I am a stay-at-home mom just starting to decorate cakes for family and friends here in Colorado, and am thinking about expanding a little. I am a little sceptical because of the many laws. I am trying to do my research, and some of the laws I just do not understand. I feel a little overwhelmed, but am determined to sort it out...I LOVE making these cakes. I need to know what legally I can and can't do, and how much I can charge without getting "in trouble". Please anyone with info please respond. My family and friends are starting to tell people that I decorate cakes, and I need to know what to do ASAP! Thank you!!
Kavrena, "Technically" you cannot charge people for cakes in Colorado unless you have a business license for food, which entails a fridge, stove, sink and storage that is separate from your family/personal use. We just moved away from Colorado, but I had a cake 'Hobby'. I had contact cards(not business cards) with my name and phone number and my blog site (which only tells about cakes I've made, no advertising, no pricing). As I understood the laws, as long as I didn't Advertise and didn't have employees, I could call it a hobby. If someone came to me and asked me to make a cake for them, they could pay for materials for me and if they wanted to give me a gift(say...$2.75 a serving) for making them a cake...
It was a pretty thin line I was walking, and I tried to stay as legal as I could. I never put out brochures, put my card on bulletin boards, etc. All of my cakes were referrals.
Thank you soo much TJ. I was told to keep my prices below market value. How low do I need to keep them? I have also been told that I should "charge" by the hour for custom cakes; can I, or can I only "charge" by the slice? Is there a place where I can find the "Hobby" laws, and is there any advice or anything else that you think that I should know before doing any of these cakes? Lastly, do I need to keep documentation for the cakes that I have done?
I don't think your pricing matters at all, high or low, you'd likely be more at risk with higher prices. It also may differ depending on the county and city ordinences within the state so you would have to check out locally. All I ever kept for documentation was what people requested. Legally you can't do contracts with customers or anything binding without a license so beware of that as well.