Off the topic, but ryannrochelle, marijuana (to smoke) is legal in CA, if you have a medicinal M card. Indeydebi, you can move here !
Marijuana is illegal period. Cakes are not illegal, so hence the rediculous comparison.
cakes sold from an unlicensed kitchen are illegal, subject to fines and other legal "reprimands", just like pot, or hooking, or doing home repairs without a contractors license.
Driving is not illegal .... unless you don't have a license.
Selling cakes is not illegal ... unless you don't have a license.
Lots of things that are not illegal have little rules that go along with them, which is the part that makes them NOT illegal.
Sorry, I just can't get my head around the idea of being able to pick and choose which laws we should follow under the pretense defense of "just trying to make a little money". Anything can be justified with that argument.
I'm just sorry for those who just don't want to hear it.
And for the record, I can totally understand being frustrated and even angry at discovering these laws. I found CC when I was trying to find info on being able to sell from home. I have physical issues that prevent me from being able to commute and lift heavy things, so a rental kitchen is out and I thought baking from home would a great solution...'till I learned I couldn't here. But I also learned about a great CC member working hard to change that for my state. Maybe see if there is already a movement in your state or start one yourself. Other states do already have cottage food laws that permit selling home baked items - maybe one day, it can be permitted in all.
and I believe that every state has a limit to earn less than x amount of dolloars a year and you don't have to claim it!
actually, according to the IRS, even if you make 1$ doing anything, you must report it...granted, you are expected to report the expenses incurred making that 1$ thus perhaps no taxes would be warranted...but there is no state that allows a "minimum amount" of income before you have to report it. Granted, most people aren't going to go to this extreme to report earning one buck...but the IRS certainly is expecting each of us to report it. I just wanted to clear up anyone's confusion about "earnings less than X amount of dollars per year" not having to be reportable....I've heard that before from others but it's simply not true.
BTW...MB20fan.... 
(I'm now, literally eating popcorn at my desk, just waiting for the next scathing remark, 
)
back to the OP, i've found hobby caking can still be incredibly enjoyable though not profitable. the downside is that it, like my other hobbies, i have to pay for them. i can't afford to buy movies or books every day, and i can't afford to do cakes every day. pick and choose your "battles" and always do cakes with love, cuz that's free!
So many people have the attitude of "It's not fair that I want to make some extra money but can't afford to do it legally by building a state-approved kitchen and being approved, carrying insurance, and all the other legal stuff! It's not my fault that I can't afford this! This is my dream and how dare they say I can't follow my dream by not being able to afford to do it the legal way! It's just selling some cakes. It's not a big deal!"
This attitude chaps my hide. When my hubby wanted to go back to school to "follow his dream", we couldn't afford it outright. We had to make that tough decision of making it happen financially. Wouldn't it be great if he could have just walked into the school he wanted and said, "Hey, it's not fair that you are telling me I can't follow my dream of getting my degree from this school because I can't afford it. You can't tell me that. It's my right to follow my dream regardless of if I can pay for it or not." That's just not how it works people. When I decided to follow my dream of opening my own cake business, it was hard! It took me over 18 months of hard work, thousands of dollars, and numerous sacrifices to do it the right way. No, I didn't have a huge amount of money just waiting in a bank account for me. I had to prioritize my finances, get a loan for what I needed, and bust my tail to get it up and running.
Just because you really want something and can't afford it, uh....that's life peeps!
So many people have the attitude of "It's not fair that I want to make some extra money but can't afford to do it legally by building a state-approved kitchen and being approved, carrying insurance, and all the other legal stuff! It's not my fault that I can't afford this! This is my dream and how dare they say I can't follow my dream by not being able to afford to do it the legal way! It's just selling some cakes. It's not a big deal!"
This attitude chaps my hide. When my hubby wanted to go back to school to "follow his dream", we couldn't afford it outright. We had to make that tough decision of making it happen financially. Wouldn't it be great if he could have just walked into the school he wanted and said, "Hey, it's not fair that you are telling me I can't follow my dream of getting my degree from this school because I can't afford it. You can't tell me that. It's my right to follow my dream regardless of if I can pay for it or not." That's just not how it works people. When I decided to follow my dream of opening my own cake business, it was hard! It took me over 18 months of hard work, thousands of dollars, and numerous sacrifices to do it the right way. No, I didn't have a huge amount of money just waiting in a bank account for me. I had to prioritize my finances, get a loan for what I needed, and bust my tail to get it up and running.
Just because you really want something and can't afford it, uh....that's life peeps!
