Love My Hobby But Do I Need To Follow Others?

Business By duchess1120 Updated 17 Oct 2008 , 4:04pm by dmhart

duchess1120 Posted 14 Oct 2008 , 7:56pm
post #1 of 21

I just want to make cakes as a hobby (for now) and bake out of my home only as people request cakes 1 or 2 a month.

Do I still need to apply for a license, insurance etc so that I can pass out business cards and flyers.


TIA

20 replies
tiggy2 Posted 14 Oct 2008 , 8:02pm
post #2 of 21

It depends on where you live and what the laws are for that state.

FromScratch Posted 15 Oct 2008 , 12:37am
post #3 of 21

Most likely yes. There are very few states that have cottage food laws where you wouldn't need a license to legally sell cakes from your home. Some states flat out will not allow you to cook from your home kitchen. Where are you located? I might be able to tell you your state's regulations. icon_smile.gif

SugarFrosted Posted 15 Oct 2008 , 1:19am
post #4 of 21

Lots of bakers do it "under the radar"... if you only do 1 or 2 cakes a months and you don't advertize, you probably have no need to worry.

I do cakes out of my home kitchen, 10-15 per month for 20 years now. There are quite a few here on CC from my state, and I know some have shops and some bake in their homes. I only do cakes for friends and friends of friends. I won't accept an order unless the person can tell me who recommended them to me. I give a few cards to my client when the cake is picked up. I have a website which functions only as an online photo album, so my clients can see the cakes I've made.

It is a personal choice to go through the process of getting licensed and only you can know if your level of involvement warrants such a step. There are a few states which allow home kitchens to be used. Sometimes the laws are very very strict, even for a home kitchen.

Look here for info:
http://www.cakecentral.com/cake-decorating-ftopict-32550-.html
The last few pages of that thread are corrupt after a site crash a while back, so start at the beginning.

duchess1120 Posted 15 Oct 2008 , 9:45pm
post #5 of 21

I live in North Carolina

kelleym Posted 15 Oct 2008 , 10:00pm
post #6 of 21

Then you are one of the lucky ones. icon_smile.gif North Carolina will license your home kitchen:

http://www.agr.state.nc.us/fooddrug/food/homebiz.htm

loriemoms Posted 16 Oct 2008 , 1:29pm
post #7 of 21
Quote:
Originally Posted by duchess1120

I live in North Carolina




Yes, you will not only need to get inspected (which is very easy) but you also need to pay taxes...North Carolina is more strict on collecting their taxes from us then on anything else! I would ask your accountant what 1-2 cakes a month means. You may not be considered a business enough to collect taxes. But I would double check to make sure!! There are huge penalities if you get caught..

cakelady15 Posted 17 Oct 2008 , 12:24pm
post #8 of 21

According to the IRS if within the first three years of getting started you expect to turn a profit then you are considered a business and not a hobby. If you only do one or two cakes a month you could probably still consider it a hobby. I know I spend way more than what I charge for a couple of cakes on new cake toys every monthicon_smile.gif

loriemoms Posted 17 Oct 2008 , 1:41pm
post #9 of 21
Quote:
Originally Posted by cupcake900

According to the IRS if within the first three years of getting started you expect to turn a profit then you are considered a business and not a hobby. If you only do one or two cakes a month you could probably still consider it a hobby. I know I spend way more than what I charge for a couple of cakes on new cake toys every monthicon_smile.gif




The local taxes are more of a concern then the IRS...I know my first year I only collected about 20 dollars worth of local taxes and they still wanted it!! (and if you are late, phew the fees add up) Again, I would check with your accountant as there were a number of bakeries in our area that got hit with HUGE tax bills a couple of years ago when the state did an audit..

cakelady15 Posted 17 Oct 2008 , 1:56pm
post #10 of 21
Quote:
Originally Posted by loriemoms

Quote:
Originally Posted by cupcake900

According to the IRS if within the first three years of getting started you expect to turn a profit then you are considered a business and not a hobby. If you only do one or two cakes a month you could probably still consider it a hobby. I know I spend way more than what I charge for a couple of cakes on new cake toys every monthicon_smile.gif



The local taxes are more of a concern then the IRS...I know my first year I only collected about 20 dollars worth of local taxes and they still wanted it!! (and if you are late, phew the fees add up) Again, I would check with your accountant as there were a number of bakeries in our area that got hit with HUGE tax bills a couple of years ago when the state did an audit..




