Calling All Cake Police!!!!!

Business By jlcalvert Updated 2 Oct 2011 , 3:49am by jlcalvert

jlcalvert Posted 29 Sep 2011 , 10:26pm
post #1 of 50

Hi everyone,
Just a quick question. I live in Louisiana and am a hobby baker. Most people at my daughters school know I bake cakes for family. However, today a lady asked me to make a cake for her daughters birthday. If I did I would only charge her for the ingredients. Is this ok?

Thanks

49 replies
KuyaRomeo Posted 30 Sep 2011 , 5:15am
post #2 of 50

There is nothing wrong with baking a cake for a friend or neighbor. I don't see any reason why she can't pay for the ingredients and you do her the favor. As long as you don't sell the cake . . .

Even if you sell the cake . . well, people do that all the time and nothing really happens, but if you want to stay legal and not break any laws, or health code violations . . . do it as a favor. Again, I see nothing wrong with her buying the ingredients and you making the cake.

scp1127 Posted 30 Sep 2011 , 5:25am
post #3 of 50

jcalvert, if your area requires a license, then ingredients are considered compensation and would be a voilation. I too have no problem with friends and family, but branching out to people at school, friends of friends, is essentially selling to strangers. That's a business. You have to act on your own conscience.

The answer is at your health dept. Call them. But remember, there are taxes to consider, insurance that can only be obtained by licensed bakers, and business licensing fees. Without a license, you also have these illegal advantages that make the field more unfair for the baker who chose to be licensed. This is why it is always a heated debate. But this is your personal decision.

platinumlady Posted 30 Sep 2011 , 5:40am
post #4 of 50

I've heard this on hear... I think from Indydebi.... Why don't you give her a list of everything you need to make the cake. Let her buy the ingredients & you make the cake. That way you are not charging her anything. Because if you make the cake then charge for the cost of ingredients then technically you are selling it. However, if she gets the ingredients let the remainder of the what she brought be your payment. ie...you need 3 eggs she buys a dozen & you keep what is left. Hope that makes sense

scp1127 Posted 30 Sep 2011 , 5:42am
post #5 of 50

platinum, it's still compensation.

platinumlady Posted 30 Sep 2011 , 5:52am
post #6 of 50

How is it still compensation if no money is changing hand???? I mean if that's wrong then give her back the left overs...I was told that no money should be exchanged. Maybe it's different per city or state... So give her the leftovers back...then will that solve it?

elvisb Posted 30 Sep 2011 , 6:15am
post #7 of 50

Think of it this way....if you receive anything for your efforts, you are a business. Anything includes ingredients. If you are to truly be legal and bake a cake as a hobby baker, your cake must be DONATED to the person who wanted it. Any kind of exchange, whether it be money, ingredients, or favors (I bake you a cake and you clean my house) is considered a business. If you get anything at all in return, that is your compensation.

scp1127 Posted 30 Sep 2011 , 6:24am
post #8 of 50

Even barter is considered compensation, so the idea of giving the exact ingredients doesn't work. The IRS considers barter to be taxable.

JohnnyCakes1966 Posted 30 Sep 2011 , 9:11am
post #9 of 50

It's an interesting topic and one that always returns varying answers. When I was looking into starting my business, I asked this question of my local tax office. Their response basically was, "If you repair someone's car and they give you some cash or return the gesture somehow, that doesn't mean you are now in business as a mechanic." As they explained it to me, if you promote yourself as a business or advertise your services in order to earn an income (of any amount) or receive any kind of payment, you are a business. The advertising/promoting seemed to be the difference.

jlcalvert Posted 30 Sep 2011 , 10:31am
post #10 of 50

Thanks everyone for the advice. It was very helpful.

suzylynn58 Posted 30 Sep 2011 , 10:42am
post #11 of 50

Just an FYI, I am in LA too and it is illegal to bake from home here.

Noobz Posted 30 Sep 2011 , 1:10pm
post #12 of 50

No one will arrest you...

