a subject that would cause hurt feelings.
I hope that y'all will forgive me.

-Debbie B.

Denise Posted 7 Aug 2008 , 11:09pm
post #30 of 60

Debbie, no need to apologize. I am like the county I live in. It is a non issue for me. Hugs to you and come bake in our county with us!

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