anaelisabethlee Posted 24 Aug 2013 , 6:21pm
post #1 of

AHey

I've probably done about 7-8 "proper" cakes so far, so quite new at it. I've learned loads via here and YouTube and Internet tutorials, but I'm sure you'll agree that you need hands on experience! I'm doing cakes for friends and family and just getting paid for the cost of ingredients - I personally don't think I am "selling" cakes, I'm not a business. But, I need practise, and friends are willing to let me do their cakes for a bargain, let's face it! Since my thread yesterday I have been told I am "selling" which makes me nervous of breaking laws etc - so my question is, how do you get your experience?? I cannot afford to foot the bill for the cakes, not to mention make loads that I have to eat myself! (I would give it a good go though!) I'm a stay at home mum at the mo, kids are 2 and 3 so not going to full time school anytime soon! I'd love to hear your start up stories? If you don't mind sharing..... A x

158 replies
shebysuz Posted 24 Aug 2013 , 6:39pm
post #2 of

I find that trading services works well for me. I also take money for ingredients if I'm doing a free cake. It's simple. You pay for the ingredients so I'm not actually paying to make you a cake, and I will donate hours of time to make you a cake because I like you. I get to practice my skills, build my confidence, and you get an awesome cake for very little money. I really do not see how that would be illegal or unethical. if the actual exchange of money is the issue, then just make a list of ingredients and have the cake recipient bring them to you.

  So I don't have a start up story but there's my two cents

MBalaska Posted 24 Aug 2013 , 7:34pm
post #3 of

Can't even remember why I chose cake/cookies/candies, or when. First Cake was a Wilton Star cake decorated with #18 stars. Didn't even own a cake pan or cupcake pan back then. It still tickles me to tears when I learn something new and I finally achieve a modicum of passable success. I do miss seeing some of the old-school dreamy buttercream wedding cakes.

sixinarow Posted 24 Aug 2013 , 8:09pm
post #4 of

Here's the problems with "getting paid for ingredients":  

You are training people to think that they can get a decently decorated cake for less than what they pay at a chain store. You'll be known as the cheap cake lady and the client base that you think you're building, will never pay a decent price. You'll lose that base and the higher client end will be hesitant to use you based on your previous cheap prices. The analogy I like is Kmart Vs Macy's. If Kmart would start to market to Macy's clients,they lose their original clients because now they are too expensive. But they also won't get the Macy's clients because Macy's has a history of high quality, so they wouldn't trust Kmart's past to give them a good product. All of this undercutting sets the rest of us who are selling cakes legally, up for the clients who pitch a fit when a cake is accurately priced. It helps no one and ends up coming back to bite you. 

THAT is why a lot of pros get ticked at people who just "charge for ingredients". If Suzy thinks she can get a 8" decorated cake from you for the cost of ingredients, why would she ever seek out a professional to bake her wedding cake. You might see it as practicing, but a lot of others see it as undercutting the market.

 

It's different for you to donate your cakes to family, but when friends say, "I want a birthday cake" and you tell them to give you $20 for ingredients, you are selling. Because unless you measure out every 1/4t of vanilla and baking powder and salt that you use, you are making a profit, which is not legal. You can be mad and give me 300 reasons that you think this should be ok, but all I have to say is IT IS NOT LEGAL. Bartering or trading services isn't even legal in some areas. 

 

For now, the cost of your ingredients to actually bake the cake part should be minimal. Use cheap mixes to practice without expensive flavorings to just practice baking, torting, filling and covering with fondant or buttercream. If you cannot afford basic ingredients for the cake, look into purchasing a couple dummies to practice decorating. You can wash and re-use them. Practice piping on the back of a pan. Scrape it off and re-use the frosting. Practice covering a cake with fondant, pull it off and do it again. Keep your practice buttercream and fondant separate from your good ingredients and use them solely for the purpose of practicing.

