Consider carefully before proceeding is all I can say. I'm not doing it as a hobby, so I have a different take, but here's my 2 cents.
Many women "back in the day" (we all know one-- an aunt, a friend's mom, whoever) have done it for years with narry a hitch.
BUT. This isn't our aunt/mom/friend's world any more. People will sue you over anything, and if you're not legal, you invite a bee's nest of problems.
Worst case scenario I've heard (aside from fines) is a lady who actually LOST her home over the issue. I don't know the whole story.
If you're selling for "whatever they want to give you" to just friends and family, that's a *little* safer than wanting to start a business in any form.
Also bear in mind that large venues are often responsible for the food served at receptions in their facility, and they will prevent you from bringing in a cake if it wasn't made in a legal kitchen. Not to mention the Health Dept occasionally does a walk through the kitchen at large receptions, just to check. How'd you like to explain to a bride on her wedding day that her cake is on its way back to your house because they wouldn't let you bring it in?
AND, last but not least, if the local caterers/cake decorator/bakeries find out about your little venture (and if you're viewed as competition by them) they will usually immediately turn you in.
Like they say, the "cake ladies" are hard to regulate, and very many "cake ladies" fly under the radar and never have any trouble...but all in all, I want a business that is legit. I did one cake at a huge venue right at the time that I was just finding out that it's illegal here, and I felt so...subversive!...setting that thing up! So something that should have been a terrific exposure for me, handing out cards to the wedding planner, DJ, etc., felt more like me skulking and trying to not have anyone ask me too many questions...it was not fun, and I changed my approach thereafter.
Most customers (and many local bakeries/caterers) never ask, know, or care, but all the same, I rent a legal kitchen, have insurance and business licenses, and will get whatever else I need to stay on the up and up. When and if I get busy enough, we'll build a separate kitchen here. Until then, I rent, and I sleep better at night.