hello i am extremely new to the cake industry... i had a brain aneurysm in 11/09 and since i have taken cake decorating classes and a whole new world has opened up to me that i am both fond of and in love with... i finally have a way to express my creativness that has been sitting bottled up since childhood... now onto business... when do i make my business official.. do i wait till business kicks off completely or do i start from now (note i have not done that many cakes, just starting one by one here and there.. do a file for an official business license and tax id or should i wait... people have advised me that i can get in trouble for selling cakes etc.. please help for i am totally twisted and confused in this matter...
Check with your state regarding its regulations and with your local zoning and permitting departments to determine what you can and cannot do from where you live and follow all their dictates and get a business license and general liability insurance. You would not want to put yourself into predicament where someone can sue you or have you get in trouble with the authorities. I know a lot of people fly under the wire and seem to get away with it but I do not think that is the right thing to do nor is it worth the chance.
The biggest hurdle is the health department. In the US, if you sell food, you are required to bake that food out of a kitchen that can pass a health inspection unless your state has a cottage food law and you meet the cottage food law requirements. The business license and tax id is the easy part.
If your state does not have a cottage food law and you still want to sell cakes, there are commercial kitchens and kitchen incubators in many areas that you can rent by the hour. You may be able to get away with operating under the radar if you are careful to only sell cakes to friends and family, avoid advertising (including facebook) or telling people about your business, and accept cash only with no paper trail, but you will still need to declare this income to the IRS.
In the meantime, it is perfectly OK to bake cakes and give them away for free, or practice decorating on cake dummies to get more experience. One thing you should be starting now is your business plan, so you can determine what the competitive landscape looks like, which markets you will be targeting, what type of products to sell, how to price them, advertising strategies, and so on.
I'm in the process of deciding the same thing. I'm currently looking for a commercial kitchen to rent in nyc but the only ones I find are in manhattan and they're much too expensive. Someone suggested renting from a church so that's what I'm looking for now. Once I have a place to rent I plan on going legit. Might be a bit. Backwards but financially its working for me.