 

The point I'm trying to make is that there are a lot of ways to practice without spending a ton of money AND without undercutting legal bakers in your area.

jason_kraft Posted 24 Aug 2013 , 8:18pm
post #5 of

AWe started in 2007 in the SF Bay Area (near San Jose). My wife was transitioning out of her previous career (teaching kids with low-functioning autism and multiple disabilities) so we decided to leverage her existing skills making allergy-friendly desserts (for me, since I have allergies to eggs and nuts) into a business. She completed the baking and pastry program at a local culinary school (Professional Culinary Institute in Campbell, CA, now called International Culinary Center) while I started working on my MBA at night so I could run the business.

I put together a startup fund to pay for R&D and other startup expenses. While my wife was honing her decorating skills, we gave away many pastries and cakes to friends and co-workers...since California did not have a cottage food law at the time we were not able to legally accept any compensation for them (not even cost of ingredients or bartering services). Once she had progressed to the point where she could make professional-looking products, we rented a commercial kitchen and launched the business. If we did not have enough money to fund the business without selling illegally, we would have waited until we had enough saved up to do it right.

I handled the business side, including sales, marketing, web design, procurement, operations management, accounting, legal, and most deliveries. I kept my day job (managing a SAP business intelligence and data warehouse system for a Fortune 50 company), luckily I have a flexible schedule and work from home. My wife handled all the baking and decorating. The business did very well, and we ended up selling it to an employee we hired when we moved out of the area at the end of 2011.

Nadiaa Posted 24 Aug 2013 , 9:50pm
post #6 of

I don't have a cake business - yet!! I'm concentrating on honing my skills at the moment, so thought I'd share how I'm getting the experience I need.

 

- I'm volunteering myself to make birthday, going away and other celebration cakes for friends (NOT wedding cakes! I'm not setting myself up to ruin someone's day!)

- When I do make them, I'm pushing myself to try something new, and make the recipient aware it's an experimental cake, lol! So far they've turned out well.

- Some days I just make a batch of BC and practice piping on a board or on a box. Some days I get a lump of gum paste/fondant and practice making flowers and other sculpted things.

- I'm perfecting my recipes and getting everything written down so I have the 'perfect' recipe for most types of cake and filling.

- I keep my eye out for my children's school requesting cake donations to sell at fundraisers, etc and make something for those.

- I'm currently saving up for good sets of cake tins and am also slowly adding to my decorating collection by keeping an eye on online specials etc.

- I make friends who get the free cakes VERY aware that as soon as I launch my business there will be NO more free cake!! 

- I watch countless YT tutorials and read a lot here at CC and elsewhere!

 

That's about it. I'm a SAHM as well, so these things are easy to do with small children around. That said, I'm expecting it to take about a year of practising solidly  before I'm ready for a business, but then again, I may not be ready then either. 

Elcee Posted 25 Aug 2013 , 12:33am
post #7 of

I got into cake decorating when I wanted to make my daughter's wedding cake. I didn't go into business until five years later when my state passed a Cottage Food Law. 

 

So, what did I do in the meantime? In addition to my friends and family getting ridiculously over-the-top (100% free) birthday cakes and the occasional (again, free) wedding cake, and my co-works getting 2 and 3-tiered decorated cakes on random Mondays,  I entered cake decorating competitions. I entered my county fair, I entered my state fair, I entered a couple of local live challenges, I discovered my ICES chapter and their show, Sweet Times in the Rockies. I have had my cakes evaluated by people like Earlene Moore, Rachael Teufel, Sharon Zambito, Rebecca Sutterby, Lisa Bugeja, Carolyn Wanke. Let me tell you, if you want to hone your skills, this is the way to go.

 

At the time I resented how easy it was for some people to sell their cakes and that I couldn't, but now I consider myself lucky. I had a long time to learn this craft and figure out how I wanted to run my business once it was allowed. By the time I was selling, my cakes were top quality. I'm not saying they're perfect, but I have confidence that my cakes are worth every penny I charge for them and that I will deliver a dream cake and not a cake wreck.

embersmom Posted 25 Aug 2013 , 3:42pm
post #8 of

I've been a supermarket baker/decorator for nearly 25 years.

 

When I first started vendors would send out personnel to teach everyone the basics of decorating -- how to stack/ice, all the basics including making a rose on nail, etc.  Those days are long, long gone.

