jlsheik Posted 21 Jul 2009 , 8:00pm
post #1 of

Ok...I have a legal and the ONLY cake shop in my town.
A church in my town just finished a new building with a a commericial kitchen. I heard through the grapevine that they have a few church members that come in and bake and then sell to farmers market. THEN I heard that one of them would be baking for a local sandwich shop some non decorated dessert cakes and cookies.
Can anyone just bake anything out of a commercial kitchen and then sell where ever they want?
They dont have a tax permit or a business license so in my opinion it is wrong to bake for PROFIT in a non profit non taxed church....am I wrong on this?
If it is open for members to bake....I think I will join, sign me up! No taxes, no lease, no insurance.......hmmmmm
What are YOUR thoughts?

24 replies
PinkZiab Posted 21 Jul 2009 , 8:21pm
post #2 of

You must still have a business license and all the tax stuff worked out if you are going into business for yourself. You would just not need to have the health inspections and that sort of thing, because your business would be under the inspection already in place for that kitchen. But aside from that, yes the church can lease (per diem, month-to-month, annually, whatever) to anyone they wish for any purpose they wish (legal, of course), even if it's to turn a profit. So yes, while they still need to have the business end made legal, there is no rule or law that says you can't bake for profit out of a non-profit facility.

Edited to add:

Not to mention, as far as financials go: I'm not sure on the EXACT tax laws and all (You'd have to ask a tax accountant), but you are allowed to make up to a certain amount of personal income before it is taxable (it's very low) so it's it's small-beans (like in a yard sale) it's really not an issue. Sales tax, on the other hand, is another story... of course some states (like DE) don't charge sales tax, so that wouldn't be an issue either.

So if these women are using the church kitchen for a one-time thing, then even the business license and all wouldn't be necessary... only if they wanted to turn it into a full-fledged business.

indydebi Posted 21 Jul 2009 , 8:28pm
post #3 of

There's so much you may not be aware of.

Indiana just passed a Farmer's Market bill that says you can bake in an uninspected kitchen TO SELL IN A FARMER'S MARKET. But you cannot sell for resale (i.e. to a restaurant). Does your state have such a law? Are the proceeds from the farmer's market sales going to the individuals doing the baking or are the proceeds going to the church?

Are churches exempt from certain laws and requirements in your state? i.e. You can't make a bunch of food from your home and charge folks $5 to eat it .... but in some states a church can because of their tax exempt status.

Do you know for sure they didn't get a HD license? In some states, you can get a temp food license, which is usually obtained for farmer's market sales.

Or if none of hte above applies, they could be just misinformed ... they may think as long as they BAKE in a comm'l kitchen, that it's ok. They may not know they need to be licensed, too.

Lots of "if's" in this one. And if you wanna find out for sure, just ask your HD inspector.

Sox-n-Pats Posted 21 Jul 2009 , 9:35pm
post #4 of

churches can rent spaces to 'for profit' businesses- however they must then pay taxes on the income they earn from the renting. And they should be paying property tax on the portion of the church that is used for the business for the percentage of the time it's being used (there's some IRS formula)

Renting the space won't jepordize their tax-exempt status- and there's nothing "morally wrong" about renting there- but a church not paying the taxes on the income the rent brings in will loose them their tax-exempt status and IMHO is what would be 'wrong'.

I'd make sure the church is planning on paying the taxes before I rented from them to avoid any "bad blood" later. (there are 3 critera for them paying the taxes- the business is not related to the church (cakes would fall under that), it's paid on a regular basis (monthly rental would fall under this), and the business is a trade or a business (selling cakes would qualify)

((my DH is a tax guy and I used to work for a chuch)) icon_smile.gif

You'd also have to make sure the kitchen is being inspected, who is paying for the inspections.... You wouldn't want to get into trouble in your state because the kitchen wasn't up to code.

notjustcakes Posted 21 Jul 2009 , 11:46pm
post #5 of

In my state there are different "levels" of commercial licensing, one of which is for churches. That license is one that requires that the kitchen be inspected periodically and to have to meet certain qualifications that are lesser than a full fledged commercial restaurant grade....This license allows the church to serve for church functions or non- profit type functions that the church chooses to support (such as boy scouts' awards dinners). Even if the church is charging per plate or whatever, as long as it is a church related function, this level of licensing is fine...In these cases the church remains qualified for its tax exempt status.