Best answer ever!
And there is not a lot of negativity here. What is here is a lot of what others do not want to hear. Once you let it sink in, then you can breathe and see that others are speaking the truth.
I find it interesting that this topic comes up from newbies all the time. If you go search the archives, if it works, you will find the same consistent answer all the time. The newer ones don't like it and defend it. The older members know the laws and state the truth. It never changes. So the only negativity are the ones that start the comparison of speeding and mechanics and babysitting and other such nonsense.
Go ahead, keep going as you are, get caught and then try to use the defense that others speed in their cars and that's illegal so I should be able to bake from my home illegally too.
Personally, I love this law. I have seen some commercial kitchens that I won't eat at the establishment anymore after seeing them. I can't imagine how an unregulated kitchen may look like if there were not these laws in place.
http://www.cbsnews.com/8301-504083_162-20012899-504083.html
Love the last line in the article
http://www.cbsnews.com/stories/2010/08/09/ap/strange/main6758706.shtml
I hope she paid her taxes before she went on that trip
I am giving myself 10 months to prepare all of my paperwork and take business courses (not required but something I feel is important) so I can become legal. I don't plan to bring in a lot of money but I know that even selling a cake for $20 is illegal and I don't want to break the law. It doesn't matter to me that I may not get caught because I know it is against the law. Making cakes can be expensive but for right now, I will only make cakes for the people I don't mind spending the money on (as gifts) and turn everyone else down until I can legally accept payment for my services. I need the practice anyway. A lot of people love my cakes but I am not even close to having the decorating skills you CCers have! 
Hence, no photos posted! 
I am determined to make money legally. I read this entire post and I found it very informative. I did not get a negative vibe at all. Thank you CC for all of your priceless insight. 
I am a "newbie" as you would put it. I've always looked at this site with amazement at all the wonderful work you ladies (and gentlemen!) do. While I don't think there is any negativity in this thread, I think there is an awful lot of snarky comments. A lot of looking down upon others. I thought this site was here for people who share a passion for cakes to help and inspire one another.
We own a business having nothing to do with cakes at all, but it is a small business and I know small business laws. What I don't know are the laws pertaining to the food industry which was why I clicked on this link out of pure curiousity. My cakes are simply a hobby for me. I make cakes for my family because it makes me happy. If I had come here to ask this question, as apparently so many had, I would be seriously saddened by a couple of the responses but thankful for the ones that gave good info MINUS the snarky attitude. Yes, those of you that are liscensed and 100% legal are at a higher level then most, but don't treat someone like they're stupid or a child when they honestly ask for advice.
I found the pot comment to be a tad overboard. I get that you were trying to hammer home a point, but it is not the same. Pot has caused A LOT of problems for someone very close to me and someone I love dearly (WITH a perscription). It is an addictive DRUG that can ruin lives. My point, and I do have one, is just to think before responding to someone. Be kinder. The world would be a better place. Hope I haven't offended anyone.
http://www.cbsnews.com/8301-504083_162-20012899-504083.html
Love the last line in the article
http://www.cbsnews.com/stories/2010/08/09/ap/strange/main6758706.shtml
I hope she paid her taxes before she went on that trip
Her parents would still have to declare the income (either on a separate tax return for her or on their own taxes), but since her income was less than the standard deduction she would not have to pay any income tax.
Depending on the state/local laws she may owe sales tax, but the amount due is probably not worth the time and negative publicity. The IRS, on the other hand, has no such qualms about negative publicity.
http://www.fairmark.com/college/kidtax/standard.htm
I think it is much better to be legal just if for no other reason than to protect thine own butt!!
Here's a thought.........How about being legal just because it's the right thing to do? Just my opinion......
I just wanted to add something. Actually the IRS says the following about filling taxes.
Table 1-1.2010 Filing Requirements for Most Taxpayers
You DO NOT have to file taxes if you income was below the following amounts.
Single under 65 $9,350
65 or older $10,750
Married filing jointly*** under 65 (both spouses) $18,700
65 or older (one spouse) $19,800
65 or older (both spouses) $20,900
Married filing separately any age $3,650
head of household under 65 $12,050
65 or older $13,450
qualifying widow(er) with under 65 $15,050
dependent child 65 or older $16,150
I've been away from CC for a while...far too long to be honest lol...man I miss this place. But I see the topics AND responses haven't changed. LindaF144a and tootie0809 said it best. I have been gone for so long because I've been going through the stressful process of trying to become completely legit.
