I was asked to bake cake for some people and they are willing to pay me. I have heard that you need some kind of permit/ license to sell cakes as a real business. But what I like baking in general as a hobby. I am not doing cakes every weekend or have not though about openeing my own business just yet. Can i still sell those cake without getting in trouble? I was thinking that I want to practice some more and then maybe in the future when im ready start a real business.

Which state do you live in? In most states you would need to rent a commercial kitchen (or build a second kitchen on your property) in order to sell food commercially, but some states have cottage food laws that allow you to bake commercially in your home kitchen.

In california.. but since im baking for the fun of it do i still need to get that permit since im not actually building a business

As long as you don't accept money (or any other compensation) for your cakes, you should be fine baking as a hobby without a permit.

Unfortunately CA does not have a cottage food law, so you would need to get commercial kitchen space that can pass inspection before you can charge for cakes. The good news is there are commercial kitchens in some areas that you can rent by an hour so it's not too difficult to start out slowly if you want to build a business.

I live in CA as well and do cakes as a hobby. Can you accept cost of supplies? Or like a gift card if the people want to give you something? Is there a website that goes over the specifics for CA? Thanks.

Compensation is compensation- cash, check, gift card, cost of supplies, barter, whatever... Legally, you are being "paid". So the health department "cares" and the IRS "cares". You are selling a product, and can have your feet held to the fire to comply with all applicable food prep law, and tax law.

The reality? Depends on where you are (local authorities), who cares (turns you in), and if anyone gets hurt (injury, food poisoning, etc.).

I have been driving 31MPH in my 30MPH zones for years now. My risk- rather low on being "busted". You must determine for yourself what risk you are willing to take, low as it may be (risk).

Take a look at the IRS explanation and determine for yourself. You can also give them a call if you still have questions.

Here's the link. http://www.irs.gov/irs/article/0,,id=186056,00.html

~ Denay