However, the next level, which is for a food service businesses, is available to churches who wish to use their church to rent out for profit or if they will be doing ongoing food service such as catering for weddings or running a full fledged soup kitchen. This is where tax status gets fuzzy...do your research, since federal and state laws can differ on how they handle taxes in these cases.

jlsheik Posted 22 Jul 2009 , 12:51am
post #6 of
Quote:
Originally Posted by indydebi

There's so much you may not be aware of.

Indiana just passed a Farmer's Market bill that says you can bake in an uninspected kitchen TO SELL IN A FARMER'S MARKET. But you cannot sell for resale (i.e. to a restaurant). Does your state have such a law? Are the proceeds from the farmer's market sales going to the individuals doing the baking or are the proceeds going to the church?

Are churches exempt from certain laws and requirements in your state? i.e. You can't make a bunch of food from your home and charge folks $5 to eat it .... but in some states a church can because of their tax exempt status.

Do you know for sure they didn't get a HD license? In some states, you can get a temp food license, which is usually obtained for farmer's market sales.

Or if none of hte above applies, they could be just misinformed ... they may think as long as they BAKE in a comm'l kitchen, that it's ok. They may not know they need to be licensed, too.

Lots of "if's" in this one. And if you wanna find out for sure, just ask your HD inspector.


jlsheik Posted 22 Jul 2009 , 12:57am
post #7 of

Sorry....goofed up the poting on that.

Deb, I knew someone would say ask the HD so I did they have passed them...as far as inspection. BUT she thought like I did that to bake and to sell they must have a tax permit and a business license. They don't have either of those.

Maybe....I am just being witchy, but I had to jump through nine miles of red tape...not to mention all the cost involved in owning my own business...I am probably being touchy!
lol
BUT I still don't like it and by gosh whatever they have to have I will make sure they do it!!

cookieaddict Posted 22 Jul 2009 , 9:22am
post #8 of

In the state of MI, you will get a license as long as you bake in an inspected kitchen that includes churchs and party halls.

So I guess you are allowed to bake at a church and sell at the local farmers market for profit making it perfectly legal. Not sure how the laws are laid out in other states.

DefyGravity Posted 22 Jul 2009 , 1:59pm
post #9 of

Do you know for sure they don't have a license? You said you heard all of this through the grapevine, so it may be possible you didn't get the whole story. I'm kind of mixed on this, because I see your side of it, nobody wants competition, especially when you've been the only shop in town, but on the other side, a lot of us newbies get harped on, being reminded over and over about having to use a commercial kitchen and go through all the proper procedures. If they are going through all the correct channels, which they very well may be, there's not much you can get mad at, aside from the fact there is now someone else around.

I mean, if you read about their story on here without knowing where they were from, and they were doing everything legally, you'd probably be encouraging them. Is there any way you can go talk to them and (nicely) inform them of all the proper policies? That way, you could even get the inside scoop about what their business plans are!

flourpowerMN Posted 22 Jul 2009 , 2:07pm

In MN, which is one of the strictest states (or so I've been told), even if you rent space in a commercially licensed kitchen, you still have to have an individual certification/licensure which you get by passing the Food Handlers test & paying for the license, etc. in order to transact business (ie take money) as a baker. But for food sold at a Farmer's Market, you can make it at home & label it as such and still be legal. Something to do with people knowing that the food they get at a Farmer's Market hasn't been through normal inspection channels.

As I understand it, church kitchens are exempt from the commercial license requirement if their only purpose is to bake/cook for their members and people who come to their facility. So, as a baker, you can't just go & use any church's kitchen...you have to look for one that has done the extra steps for the licensure.

I wouldn't worry too much about the folks who are selling at the Farmer's Market...that's probably not your target audience anyway.