I am in Las Vegas Nevada...where you can operate from your home kitchen with an occupational business license...nowhere near an actual business license though. Now, being able to get the home occupancy license depends on which zone you reside in....I moved and my license was no longer valid. I had to acquire a business license for the state of Nevada...and Clark County. The fees are OUT OF THIS WORLD. I found a commercial kitchen to rent, sharing space with an existing bakery/cake decorating studio. I am now in the process of paying everyone from the health dept...insurance comp....secretary of state...even the fire dept. has to come out and get their "piece of the cake lol".
It's been a very long and heart wrenching journey and I'm almost there. Go the legal way when you can afford to...until then...just know that you are definitely treading on some thin ice.
I just wanted to add something. Actually the IRS says the following about filling taxes.
Table 1-1.2010 Filing Requirements for Most Taxpayers
You DO NOT have to file taxes if you income was below the following amounts.
Interesting. Here is a link with more info:
http://www.1040.com/site/federaltaxes/taxfilingbasics/whomustfile/tabid/215/default.aspx
While it's true that you don't have to file a return if your income is that low, you may be leaving money on the table in the form of tax credits. Note that these limits include all your income (plus your spouse's if MFJ), so if your total income is low enough to fall under these limits you probably have other things to worry about.
It is not negative to discuss the consequences of breaking the law. Us cake people who have spent all of our savings making everything legit and working to make sure we pay our taxes (the fleecing I receive once a month hurts every time) have a hard time having sympathy for people who don't want to follow the rules.
Those people also hurt the business of legitimate and licensed businesses who have employees to pay and bills to pay as well. If you don't know how you hurt legitimate businesses by being illegal, that is a topic we could discuss further.
Basically, this argument isn't an argument, it's a one-sided fishing expedition where someone who wants to do something that they know is illegal keeps asking until they get the answer they want, then ignores the rest of the answers that don't make them so happy. Or calls us meanies and dream crushers for replying factually.
For the OP, you probably won't get caught if you just get reimbursed for expenses from family and friends, but if your state doesn't allow selling food from home kitchens then it's up to you to decide how much risk you can tolerate.
For the people who think that it's "mean" to say that you should be licensed or not sell cakes, oh well. It is what it is. If you don't like it lobby for change in your state. There are a bunch of members here who are doing just that, maybe you could ask them for ideas on how to go about it.
Edited to add: for anyone who needs examples for lawmakers of why it's good to have licensing for home businesses, I'd be glad to write a letter endorsing the idea, since I have a home business and can attest to the fact that it benefits the state to license us.
Note that these limits include all your income (plus your spouse's if MFJ), so if your total income is low enough to fall under these limits you probably have other things to worry about.
That's what I was thinking too!
[quote="jason_kraft"]
I believe there is a minimum on earnings to where you don't pay taxes.
Incorrect. You may have deductions that reduce your taxable income, but you must declare all income on your tax return. There are many business deductions you can take, and in some cases businesses will end up showing a loss on their tax return. That loss can usually offset personal income, so you may wind up actually getting money back from the government when you file your corporate taxes.
havnt read through the entire post yet, but in reference to this, the original quote was in reference to Australian Law - not american Law, and this i something I have also heard.
That's what I do right now. My kitchen is certified, but I do not have a business licence. My husband and I own a business and the area we live in eats small business alive with taxes. I only sell to family, friends and friends of friends. Maybe if I decided in the future to get larger then I would get the appropriate licensure but for now no way.
This is an extremely dangerous way to operate...there was a thread on CC recently about a bakery that decided not to pay state and local taxes and was closed by the state (I can't find the thread but the story is linked below). The bakery in question was a licensed business, but if they had been "under the radar" the state probably would have started seizing personal assets and/or suing to recover lost revenue, followed closely by the fed.
http://www.pickensprogressonline.com/index.php?option=com_content&view=article&id=947:popular-jasper-bakery-seized-by-ga-dept-of-revenue&catid=42:news&Itemid=18
It would almost be safer to not have a certified kitchen if you plan on evading taxes, at least then no government department would have you on the books.
I have to go back to the beginning of this thread and reread since it has gotten a little off track. Some how my initial post must not have been read completely. I specifically said I only sell to family, friends and friends of friends. I do not advertise to the general public. , but some how now I operate an extremely dangerous business. I do not condone illegal acts and if what I doing is illegal please someone clarify that for me. I pay taxes on the gross products I use to make my cakes. I charge a negligable fee for these products but some how all of this is illegal. Maybe if I took out an ad, had a store front, advertised at bridal shows I could see where this would be illegal, but everyone I sell to knows my kitchen is clean (actually it is my spare kitchen since I have two in my house - just to clarify). And I believe if you want to sue someone you have to prove there was malice and that there was nothing done to remedy the offense (refunding monies, paying for DR visit - God forbid).