ConfectionsCC Posted 30 Sep 2011 , 1:19pm
post #13 of 50

Okay, no one shoot me down for this! In my county, MY INSPECTOR told me, back when I was first getting started, I COULD get cost of ingredients for cakes and it be okay so long as I was not making a penny of profit. OR they could by the stuff and give it to me, but it was not necessary! It very well can change from county to county, state to state, so its always best to ask you HD the rules on that one!! Getting extra though would be payment be it in a for of a gift card, tip, extra stuff that you can keep for personal use...very hairy line though...!

enoid Posted 30 Sep 2011 , 1:28pm
post #14 of 50

If she provides the exact amount of ingredients for the cake and you bake the cake for her what makes that illegal? There is no compensation and you donated your time and talent.

Cohaja12 Posted 30 Sep 2011 , 1:28pm
post #15 of 50

A tip from my friend that works in the health department.....Charge her for the cake plate and give her the cake for free!!

NerdyGirl Posted 30 Sep 2011 , 1:46pm
post #16 of 50

Funny, the IRS has some different ideas about what is considered a business & a hobby - though both are taxable (but not the same way). I just read the difference between business & hobby in "The Dummies Guide to Owning a Home Based Business" - I think that's the name. Some examples of a business include:

1. Spending the majority of your time on the craft
2. Advertising
3. Forming a business plan, hiring a CPA and/or tax attorney
4. Making a profit 3 out of 5 years - and not just a low number like $10.

There were several others.


If the materials are provided and returned with no profit, it's a hobby. Though with the laws varying from state to state, and even city to city, it's probably best to find out what's going on in your area.

jason_kraft Posted 30 Sep 2011 , 1:48pm
post #17 of 50
Quote:
Originally Posted by enoid

If she provides the exact amount of ingredients for the cake and you bake the cake for her what makes that illegal? There is no compensation and you donated your time and talent.



The way food safety laws are written in most states, if there is an exchange of cash, goods, or services for food, it is considered a commercial transaction and the licensing and inspection requirements kick in. It does not matter if the transaction is profitable or not.

Enforcement of food safety laws will vary from county to county, so it's possible that these laws are not enforced by your local health department, but if there is a liability issue that ends up in court the legality of the business will probably be a factor (and you may have trouble finding liability insurance that will actually cover you as an illegal business).

jason_kraft Posted 30 Sep 2011 , 1:51pm
post #18 of 50
Quote:
Originally Posted by NerdyGirl

Funny, the IRS has some different ideas about what is considered a business & a hobby - though both are taxable (but not the same way).



The IRS's definition of a business does not impact the health department's definition (and vice versa), so even if you qualify as a hobby under the IRS, you are still engaged in commercial activity if you accept any money for food according to the health department.

Of course, if you only accept cash from friends/family and don't advertise, your chances of getting caught are slim.

jason_kraft Posted 30 Sep 2011 , 1:53pm
post #19 of 50
Quote:
Originally Posted by Cohaja12

A tip from my friend that works in the health department.....Charge her for the cake plate and give her the cake for free!!



I would be wary about following this advice. Trying to get around the law like this shows that you are aware of what the law says and are deliberately trying to ignore it, that can cross the line into fraud.

brenda549 Posted 30 Sep 2011 , 2:11pm
post #20 of 50
Quote:
Originally Posted by Noobz

No one will arrest you...




Don't be so sure. When I was getting inspected, my rep from the Dept of Ag said my county contacted her. They wanted her to accompany the local police to an illegal baker's home to make an arrest. However, I got the impression that this was a repeat offender. She of course refused to assist them.

mclaren Posted 30 Sep 2011 , 2:16pm
post #21 of 50

I'm not in the US, just asking...

