Is This A Business Transaction?

Decorating By Rachie204 Updated 18 Nov 2009 , 5:48pm by __Jamie__

Rachie204 Posted 16 Nov 2009 , 6:59pm
post #1 of 40

Okay I live in GA where home kitchens are not permitted. So for now I am just trying to perfect my recipes and decorating skills by doing lots of cakes. And later I plan to rent a kitchen and start charging for my work.

As you know caking can get expensive when you are buying ingredients and not getting paid for cakes....Is it okay to charge for the ingredients only and make no profit or would this be illegal also?

39 replies
__Jamie__ Posted 16 Nov 2009 , 7:00pm
post #2 of 40
Quote:
Originally Posted by Rachie204

Okay I live in GA where home kitchens are not permitted. So for now I am just trying to perfect my recipes and decorating skills by doing lots of cakes. And later I plan to rent a kitchen and start charging for my work.

As you know caking can get expensive when you are buying ingredients and not getting paid for cakes....Is it okay to charge for the ingredients only and make no profit or would this be illegal also?




Yes. Now where's K8.... icon_lol.gificon_lol.gif

j_arney Posted 16 Nov 2009 , 7:03pm
post #3 of 40

I once had a Wilton teacher tell me that she gives her cakes for free, but asks for a "donation" to help offset her costs. Honestly, I think this is still taking money for a cake. I always exagerate the scenario to understand. If a prostitue "gave" her services to someone for free, but took a donation, she's still be breaking the law. However...will anyone arrest you for it? Probably not. I would like to think the police are busy with bigger and badder crimes.

Texas_Rose Posted 16 Nov 2009 , 7:10pm
post #4 of 40
Quote:
Originally Posted by j_arney

I once had a Wilton teacher tell me that she gives her cakes for free, but asks for a "donation" to help offset her costs. Honestly, I think this is still taking money for a cake. I always exagerate the scenario to understand. If a prostitue "gave" her services to someone for free, but took a donation, she's still be breaking the law. However...will anyone arrest you for it? Probably not. I would like to think the police are busy with bigger and badder crimes.




I've seen illegal bakers compared to drug dealers before but never to prostitutes.

icon_lol.gificon_lol.gificon_lol.gificon_lol.gif
Texas_Rose, The Happy Cake Hooker!!!
icon_lol.gificon_lol.gificon_lol.gificon_lol.gif

j_arney, I am not laughing at you so please don't get offended.

The real way to know the answer to the question is to call up your local Health Department and just see what they say. Some don't consider baking for friends and family a business transaction, some do.

cassiopeia Posted 16 Nov 2009 , 7:15pm
post #5 of 40

That is a good idea. I never thought of wording it like that.

rainbow_kisses Posted 16 Nov 2009 , 7:28pm
post #6 of 40

texas rose you always make me laugh icon_lol.gif

Here in the UK you are allowed to ask for the cost of ingredients aslong as you inform the local council that is what youa re doingas hobby bakers are allowed to make 5 cakes over a period of 5 weeks but not make a profit icon_confused.gif They were unable to answer what the case is with cupcakes? icon_rolleyes.gif

So I would say speak to your local authourity and see what they recommend.

LaBellaFlor Posted 16 Nov 2009 , 7:42pm
post #7 of 40
Quote:
Originally Posted by j_arney

I once had a Wilton teacher tell me that she gives her cakes for free, but asks for a "donation" to help offset her costs. Honestly, I think this is still taking money for a cake. I always exagerate the scenario to understand. If a prostitue "gave" her services to someone for free, but took a donation, she's still be breaking the law. However...will anyone arrest you for it? Probably not. I would like to think the police are busy with bigger and badder crimes.





icon_lol.gificon_cry.gificon_lol.gificon_lol.gificon_cry.gificon_lol.gif

I think I like this comparison better then the drug dealer one! thumbs_up.gif

TexasSugar Posted 16 Nov 2009 , 8:07pm
post #8 of 40

If you take any money for it, you are charging and there for breaking the law. It doesn't matter if the money is just to cover supplies, a donation, or to pay for the cake board it is sitting on. If money exchanges hands, then you are taking payment for the cake.

There are people that do take money for cakes that aren't legal, that is a choice you have to decide on your own. Calling payment something else, like a donation, doesn't change what it actually is.

cassiopeia Posted 16 Nov 2009 , 8:22pm
post #9 of 40

If you are not legal I really dont think its a big deal if you are selling to your friends or family. Just dont be advertising around town. Most likely your friends or family wont be turning you in but if you are bringing a lot of attention to yourself by say making a website and trying to get business then you probably will get in trouble. I guess its just you have to decide for yourself.

indydebi Posted 16 Nov 2009 , 8:31pm
post #10 of 40

Whether you make a profit or not is immaterial. THe gov't doesn't care that you're a bad business person who doens't know how to price the product so that you make a profit.