Now can we please stop beating this horse because I think he is dead already.
Those of you who say that many of us are negative, snarky, condescending, etc. because some of us don't sit back and encourage those who don't want to follow the rules and laws are not being fair or logical. This topic isn't about being supportive. Are we all as cake decorators supposed to support everyone just because they are aspiring cake decorators and encourage them to open a business regardless of the laws? So we're not supportive if we encourage everyone to follow their passion, but just do it legally? No one is sitting here criticizing other people's work and calling them stupid, untalented, useless, or trying in any way to be negative. We're just being realistic. There's the hobby side of cake decorating and the business side of it. If those of you who say you come to this site for inspiration, encouragement, and an outlet to talk cake with others who enjoy this hobby, then you have definitely come to the right place. We are all encouraging and share tips and try to help each other as a communtiy. However, then there's the business side of this and it's a career for some of us. If you feel like you're not being encouraged to open a business illegally, then you're crossing the line with what you should expect. Please don't call people here negative or try to insinuate we are out to get each other. This is one of the most helpful, insightful, and useful communities online that I know of. But that's only if you are truly open to help and information and not just expecting someone to tell you what you want to hear for the sake of being encouraging and supportive.
Those of you who say that many of us are negative, snarky, condescending, etc. because some of us don't sit back and encourage those who don't want to follow the rules and laws are not being fair or logical. This topic isn't about being supportive. Are we all as cake decorators supposed to support everyone just because they are aspiring cake decorators and encourage them to open a business regardless of the laws? So we're not supportive if we encourage everyone to follow their passion, but just do it legally? No one is sitting here criticizing other people's work and calling them stupid, untalented, useless, or trying in any way to be negative. We're just being realistic. There's the hobby side of cake decorating and the business side of it. If those of you who say you come to this site for inspiration, encouragement, and an outlet to talk cake with others who enjoy this hobby, then you have definitely come to the right place. We are all encouraging and share tips and try to help each other as a communtiy. However, then there's the business side of this and it's a career for some of us. If you feel like you're not being encouraged to open a business illegally, then you're crossing the line with what you should expect. Please don't call people here negative or try to insinuate we are out to get each other. This is one of the most helpful, insightful, and useful communities online that I know of. But that's only if you are truly open to help and information and not just expecting someone to tell you what you want to hear for the sake of being encouraging and supportive.
Well said.
I do not condone illegal acts and if what I doing is illegal please someone clarify that for me. I pay taxes on the gross products I use to make my cakes. I charge a negligable fee for these products but some how all of this is illegal.
Your post implied that you specifically did not license your business because you wanted to avoid paying taxes (tax evasion is the illegal act referred to)...if you do indeed pay all your taxes, why are you avoiding licensing your business?
And by the way -- unless you feel like making a donation to the IRS you only need to pay income tax on net income, not gross.
The other worrying part is the "friends of friends", not necessarily from the tax perspective but for liability reasons. You didn't mention if you have liability insurance but if you don't have it I would get coverage ASAP, it's pretty cheap for what it covers. There's also the risk that word of mouth could reach someone in your local government, as "friends of friends" can cast a pretty wide net. Personally I would prefer to view word of mouth as solely a positive factor.
And I believe if you want to sue someone you have to prove there was malice and that there was nothing done to remedy the offense (refunding monies, paying for DR visit - God forbid).
You might end up winning the case, but you could still be out thousands of dollars in attorney's fees (unless you have liability insurance).
ok i normally don't get involved in these discussions, but hey, i have some free time 
Marijuana is illegal period. Cakes are not illegal, so hence the rediculous comparison.
cakes sold from an unlicensed kitchen are illegal, subject to fines and other legal "reprimands", just like pot, or hooking, or doing home repairs without a contractors license.
Driving is not illegal .... unless you don't have a license.
Selling cakes is not illegal ... unless you don't have a license.
Lots of things that are not illegal have little rules that go along with them, which is the part that makes them NOT illegal.
Sorry, I just can't get my head around the idea of being able to pick and choose which laws we should follow under the pretense defense of "just trying to make a little money". Anything can be justified with that argument.
I'm just sorry for those who just don't want to hear it.
you have hit the nail on the head Indy. Well done
I cop this alot. I am a licenced electrician. Did an apprenticeship, have the ticket. BUT i can not work on anyones house (except immediate family) without a contracting licence
the amount of time i have been asked to just put a powerpoint in here or just install some lights is amazing.
