To Get A License Or Not To Get A License...

Business By tabco Updated 29 Dec 2010 , 9:10pm by cakeandpartygirl

tabco Posted 29 Dec 2010 , 6:46pm
post #1 of 8

That is the question. I am so new. I have only made a few cakes for hire. So it is not like I am making cakes every week, at best it is a couple a month. I have recently felt like really trying to make an at home buisness out of this. My brother does websites, my cousin does branding. I am ready to give it a go. Just wandering the pros and cons of having a license. I live in Virginia so I can have a home bakery. Would love to here from those who are licensed and those who are not licensed and why.

7 replies
playingwithsugar Posted 29 Dec 2010 , 6:54pm
post #2 of 8

Can you insure your business without a license? And what about income tax reporting? How are you going to declare your income from an unlicensed business?

Theresa icon_smile.gif

leah_s Posted 29 Dec 2010 , 7:16pm
post #3 of 8

If you can have a home baking business legally (with a license) then do it. There's no reason not to. And lots of reasons to get it.

1. Makes you a more legitimate biz.
2. You can get insurance.
3. You will also need to set up a corp of some sort.

There's a million reasons not to break the law by having an illegal biz, but if you can be above board, legal and not have to worry about looking over your should all the time what's the reason no to get the license? Al least here, the license itself cosst next to nothing.

costumeczar Posted 29 Dec 2010 , 7:42pm
post #4 of 8

It's very easy in Virginia to get licensed, so I don't see why you wouldn't do it. The Dept of Agriculture can be hard to get information from, but when you get to talk to the inspectors they're very helpful. If you look at these threads you'll find more info.

http://www.cakecentral.com/modules.php?name=Forums&file=viewtopic&p=6229108&sid=83a1c533e9e01ac34ecfaad9c5416a3f

http://www.cakecentral.com/cake-decorating-ftopicp-6869041.html

http://www.cakecentral.com/cake-decorating-ftopict-646566-.html&sid=e0aeaf5cf571f64c2b597bd3ccb11c01

You can email me if you need more info, but there are a lot of people from VA on here, so you should be able to get lots of info from others also.

VA also has a cottage food law, but to use that you have to make sure to label everything correctly. I can dig up a copy of that if you want, but it limits what you can make.

tabco Posted 29 Dec 2010 , 8:58pm
post #5 of 8

Thank you guys! The input really helps. I guess I am just scared about putting out more money than I would make. I read on one of the links posted $400 for insurance yikes!

jason_kraft Posted 29 Dec 2010 , 8:59pm
post #6 of 8
Quote:
Originally Posted by playingwithsugar

Can you insure your business without a license? And what about income tax reporting? How are you going to declare your income from an unlicensed business?



Same as with a licensed business, on the 1040 Schedule C. Getting licensed by the local dept of health/agriculture has nothing to do with your status in the eyes of the IRS.

As said above, there is no reason not to get licensed. And don't forget to get liability insurance ASAP.

jason_kraft Posted 29 Dec 2010 , 9:02pm
post #7 of 8
Quote:
Originally Posted by tabco

I guess I am just scared about putting out more money than I would make.



As a home bakery I wouldn't worry about this too much since you don't have a lot of overhead, but if you do operate your business at a loss, you can deduct the loss on your income taxes against any other personal income you may have.

Just make sure you have your pricing down, underpricing is a common mistake for new home bakeries.

cakeandpartygirl Posted 29 Dec 2010 , 9:10pm
post #8 of 8
Quote:
Originally Posted by tabco

Thank you guys! The input really helps. I guess I am just scared about putting out more money than I would make. I read on one of the links posted $400 for insurance yikes!




It may seem like alot but the thing about it is that you can make payments on it. Mine is quarterly and if you split that up into monthly payments you can make that back in a couple of cakes. Mark it up as the cost of doing business.

Remember it takes money to make money!! icon_biggrin.gif

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