And the other people that are baking for/selling to restaurants? If that's the only thing they're doing, I wouldn't worry about it much either...unless you aim to do that yourself. Put your energy into churning out FANTASTIC baked goods & the rest will take care of itself. Good luck!

sweet-thing Posted 22 Jul 2009 , 2:15pm

It doesn't actually sound like they are any competition for you. I looked at the pictures you have posted and I can't imagine some ladies baking cookies and dessert cakes from the church kitchen at the farmers market are going to be able to compete with your beautiful cakes. icon_smile.gif It sounds like they are just trying to raise some money for the church. I know illegal is illegal but I think I would have let them get caught on their own, if in fact they are breaking the law.

kr1970 Posted 22 Jul 2009 , 2:51pm

Does anybody know how this works in Texas? Renting from a church I mean.

notjustcake Posted 22 Jul 2009 , 3:26pm

I live in OKC and I learned while I got my license that no you cannot do that, you must have what is called a manufacturers license ($150)to sell food items other places in the end they end up being sold to the public and their safety comes first.

If you are going to get a license through New Church or whatever other church kitchen not only does it have to be commercial but must be approved by the Health Department, you must also have your food handler's certification, register your llc and get a tax id number and finally Zoning and Plan Review has to approve your license.

All that just to get the license...

Good Luck

notjustcake Posted 22 Jul 2009 , 3:45pm
Quote:
Originally Posted by jlsheik

Sorry....goofed up the poting on that.

Deb, I knew someone would say ask the HD so I did they have passed them...as far as inspection. BUT she thought like I did that to bake and to sell they must have a tax permit and a business license. They don't have either of those.

Maybe....I am just being witchy, but I had to jump through nine miles of red tape...not to mention all the cost involved in owning my own business...I am probably being touchy!
lol
BUT I still don't like it and by gosh whatever they have to have I will make sure they do it!!




I know how you feel I just got my license and it was very pricey, and time consuming I live in north OKC and I know here in Oklahoma a place that gives cake decorating classes for close to nothing, there is also Midwest Bakers and everytime I go there to buy stuff I see ladies buying tons of boards and boxes and makes me wonder why the health department does not require this place to sell to people with tax id numbers only because who knows how many of those aren't actually licensed.

I went to a baby shower where they served a 12" round cake iced very poorly and asked where they got it and she she said the kitchen manager at a hospital bakes them and she thought it was so cute to add "oh yeah we all get our cakes from her" then I asked how she paid and she said $25!!!!!!!
I thought I was going to throw up and then I tasted the cake and it tasted like a $25 cake! She didn't even doctor the mix!

I do not worry about competition my biggest concern is reaching out to those Oklahomans that can afford my cakes!

I decided once I became licensed my biggest concern was never going to be the homebakers, or reporting them because they wished they were in my shoes.

Our mottos should be to stick to one thing and do it right
I do not work for the health department it is their job to get them not mine.

All I know is they better hope they don't make anyone sick or someone with allergies eats their cake because they will have a mess in their hands.

Also when it comes to weddings lots of venues only allow food made by a licensed baker.

Good Luck with your business. I'm jealous I wish I had my own shop but I will someday. Where is yours?

You went through all the red tape because it is better then being the lady that makes cakes.

Patty

notjustcake Posted 22 Jul 2009 , 3:52pm

By the way check your link to your website I clicked on it and it takes you to the godaddy website.

Good Luck with everything

newmansmom2004 Posted 22 Jul 2009 , 5:34pm
Quote:
Originally Posted by kr1970

Does anybody know how this works in Texas? Renting from a church I mean.




It is my understanding that as long as the church kitchen passes inspection from the HD, anyone - WITH A BUSINESS LICENSE - can use that kitchen to bake goods for sale. The key here is that if you run a business for profit, you must have a registered business name and a tax ID number. The state of Texas isn't going to let you make money through a business and not pay taxes. When we had our salsa company we had to register our business name with the county, then file for a state tax ID number before we could get started. Since we could NOT make it from our home due to state & local health code, we had another food company with a commercial kitchen that was monitored by the HD actually making it for us.