 

I was very lucky to have worked with two veteran decorators.  For a very long time I observed what they did before being allowed to try anything myself for the display case.  My first manager gave me a stack of parchment paper (back then we used parchment cones rather than cloth/vinyl bags -- plastic bags weren't in vogue then), a few tips, a small container of icing, and some leftover cake boards and told me to practice at home every chance I got.

 

This was way before the internet, so I'd get books out of the library and follow the photos. 

 

I still do this.  For instance, I'm always on the lookout for new and exciting borders made with one tip (we're not allowed to change them out at work because it takes too much time), so if I see something online, I'll bookmark it.  I always have cake boards floating around.  The next time I have leftover icing or even enough Crisco, I'll make up a bag and play with whatever borders I've bookmarked.  Ditto with flowers.

 

If I'm working with a decorator from another store, I'll watch what h/she does.  If I like a technique they use, I'll try replicating it on my own.

 

Foremost, though is PRACTICE.  Practice on a dummy cake, practice on a cake board or even on the cookie tin, but PRACTICE :)
 

annabellas Posted 26 Aug 2013 , 2:55am
post #9 of

AWe started our natural foods store in 2002. A lot of our customers at the time were living special diet lifestyles - either by choice or necessity. So about 2 years ago we expanded to include a GF bakery and a cafe that uses local and organic ingredients. To prevent cross contamination we decided to make both of these new areas dedicated GF. We are still fine tuning our recipes. It's a lot of fun to see new people (and kids) get so excited to see beautiful and delicious pastries they can eat. That's the goal - to offer the special diet community delicious cupcakes, pies, brownies and birthday cakes that their friends and family are enjoying but only GF!

anaelisabethlee Posted 26 Aug 2013 , 9:16pm

A

Original message sent by sixinarow

Here's the problems with "getting paid for ingredients":   You are training people to think that they can get a decently decorated cake for less than what they pay at a chain store. You'll be known as the cheap cake lady and the client base that you think you're building, will never pay a decent price. You'll lose that base and the higher client end will be hesitant to use you based on your previous cheap prices. The analogy I like is Kmart Vs Macy's. If Kmart would start to market to Macy's clients,they lose their original clients because now they are too expensive. But they also won't get the Macy's clients because Macy's has a history of high quality, so they wouldn't trust Kmart's past to give them a good product. All of this undercutting sets the rest of us who are selling cakes legally, up for the clients who pitch a fit when a cake is accurately priced. It helps no one and ends up coming back to bite you.  THAT is why a lot of pros get ticked at people who just "charge for ingredients". If Suzy thinks she can get a 8" decorated cake from you for the cost of ingredients, why would she ever seek out a professional to bake her wedding cake. You might see it as practicing, but a lot of others see it as undercutting the market.

It's different for you to donate your cakes to family, but when friends say, "I want a birthday cake" and you tell them to give you $20 for ingredients, you are selling. Because unless you measure out every 1/4t of vanilla and baking powder and salt that you use, you are making a profit, which is not legal. You can be mad and give me 300 reasons that you think this should be ok, but all I have to say is IT IS NOT LEGAL. Bartering or trading services isn't even legal in some areas. 

For now, the cost of your ingredients to actually bake the cake part should be minimal. Use cheap mixes to practice without expensive flavorings to just practice baking, torting, filling and covering with fondant or buttercream. If you cannot afford basic ingredients for the cake, look into purchasing a couple dummies to practice decorating. You can wash and re-use them. Practice piping on the back of a pan. Scrape it off and re-use the frosting. Practice covering a cake with fondant, pull it off and do it again. Keep your practice buttercream and fondant separate from your good ingredients and use them solely for the purpose of practicing.

The point I'm trying to make is that there are a lot of ways to practice without spending a ton of money AND without undercutting legal bakers in your area.

Fab, I love hearing everyone's stories, thanks. It makes me really want to persevere with this, I can't believe it took this long to discover what I love doing!