Hubby was telling me about a Judge Marilyn show he saw recently (tv in his breakroom at work). A woman sold a dog that she wasn't permitted to sell. Woman claimed she did not sell the dog. There was a witness that saw a man give her $160 for the dog. Woman said:

"I didn't SELL the dog. I GAVE him the dog to him as a gift. he GAVE me $160 as a gift. But I didnt' SELL the dog."

Judge Marilyn didn't buy that line of crap either.

KHalstead Posted 16 Nov 2009 , 8:45pm
post #11 of 40

I wonder if the customer buys the ingredients and drops them off and you make the cake and no money exchanges hands....is that considered a business transaction?

cassiopeia Posted 16 Nov 2009 , 8:49pm
post #12 of 40

That is a very good idea. Or maybe goes with you to the store so you can tell them exactly what you need so they dont end up buying the wrong stuff.

KHalstead Posted 16 Nov 2009 , 8:52pm
post #13 of 40

I always think it's funny to send them with a list of stuff............usually these are people that want a great deal anyhow and they always think they'll get off easy buying JUST the ingredients, till they ring it up and find out it costs MORE for just ingredients than it does to buy a cake from wal-mart! LOL

You can't buy 3 cups of flour, you gotta buy the 5 lb. bag, same with the sugar and the WHOLE dozen eggs, not just the 3 you need!

cassiopeia Posted 16 Nov 2009 , 8:57pm
post #14 of 40

LOL then its kind of like they are paying for a little bit of your time with the little bit of extra stuff you are getting. Like the few extra eggs, flour, etc. I think I will start having people do this. Sounds like a good idea.

Texas_Rose Posted 16 Nov 2009 , 9:05pm
post #15 of 40

It doesn't work for me to have people shop for the ingredients because I only use certain brands. Every time I tell someone to buy Domino sugar they come back with Imperial, or clear vanilla they come back with regular brown vanilla.

HowCoolGomo1 Posted 16 Nov 2009 , 9:23pm
post #16 of 40
Quote:
Originally Posted by Texas_Rose

It doesn't work for me to have people shop for the ingredients because I only use certain brands. Every time I tell someone to buy Domino sugar they come back with Imperial, or clear vanilla they come back with regular brown vanilla.




You always nail it on the head, Texas_Rose!

tiggy2 Posted 16 Nov 2009 , 9:40pm
post #17 of 40
Quote:
Originally Posted by Texas_Rose

It doesn't work for me to have people shop for the ingredients because I only use certain brands. Every time I tell someone to buy Domino sugar they come back with Imperial, or clear vanilla they come back with regular brown vanilla.



I'd send them back to the store to exchange it for the "right" stuff icon_smile.gif

cassiopeia Posted 16 Nov 2009 , 9:43pm
post #18 of 40

hahaha the only way to get everything right would be to just go with them.

Ruth0209 Posted 16 Nov 2009 , 9:45pm
post #19 of 40
Quote:
Originally Posted by indydebi

Whether you make a profit or not is immaterial. THe gov't doesn't care that you're a bad business person who doens't know how to price the product so that you make a profit.




Exactly. If you accept money in exchange for a product, it's a sale and that's income. Whether you make a profit from that sale is irrelevant. There's a very low threshold with the feds for how much you can collect as income without being subject to taxation.

If you're in a state with sales tax, they also want the sales tax for that sale. They don't care if you make a profit, either.

cassiopeia Posted 16 Nov 2009 , 9:50pm
post #20 of 40

You could rent out dummy cakes and then just give them sheet cake for free. haha

I know this suggestion will probably make a few people mad.

Ruth0209 Posted 16 Nov 2009 , 9:53pm
post #21 of 40
Quote:
Originally Posted by cassiopeia

You could rent out dummy cakes and then just give them sheet cake for free. haha

I know this suggestion will probably make a few people mad.




Ha! Wrong on so many levels...

cassiopeia Posted 16 Nov 2009 , 9:57pm
post #22 of 40

Honestly I was just kidding. Im sure she wouldnt even consider that idea.

cutthecake Posted 16 Nov 2009 , 10:31pm
post #23 of 40

I can't even get the people in my family to get the right stuff at the store. And they eat the stuff all the time.

Marronglace Posted 16 Nov 2009 , 10:54pm
post #24 of 40
Quote:
Originally Posted by cutthecake

I can't even get the people in my family to get the right stuff at the store. And they eat the stuff all the time.




icon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gificon_lol.gif

DragonFly2333 Posted 17 Nov 2009 , 7:21pm
post #25 of 40

Here I am reading another thread about what is a business transaction and for some reason these threads make me think back to my babysitting days as a teenager.

I babysat for nearly 22 families at my peek. Neither I nor the parents ever reported the cash transaction.

I dont see any difference in selling a cake verses a teenager babysitting your kids. I know some of you will come at my for sanitations/getting sick angle.but those are minor arguments when you think about the millions of parents who leave their childrens welfare in the hands of a teenager.