Julie53 Posted 22 Jul 2009 , 6:08pm

I have to say that this week it seems that there are a lot of people in the cake mafia...We all seem to worry about everybody else, how many people on here have admitted that they are "not legal". Also, when we were talking about the Health Department- I wondered how so many TV shows get a way with not following the regs. For instance all of the food network shows, how many people wear hairnets, gloves etc. OK< I know the next comment will be -but they are not selling their food. But then what about The Cake Boss (Bakery) and Duff- they sell their food. I don't believe that there is one perfect person out there. We all try to do our best, but there are so many things that can slip by. Just my opinion, and my thoughts- maybe right, maybe not but we should not throw people under the bus when we don't know the whole story for sure.

Julie53 Posted 22 Jul 2009 , 6:10pm

I have to say that this week it seems that there are a lot of people in the cake mafia...We all seem to worry about everybody else, how many people on here have admitted that they are "not legal". Also, when we were talking about the Health Department- I wondered how so many TV shows get a way with not following the regs. For instance all of the food network shows, how many people wear hairnets, gloves etc. OK< I know the next comment will be -but they are not selling their food. But then what about The Cake Boss (Bakery) and Duff- they sell their food. I don't believe that there is one perfect person out there. We all try to do our best, but there are so many things that can slip by. Just my opinion, and my thoughts- maybe right, maybe not but we should not throw people under the bus when we don't know the whole story for sure.

miny Posted 22 Jul 2009 , 8:30pm
Quote:
Originally Posted by Julie53

I wondered how so many TV shows get a way with not following the regs.




I second Julie, everytime Duff or someone at CCC drops something on the floor, which is very often, they just put the sign stating "it was properly clean" or "it was redone" but who can assure us it was, really? We just have to trust in people and stop the assumtions

leicholtz Posted 11 Jul 2013 , 1:28am

I am in Pa.... I would like to start baking for proft..... I was thinking of renting a kitchen space from the local fire dept or church  to bake my products........  If I  rent an kitchen already approved can I then re sell my products legally?   I was thinking of selling cookies, lollipops, choclate candies, fudge and other goodies at my local craft show and farmers markets.......  What exactly do you need in order to do this besides an approved kitchen....... I am in pa ......

 

 

thanks

ericapraga Posted 11 Jul 2013 , 1:58am

It depends on where you are in PA. Philadelphia is very strict, I can tell you that. Outside the city, I believe it is more lenient.

Talk to your local health department about what you will need, they are the best resource for starting out.

newbe86 Posted 11 Jul 2013 , 7:37pm

Since I’m working on getting my business going, my house has such a small kitchen I was planning to use my church’s kitchen.  I still need to get my business license and other things taken care of, but my church often has different sales to earn money for different causes.  For example each year there is a chicken and dumpling dinner which is sold to the public.  The church has all the permits and licenses required to do this legally. 

 

Back to my question, would all I need is a business license for myself since the church is already legal?

MimiFix Posted 11 Jul 2013 , 7:51pm
Quote:
Originally Posted by newbe86 

Back to my question, would all I need is a business license for myself since the church is already legal?

 

You should talk with a health department inspector for this question. Many states require that businesses need to have their own license, even if they work in a commercial kitchen. CC is a wonderful resource, but members are not qualified to give answers to these kinds of legal questions.  

newbe86 Posted 11 Jul 2013 , 8:13pm
Quote:
Originally Posted by MimiFix 

 

You should talk with a health department inspector for this question. Many states require that businesses need to have their own license, even if they work in a commercial kitchen. CC is a wonderful resource, but members are not qualified to give answers to these kinds of legal questions.  

I plan to, I was just curious if anyone had any ideas. I do appreciate your answer. Now that I think about it a little more, it would be quite difficult to find someone in my county who is on CC and knows the laws as well. I want to do most of the business stuff myself since I plan to keep this pretty small so I do not want to incur too much cost... Looks like I get to do some leg work.

 

I also want to thank you for all of the information and guidance you have given to other bakers, especially new ones like myself. I really appreciate it.

MimiFix Posted 11 Jul 2013 , 11:23pm

You're very welcome, newbe86! Good luck with your business!   

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