As far as I can tell though, it's not illegal to bake from home in the uk. You just need to register with environmental health dept at the council, and as cakes are low risk food, it's pretty much just a questionnaire and then an inspection. And as for undercutting, I am catering for people that would never spend that amount on a cake - not for regular birthdays anyway. And Suzie will still come to you for weddings because I don't envisage being good enough to do anyone's wedding cake, for a long long time!! I understand your point of view, but I don't agree with the fact that people can't give me compensation for ingredients.

jason_kraft Posted 26 Aug 2013 , 9:28pm

A

Original message sent by anaelisabethlee

As far as I can tell though, it's not illegal to bake from home in the uk. You just need to register with environmental health dept at the council, and as cakes are low risk food, it's pretty much just a questionnaire and then an inspection.

I think the issue is more that it's typically not legal to just start selling food from home without following the rules in your area. In some cases (such as yours) the process is pretty simple, but you still need to register, track your net income for tax purposes, etc.

And as for undercutting, I am catering for people that would never spend that amount on a cake - not for regular birthdays anyway.

Generally if someone can't afford to buy a custom cake, they won't be able to buy a custom cake, and they will end up settling for a grocery store cake or make it themselves. If you want to run a charity to provide higher-end products for people who can't normally afford them that's fine, just don't pretend you are running a business, and don't advertise as such. Otherwise you are devaluing the entire market.

For a more detailed analysis of this issue check out the "Pricing, Market Value, and Economic Damage" link in my signature below.

anaelisabethlee Posted 26 Aug 2013 , 9:46pm

A

Original message sent by jason_kraft

I think the issue is more that it's typically not legal to just start selling food from home without following the rules in your area. In some cases (such as yours) the process is pretty simple, but you still need to register, track your net income for tax purposes, etc. Generally if someone can't afford to buy a custom cake, they won't be able to buy a custom cake, and they will end up settling for a grocery store cake or make it themselves. If you want to run a charity to provide higher-end products for people who can't normally afford them that's fine, just don't pretend you are running a business, and don't advertise as such. Otherwise you are devaluing the entire market.

For a more detailed analysis of this issue check out the "Pricing, Market Value, and Economic Damage" link in my signature below.

That's the thing, I totally get your point, and when I do start the business, then I'll go through the proper channels. But in the meantime, I'm practising. I'm not running a business, and I tell people specifically I am not running a business. Nor am I pretending to. But I need to be reimbursed for ingredients. As I am making no profit, I don't feel I have anything to feel guilty about. But I can see that we'll be agreeing to disagree!

texas_mom Posted 26 Aug 2013 , 9:56pm

"And as for undercutting, I am catering for people that would never spend that amount on a cake - not for regular birthdays anyway. And Suzie will still come to you for weddings because I don't envisage being good enough to do anyone's wedding cake, for a long long time!!
I understand your point of view, but I don't agree with the fact that people can't give me compensation for ingredients.I for one am not "selling" my cakes"

 

 

 

__________

 

  I bake for family and close friends only and I literally give them a list of what I need and they buy it or I buy everything and had them the receipt .  Which is why I use box mixes.  There is no profit in buying only exactly what is needed.  I literally tell them to get the one mix and supply the three eggs and the pint of milk if they prefer I use that over water.  I do this for the love of decorating cakes...for the art form . And everyone is happy with the cake and I am happy with the chance to do the cake.  So maybe I should change the "costumer" label I use when talking about who wants the cakes because I literally do not make any money with the cakes I make.  It is a given that when we have births, wedding, birthday, etc. I furnish the cake, all they have to do is furnish the ingredients.  Any left over eggs, milk etc. goes back to who every wanted the cake (  I hate eggs I never eat them so I don't need them ).  Many time I donate the cake, especially for weddings, the brides love that a cake can serve 250 people and cost them nothing .  I feel the same way I am not undercutting anyone.  It has always been a standing tradition that I make the cakes for the family.  Once I am gone I am sure they will have to seek the high end bakers.  So all is not lost for the "pros" out there.

liz at sugar Posted 26 Aug 2013 , 11:29pm

It seems unlikely that any "educating" is going to occur in this thread.  Those who sell cakes for far below market value but insist they aren't running a business only want to be told that it is all A-Okay!

 

Selling a $100 cake for $20 because that is what the ingredients cost is not practice - it is running a business that loses money.  And if you aren't even following the cottage food laws in your area, you are putting the health of all you bake for at risk.