How about if your friend buys the ingredients, and you bake and decorate at HER home for her, would that be considered illegal (assuming you need to be legal to sell cakes) or that is considered as a friend doing another friend a favor?

jason_kraft Posted 30 Sep 2011 , 2:29pm
post #22 of 50
Quote:
Originally Posted by mclaren

I'm not in the US, just asking...

How about if your friend buys the ingredients, and you bake and decorate at HER home for her, would that be considered illegal (assuming you need to be legal to sell cakes) or that is considered as a friend doing another friend a favor?



In some states in the US there is an exception (meant for personal chefs) that allows you to legally charge for your services as long as you make the food in the customer's home, even if you bring your own ingredients. No health dept inspection necessary.

Baker_Rose Posted 30 Sep 2011 , 6:49pm
post #23 of 50
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by mclaren

I'm not in the US, just asking...

How about if your friend buys the ingredients, and you bake and decorate at HER home for her, would that be considered illegal (assuming you need to be legal to sell cakes) or that is considered as a friend doing another friend a favor?


In some states in the US there is an exception (meant for personal chefs) that allows you to legally charge for your services as long as you make the food in the customer's home, even if you bring your own ingredients. No health dept inspection necessary.




However, personal chefs DO have to have food handlers certificates and licenses for their local areas, and business licenses etc.

Tami icon_smile.gif

Baker_Rose Posted 30 Sep 2011 , 6:50pm
post #24 of 50
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by mclaren

I'm not in the US, just asking...

How about if your friend buys the ingredients, and you bake and decorate at HER home for her, would that be considered illegal (assuming you need to be legal to sell cakes) or that is considered as a friend doing another friend a favor?


In some states in the US there is an exception (meant for personal chefs) that allows you to legally charge for your services as long as you make the food in the customer's home, even if you bring your own ingredients. No health dept inspection necessary.




However, personal chefs DO have to have food handlers certificates and licenses for their local areas, and business licenses etc.

Tami icon_smile.gif

kelleym Posted 1 Oct 2011 , 1:10am
post #25 of 50

I have a crazy idea. Why not call your local Health Department and ask them? No one here knows the answer.

costumeczar Posted 1 Oct 2011 , 1:17am
post #26 of 50
Quote:
Originally Posted by suzylynn58

Just an FYI, I am in LA too and it is illegal to bake from home here.




This answers the question, if you want to be technical about it.

And I have to say to the OP-- good for you for asking in the first place.

costumeczar Posted 1 Oct 2011 , 1:18am
post #27 of 50
Quote:
Originally Posted by kelleym

I have a crazy idea. Why not call your local Health Department and ask them? No one here knows the answer.




That's far too logical and makes too much sense!

MimiFix Posted 1 Oct 2011 , 1:51am
post #28 of 50
Quote:
Originally Posted by jlcalvert

Hi everyone,
Just a quick question. I live in Louisiana and am a hobby baker. Most people at my daughters school know I bake cakes for family. However, today a lady asked me to make a cake for her daughters birthday. If I did I would only charge her for the ingredients. Is this ok?

Thanks




Actually, I saw this post when it first went up and was startled to see "cake police" in the title. Even though I knew the answer I didn't want to get embroiled in one of those unpleasant, infamous CC threads. So yeah, I agree that you should call your local health department. They will let you know what is and is not allowed in your county.

Good luck, hon, hope you find the definitive answer.

Hope this response doesn't offend anyone... I wish I may, I wish I might, not get called "the police" tonight.

The_Sugar_Fairy Posted 1 Oct 2011 , 1:53am
post #29 of 50
Quote:
Originally Posted by Cohaja12

A tip from my friend that works in the health department.....Charge her for the cake plate and give her the cake for free!!



Love it! What a good idea!!

Osgirl Posted 1 Oct 2011 , 2:14am
post #30 of 50

OMG! Just make the cake! You won't go to jail icon_smile.gif It's for a friend and she is not paying you over and above the ingredients. Seriously, does it have to be this big of a debate? If what she does is illegal, then no one should ever bake anything ever again out of their kitchens for ANYONE.

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