I didn't even think about local taxes. I should have added I do let my accountant handle all of that stuff icon_biggrin.gif I just remember reading that for federal it's still a hobby if you aren't making any money.

tootie0809 Posted 17 Oct 2008 , 2:10pm
post #11 of 21

Even if your state does have cottage food laws, you still have to get a cottage food license. I'm in the process of getting my cottage food license myself and they still have to come inspect my kitchen and I have to have a current food handler's certificate. Cottage food licensing isn't as stringent as commercial licensing, but you still have to have certain requirements in your kitchen met. At least that's how it is in my state. Hope this helps. Good luck to you!

forthwife Posted 17 Oct 2008 , 2:21pm
post #12 of 21

Does anyone know the law in Florida?

FromScratch Posted 17 Oct 2008 , 2:26pm
post #13 of 21

In Florida you cannot bake from your home kitchen at all. You would have to rent space or be able to build a completely separate commercial kitchen. That's my understanding anyway.

forthwife Posted 17 Oct 2008 , 2:32pm
post #14 of 21

Thanks for the info! I wonder how lunch trucks handle this. I'm amazed that the state thinks a home kitchen can't pass making "clean" food, but a car can. icon_wink.gif

dmhart Posted 17 Oct 2008 , 2:33pm
post #15 of 21

Here in Georgia you can not have a home kitchen business. It has to be a totally separate kitchen for you home kitchen. My inspector was here yesterday and I asked him he said you can have it at home but it has to be in a separate building from your residence. And it has to meet their standards. I am inspected by the Dept of AG.

forthwife Posted 17 Oct 2008 , 2:36pm
post #16 of 21

The department of agriculture? Not the health department? Interesting. Florida has it's own quirks too. I know home gardeners (at least in central Florida) are subject to state inspection as well.

loriemoms Posted 17 Oct 2008 , 2:39pm
post #17 of 21
Quote:
Originally Posted by cupcake900

Quote:
Originally Posted by loriemoms

Quote:
Originally Posted by cupcake900

According to the IRS if within the first three years of getting started you expect to turn a profit then you are considered a business and not a hobby. If you only do one or two cakes a month you could probably still consider it a hobby. I know I spend way more than what I charge for a couple of cakes on new cake toys every monthicon_smile.gif



The local taxes are more of a concern then the IRS...I know my first year I only collected about 20 dollars worth of local taxes and they still wanted it!! (and if you are late, phew the fees add up) Again, I would check with your accountant as there were a number of bakeries in our area that got hit with HUGE tax bills a couple of years ago when the state did an audit..



I didn't even think about local taxes. I should have added I do let my accountant handle all of that stuff icon_biggrin.gif I just remember reading that for federal it's still a hobby if you aren't making any money.




What got me is the property taxes....in our state, everything you deduct you have to claim property taxes on..things like mixers and tables and such. Its crazy. They get you all they can!

FromScratch Posted 17 Oct 2008 , 2:42pm
post #18 of 21

Depending on the state, it's either the Dept of Ag or Heath and Human Services. In NH is the DHHS.. in the neighboring state of MA.. it's the Dept of Ag. It's odd.. but what can you say right?

I'm sure the lunch trucks have to be inspected.. and you assume they are legal and licensed, but who knows right? I'm sure some aren't. I know people bake under the radar in their homes in FL.. it's a risk you have to weigh yourself though.. to me it's not worth it.

They inspect gardeners?? I assume they sell their wares to the public?? If not that's odd.. talk about creating a job for your cousin Vinnie huh?? LMAO

forthwife Posted 17 Oct 2008 , 2:48pm
post #19 of 21

All home gardeners in central Florida are subject to inspection, regardless of intent to sell. (I am not sure if you even can sell home grown produce.) I would hope it's to keep our other crops safe in Florida. I'm never suprised by anything anymore. I got my property tax bill and it was $800 higher than my neighbor (our homes are IDENTICAL) and the appraiser said when he LOOKED in our windows it seemed like I had more tile. I don't, and made them drop my rate.

FromScratch Posted 17 Oct 2008 , 3:44pm
post #20 of 21

it LOOKED like you had more tile??? That's insane. Good for you for fighting it.

dmhart Posted 17 Oct 2008 , 4:04pm
post #21 of 21
Quote:
Originally Posted by forthwife

All home gardeners in central Florida are subject to inspection, regardless of intent to sell. (I am not sure if you even can sell home grown produce.) I would hope it's to keep our other crops safe in Florida. I'm never suprised by anything anymore. I got my property tax bill and it was $800 higher than my neighbor (our homes are IDENTICAL) and the appraiser said when he LOOKED in our windows it seemed like I had more tile. I don't, and made them drop my rate.



I have learned that they try most anything to raise the tax bill thinking most people won't do anything to fight it. And a lot of people don't they just pay thinking they don't have any recourse. But the way I see it, If I don't say anything my taxes will stay the same, at least if I speak up they will be acountable for an explanation and maybe an adjustment.

Quote by @%username% on %date%

%body%