 

Liz
 

jason_kraft Posted 26 Aug 2013 , 11:42pm

AThere is something cake charities can do that would help: every time you provide a cake to a "customer", include an invoice that shows what the price of the cake would be at normal market prices. This helps alleviate the damage to the local market, while at the same time giving the beneficiary a greater appreciation for your gift.

sixinarow Posted 27 Aug 2013 , 12:19am

Can they even be called cake charities? With a charity, you wouldn't make them pay you for cost of ingredients so you could practice your hobby. I don't know any other hobby that requires other people to pay for the supplies so the hobbyist can participate.

 

I agree with liz. There will be no "educating" on this thread. Interesting how you so need advise from professionals when you can't figure out why your cake is raw in the middle and oozing out filling, yet you totally disregard advise on your *non* business.

texas_mom Posted 27 Aug 2013 , 12:43am

liz at sugar - I can assume that not all forum members do this for a business or to make money.  I for one do not run a business nor am I making any money.  I do it as a hobby.  Some people like to sew others to crochet...I like to decorate cakes.  I have been a stay at home mom for 27 years and I found that decorating cakes is an art form that I love to do. And I love the reaction of the people that I do it for.  No money made here and neither is any money lost.  It is no different that me going to a pot luck dinner at my family or friends home and bringing a cake for dessert.

texas_mom Posted 27 Aug 2013 , 12:54am

sixinarow- I do have other hobbies that I like to do, for one I like to crochet and when someone ask if I would make a baby afghan as a gift all I ask is for them to bring me the yarn.  I do this because I have the time and it gives me something to do.  Why not sit and crochet while I watch TV?  I find it so hard to believe that many people don't understand that I do this out of love for family and friends and not for the money.  Maybe I am in the wrong website. I have been a member since 2006 and I have just now started to actually read and  post but I think this is all a mistake.  I thought this was a place to learn from one another and receive some encouragement. But that  doesn't seem to be the norm.   I think it is time for my exit.

scrumdiddlycakes Posted 27 Aug 2013 , 12:57am
Quote:
Originally Posted by texas_mom 

liz at sugar - I can assume that not all forum members do this for a business or to make money.  I for one do not run a business nor am I making any money.  I do it as a hobby.  Some people like to sew others to crochet...I like to decorate cakes.  I have been a stay at home mom for 27 years and I found that decorating cakes is an art form that I love to do. And I love the reaction of the people that I do it for.  No money made here and neither is any money lost.  It is no different that me going to a pot luck dinner at my family or friends home and bringing a cake for dessert.


Except that you are accepting money for it, even if there is no profit, you accept money.

 

When money transfers hands, unless it is a gift or donation, it is a business transaction. Since they are receiving a product in return, it can't be one of the first two.

In the eyes of the law, you are running a business, like it or not. We would all hope that if somehow our cakes gave a family member or close friend food poisoning, they wouldn't take us to court, but we live in a day and age where that does happen. They way you are conducting your business, you would be liable.

Furthermore, the point a lot of people here are trying to make is that since you are running a business, even if you don't call it that, people who know you are coming to you for cheap cakes instead of hiring a legal baker, aka: undercutting.

You said it yourself with this line...

"Once I am gone I am sure they will have to seek the high end bakers.  So all is not lost for the "pros" out there."

 

There is nothing wrong with making cakes for loved ones for free, I get loving the reactions, but that doesn't mean ignoring a law because it's inconvenient or not cost effective for you. Either give them away or sell them properly, and show respect for others in this profession. 

texas_mom Posted 27 Aug 2013 , 1:12am

scrumdidlycake- no ,not accepting money but excepting a reimbursement, something millions of people do daily for many things.  I guess I better not ever pick up dinner for my daughter and have her reimbursement for the meal...I might just be accused of running a catering business.  I am sorry but I am done with this forum and website.... to all have a nice day.

sixinarow Posted 27 Aug 2013 , 1:16am
Quote:
Originally Posted by texas_mom 

sixinarow- I do have other hobbies that I like to do, for one I like to crochet and when someone ask if I would make a baby afghan as a gift all I ask is for them to bring me the yarn.  I do this because I have the time and it gives me something to do.  Why not sit and crochet while I watch TV?  I find it so hard to believe that many people don't understand that I do this out of love for family and friends and not for the money.  Maybe I am in the wrong website. I have been a member since 2006 and I have just now started to actually read and  post but I think this is all a mistake.  I thought this was a place to learn from one another and receive some encouragement. But that  doesn't seem to be the norm.   I think it is time for my exit.

