Is A Home Bakery Considered Retail?

Business By Dreme Updated 17 Apr 2011 , 12:19am by costumeczar

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Dreme Posted 16 Apr 2011 , 7:46pm
post #1 of 5

I know this may be a dumb question, but as a home based business of one employee that makes custom orders to order, am I considered a retail business?

Also do I count inventory as a bakery business? I have lots of non bakery things stocked. Do I need to count things like how much gel coloring is left in the bottle or each dragee in the jar? Does the items I have stocked get counted as supplies instead?

4 replies
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jason_kraft Posted 16 Apr 2011 , 9:03pm
post #2 of 5

What context are you looking at? If you sell directly to consumers instead of through intermediaries like wedding venues, coffee shops, etc. then you are a retail business (as opposed to wholesale).

Regarding inventory, if it's only for your own internal business processes it's really up to you how detailed you have to be. Even "non-bakery" items can be vital to your business, so you should at least have a general idea of how much you have remaining for things like food coloring and dragees so you know when to reorder.

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KoryAK Posted 16 Apr 2011 , 9:19pm
post #3 of 5

Sounds like you're doing your taxes... am I right? lol

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jason_kraft Posted 16 Apr 2011 , 9:26pm
post #4 of 5

If you are doing your taxes and you have a home-based bakery you really don't have to worry about inventory too much, since you can use the cash method of accounting (which is basically income earned in 2010 - expenses paid in 2010) as long as you gross less than $1 million/year.

http://www.irs.gov/publications/p538/ar02.html#d0e1793

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costumeczar Posted 17 Apr 2011 , 12:19am
post #5 of 5

Yep, use the cash method and then you don't have to keep that detailed inventory. And yes, you'd be retail if you're selling at full price to consumers.

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