Am i qualified.... yes
Am i confident that i can do it?.... hell yes
Could i make some awesome money..... oh yeh... or at least a lot of alcohol (people like to pay in cartons of beer in australia)
do i do it?.... no because it is illegal for me to do it
Oh but you are a licenced electrician, they say to me. Yes but i don't have the right ticket. No difference with cakes from the sounds of it
I could take the risk. and do it. and not get caught. BUT if i do get caught, i could lose everything, including my electrical licence which i need for my paying job. I choose not to risk it
I have read all the posts in this thread and i am not reading negativity, just facts.. You can make the choice, do it illegally, or do it legal. I know which one i would choose and have chosen
I enjoy baking and decorating cakes, and would like to make a little profit to support my costs of buying new supplies. I do not want to start a fulltime bakery business, that requires more work than play. Right now I bake for my family and for school or social functions, I have never charged any money, though I have spent days making one cake, and regretted wasting my time. I am considering asking for donations or pricing my cakes just enough to cover my ingredients, and sell only to friends or friends of friends. Do I still need to get some sort of vendor's license or food license or home-based-business license. I want to keep baking enjoyable, and not worry about it being a bunisess where I have to do accounting or income taxes or marketing. I want to keep it simple and just announce I want to bake cakes on a website or Facebook and just wait for my friends to request a cake.
If you receive money, baking ingredients or anything else for a cake, you are a business. You need to find out the legalities of where you live and be legal. It is not easy to become legal in many instances but, it can be done.
Another person wrote that when this country was young many sold pies, etc with no licenses. My answer to this is: there were many thing that were not overseen by officials then. AS a county we have grown, cities are larger and the population has grown significantly. Can you imagine what it would be like without rules? I agree government has gotten into our lives too much, however, if it is a rule, law or whatever you want to call it, it should be followed to alleviate harm to others (even accidental) and keeping the safety of our fellow man.
Just my opinion,
evelyn
The tax info /paying in etc.. has been brought up a few times, this was just one of the most recent post i could quote (since there are multiple things being talked about on this topic)
But one thing i didn't see anyone mention is payiing taxes (irs, city, county, etc...) is different than dealing witht he health dept. The health depts say it's illegal to sell food without a license or inspected kitchen (minus a few states with cottage law) If you receive any compensation then it's illegal.
Now whether or not you report that income is another story that is being covered by others.
I just wanted to add something. Actually the IRS says the following about filling taxes.
Table 1-1.2010 Filing Requirements for Most Taxpayers
You DO NOT have to file taxes if you income was below the following amounts.
Interesting. Here is a link with more info:
http://www.1040.com/site/federaltaxes/taxfilingbasics/whomustfile/tabid/215/default.aspx
While it's true that you don't have to file a return if your income is that low, you may be leaving money on the table in the form of tax credits. Note that these limits include all your income (plus your spouse's if MFJ), so if your total income is low enough to fall under these limits you probably have other things to worry about.
To the OP:
Find out if you live in a state with cottage laws. Check with your Department of Agriculture. For Ohio, you pay $10 annually for your home bakery license and inspection. $10 to become legal - not bad at all!
On the subject of taxes:
No, you do NOT have to pay taxes on net earnings up to $400. So, those who just want to cover their costs of the cake or just make a little extra (up to $400) do not need to pay taxes on income from their cakes.
According to the IRS:
The self-employment tax is a social security and Medicare tax on net earnings from self-
employment. You must pay self-employment tax if your net earnings from self-employment are at least $400.
http://www.irs.gov/publications/p54/ch03.html
Most people who pay into Social Security work for an employer. Their employer deducts Social Security taxes from their paycheck, matches that contribution and sends taxes to the Internal Revenue Service (IRS) and reports wages to Social Security. But self-employed people must report their earnings and pay their taxes directly to IRS.
You are self-employed if you operate a trade, business or profession, either by yourself or as a partner. You report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on Schedule SE in addition to the other tax forms you must file.
http://www.ssa.gov/pubs/10022.html
* Yes, you should do everything legally. I just hope people reading this understand that becoming legal may not be as difficult as it is sometimes portrayed.
Best of luck!
http://www.cbsnews.com/8301-504083_162-20012899-504083.html
Love the last line in the article
http://www.cbsnews.com/stories/2010/08/09/ap/strange/main6758706.shtml
I hope she paid her taxes before she went on that trip
love the articles! thanks for sharing
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