I'm ALL for encouraging art and creativity.  I'm not going to support and encourage something that is illegal just because you enjoy it and love seeing others' reactions.

I'm sorry you feel that you have to leave an entire website because everyone isn't telling you what you want to hear and trying to help you find a way to get around laws. What is not the norm is taking money or supplies from people and not believing it is a transaction. 

Your analogies are flawed, but you will never admit it because you want to continue doing what you are doing. Making excuses for your actions doesn't make them right, even if they "feel" good. 

MBalaska Posted 27 Aug 2013 , 7:59am

Quote:

Originally Posted by sixinarow 

..................Interesting how you so need advise from professionals when you can't figure out why your cake is raw in the middle and oozing out filling, yet you totally disregard advise on your *non* business.

Thank You experienced bakers/decorators once again for sharing !!!  I'd not ever go into business,from reading these forums you guys have some real rough patches to go through. If there was a way to pay you for your tips, techniques, & tutorials.........I for one would be happy to compensate you. Your assistance in the tutorials, recipes & posts have propelled me in Leaps & Bounds beyond where I was previously.

ApplegumPam Posted 27 Aug 2013 , 8:44am

Whilst this may be an old thread - it addresses the same questions asked here ......  funny I read what I wrote way back then..... and it still rings true..... how many of us from those days are still here ??   Jamie?  Evoir?

http://cakecentral.com/t/665560/when-did-you-start-your-business-how-much-experience

as you wish Posted 27 Aug 2013 , 12:10pm

AI have typed this out and deleted it several times. I am trying to put this is a way this isn't going to upset anyone, but I don't know if I can so here goes! Learning the art of cake decorating by making practice cakes for friends and family instead of paying for professional instruction is all well and good, but why should your friends and family be paying for your education? Pay for your own ingredients; this is the cost of your education.

ApplegumPam Posted 27 Aug 2013 , 12:36pm
Quote:
Originally Posted by as you wish 

I have typed this out and deleted it several times. I am trying to put this is a way this isn't going to upset anyone, but I don't know if I can so here goes!
Learning the art of cake decorating by making practice cakes for friends and family instead of paying for professional instruction is all well and good, but why should your friends and family be paying for your education? Pay for your own ingredients; this is the cost of your education.


I agree - and a few well placed face to face classes on fundamentals and different techniques throughout your 'education' will be invaluable and never be replaced with hours spent sitting in front of a computer.........  

 

Its easy for people to have a huge online following and we can mistake that for credibility ..... nobody really knows if the advice is coming from a successful business owner....... or a MONKEY

embersmom Posted 27 Aug 2013 , 3:12pm
Quote:
Originally Posted by as you wish 

I have typed this out and deleted it several times. I am trying to put this is a way this isn't going to upset anyone, but I don't know if I can so here goes!
Learning the art of cake decorating by making practice cakes for friends and family instead of paying for professional instruction is all well and good, but why should your friends and family be paying for your education? Pay for your own ingredients; this is the cost of your education.

 

:trying to think of a way to phrase this so as not to upset anyone:

 

IMHO (and this is more for the hobby bakers as opposed to those who have licensed businesses):

 

1.  It's an expensive hobby once you really start getting into it, and I think many people don't realize that until they're well into it.

 

2.  Cake, in general, isn't one of those foods eaten everyday, but one needs to practice, one needs to do something with the cake once it's finished..  You can donate it, but after awhile people are going to get sick of your donations not because they're not yummy, but because...who eats cake every day?

 

3.  The easiest way to circumvent #2 is to volunteer to make a cake for an event.  The recipient gets a cake, you get to practice = win-win.

 

4.  But there's the whole expensive thing again (see #1).

 

5.  People want to compensate you for volunteering, so they offer to pay you for ingredients.  For them, it's no different than giving you yarn for a sweater you're willing to knit, or buying the paint for whatever you're going to paint for them. or giving you gas money for driving them to X.