Ruth0209 Posted 17 Nov 2009 , 7:50pm
post #26 of 40
Quote:
Originally Posted by phoenixphillips

Here I am reading another thread about what is a business transaction and for some reason these threads make me think back to my babysitting days as a teenager.

I babysat for nearly 22 families at my peek. Neither I nor the parents ever reported the cash transaction.

I dont see any difference in selling a cake verses a teenager babysitting your kids. I know some of you will come at my for sanitations/getting sick angle.but those are minor arguments when you think about the millions of parents who leave their childrens welfare in the hands of a teenager.




You can't possibly be serious. In the first place, even if you were busy babysitting you probably never made enough to make it reportable.

Secondly, all people operating a business in the U.S. have federal and state laws that EVERYONE has to comply with or you create an unfair advantage for those who don't play by the rules. As a legal business that follows all the regulations, I resent someone who basically steals from taxpayers by not paying what they rightly owe. It cannot in any way be compared to a teenager making a few hundred bucks of pocket money. I'd love to be able ignore all the rules and keep all the money I bring in, but not only is it not legal, it's unethical. Am I really the only person who believes we all have a duty to pay our fair share of taxes?

Mike1394 Posted 17 Nov 2009 , 8:33pm
post #27 of 40
Quote:
Originally Posted by LaBellaFlor

Quote:
Originally Posted by j_arney

I once had a Wilton teacher tell me that she gives her cakes for free, but asks for a "donation" to help offset her costs. Honestly, I think this is still taking money for a cake. I always exagerate the scenario to understand. If a prostitue "gave" her services to someone for free, but took a donation, she's still be breaking the law. However...will anyone arrest you for it? Probably not. I would like to think the police are busy with bigger and badder crimes.




icon_lol.gificon_cry.gificon_lol.gificon_lol.gificon_cry.gificon_lol.gif

I think I like this comparison better then the drug dealer one! thumbs_up.gif




Free cake Free ...... always good to donate for a cause. LOLOL

DragonFly2333 Posted 17 Nov 2009 , 8:35pm
post #28 of 40
Quote:
Originally Posted by Ruth0209


You can't possibly be serious. In the first place, even if you were busy babysitting you probably never made enough to make it reportable.


Secondly, all people operating a business in the U.S. have federal and state laws that EVERYONE has to comply with or you create an unfair advantage for those who don't play by the rules. As a legal business that follows all the regulations, I resent someone who basically steals from taxpayers by not paying what they rightly owe. It cannot in any way be compared to a teenager making a few hundred bucks of pocket money. I'd love to be able ignore all the rules and keep all the money I bring in, but not only is it not legal, it's unethical. Am I really the only person who believes we all have a duty to pay our fair share of taxes?




How many times are we told on here If cash is exchanged its a business transaction. Please tell me the difference b/t taking money for a cake vs babysitting services. And if a babysitter making a couple hundred bucks a year doesn't make enough to report it then some of these illegal bakers dont need to report either, right?

Im just curious how many legal bakers report the money they give to their babysitters, lawn boy, the neighbor kid who rakes their leaves, etc. I mean cash is exchanged for a service, its a business transaction. icon_rolleyes.gif

Mike1394 Posted 17 Nov 2009 , 9:01pm
post #29 of 40
Quote:
Originally Posted by phoenixphillips

Quote:
Originally Posted by Ruth0209


You can't possibly be serious. In the first place, even if you were busy babysitting you probably never made enough to make it reportable.


Secondly, all people operating a business in the U.S. have federal and state laws that EVERYONE has to comply with or you create an unfair advantage for those who don't play by the rules. As a legal business that follows all the regulations, I resent someone who basically steals from taxpayers by not paying what they rightly owe. It cannot in any way be compared to a teenager making a few hundred bucks of pocket money. I'd love to be able ignore all the rules and keep all the money I bring in, but not only is it not legal, it's unethical. Am I really the only person who believes we all have a duty to pay our fair share of taxes?



How many times are we told on here If cash is exchanged its a business transaction. Please tell me the difference b/t taking money for a cake vs babysitting services. And if a babysitter making a couple hundred bucks a year doesn't make enough to report it then some of these illegal bakers dont need to report either, right?

Im just curious how many legal bakers report the money they give to their babysitters, lawn boy, the neighbor kid who rakes their leaves, etc. I mean cash is exchanged for a service, its a business transaction. icon_rolleyes.gif




Because food is involved. You can stand on the corner next to the hooker, and give away free cakes all day. You sell one item, and then you bring in a whole nuther dimension. It's simple you can not sell a food item without a license. Except for the states that allow it.

Mike

indydebi Posted 17 Nov 2009 , 9:40pm
post #30 of 40

Depending on your state.......

To babysit, the only requirement is that you be of an age that is deemed responsible to be alone with children. (A co-worker called her welfare dept and was told the child had to be at least 12).

To sell a food product requires a license, inspection, special equipment, certified food safety training, and a host of other laws.

This is not just about reporting fifty bucks income for a cake. It's WAY more than that.

Quote by @%username% on %date%

%body%