 

6.  It's #5 where people lock horns in this community.

niniel1 Posted 27 Aug 2013 , 3:33pm

It is confusing me a little. One of my other hobbies is upcycling furniture, at the weekend my sister bought a bureau and some paint for me to make it over for her. If I paint the bureau, do I suddenly have a furniture business? Or recently my cousin made a crotchet dress for my baby, I bought the yarn for her AND I gave her a bottle of wine as a thank you for her time. She certainly doesn't have a clothing business. If a friend buys all the ingredients and I go to her house and bake her a cake there is that a business??? I just find it a weird way of looking at things. Even if someone buys all the ingredients for me I'm probably still losing money on the cost of electricity etc, it's not a business! it's me doing someone in my family a favour! 

texas_mom Posted 27 Aug 2013 , 3:52pm
Quote:
Originally Posted by niniel1 

It is confusing me a little. One of my other hobbies is upcycling furniture, at the weekend my sister bought a bureau and some paint for me to make it over for her. If I paint the bureau, do I suddenly have a furniture business? Or recently my cousin made a crotchet dress for my baby, I bought the yarn for her AND I gave her a bottle of wine as a thank you for her time. She certainly doesn't have a clothing business. If a friend buys all the ingredients and I go to her house and bake her a cake there is that a business??? I just find it a weird way of looking at things. Even if someone buys all the ingredients for me I'm probably still losing money on the cost of electricity etc, it's not a business! it's me doing someone in my family a favour! 

I feel the same way.  I have been doing this for almost 30 years and I have never made it a business and certainly have never made a profit.  Making cakes is a hobby for me, plain and simple.  Yes it  can be an expensive hobby but one that I enjoy ( honestly I feel any good hobby is expensive not matter what the hobby is ) doing and I don't mind the cost. My family will bring me everything I need to make them a cake and I will not say no and yes I will deliver it free of charge.  My biggest and proudest cake to date was my own daughters five tier wedding cake that was of course not cost to her.  Next month I will make my niece her baby shower cake and the hostess will be receiving a list of the things I need to make it.   Again no cost to me and free labor for them and much needed experience I will receive by trying something new.

jason_kraft Posted 27 Aug 2013 , 4:02pm

AAs stated above, the typical delineation involves how you advertise. If you make a web site, post flyers, hand out business cards, or just use word of mouth saying that you accept orders from the general public, you have a business, regardless of whether or not you are profitable. If you just make stuff for your family and don't advertise, that's a hobby, even if you get reimbursed for ingredients.

The point where people run into trouble is when word of mouth starts to spread and you start to get requests from your sister's friend's neighbor's co-worker's life coach. You have to be willing to limit yourself to a small circle of family and close friends, unless you are giving the product away for free with no strings attached.

sixinarow Posted 27 Aug 2013 , 4:07pm
Quote:
Originally Posted by texas_mom 

I feel the same way.  I have been doing this for almost 30 years and I have never made it a business and certainly have never made a profit.  Making cakes is a hobby for me, plain and simple.  Yes it  can be an expensive hobby but one that I enjoy ( honestly I feel any good hobby is expensive not matter what the hobby is ) doing and I don't mind the cost. My family will bring me everything I need to make them a cake and I will not say no and yes I will deliver it free of charge.  My biggest and proudest cake to date was my own daughters five tier wedding cake that was of course not cost to her.  Next month I will make my niece her baby shower cake and the hostess will be receiving a list of the things I need to make it.   Again no cost to me and free labor for them and much needed experience I will receive by trying something new.

If you were only doing this for family (which people are not) many would be more understanding. But here's the kicker -- bartering services is supposed to be reported to the IRS as taxable income also. It doesn't matter if you "like" the law, or think it's a good law, (there's a bunch that I don't)  you are still required to comply with the law. But, you refuse to listen to anyone who has offered any lawful advise. It's apparent you only want to argue, call people meanies and stomp off when they tell you the truth, I'll let the IRS doing the talking for me..

 

Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. The fair market value of goods and services exchanged must be included in the income of both parties.

http://www.irs.gov/taxtopics/tc420.html

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