Very excited, as we found a rentable commercial kitchen that fits our needs. Been trying to get everything together . . cross our t's and dot our i's.

Just got off the phone with our Insurance Broker . . .

We thought we would only need liability (which will be less than $500 year), and that is fine.

But she was explaining to me that NY may also require me to have Workers Comp and Disability Insurance . .. which is expected to drive the price up to around $1,700 per year (total for all 3). . . BIG difference. Just another Bill, I had not really expected, as nothing is ever black and white.

Anyone using a shared kitchen in NY have any experience with this?

I am one person (sole prop), however I have a few family members who will be helping out from time to time (non paid). Am I really forced to have these additional insurances?

I read on the NYS website that if you have NO employees you can file for an exemption. How can a business run with at least one employee/owner?

Looking for others to share some knowledge?

In CA (and probably NY too) you are required by law to carry worker's comp insurance if you have anyone other than the owners of the company working for the business, even if they are not paid. For the first couple years my wife and I ran the business ourselves (we are both co-owners of the LLC that owns the business so worker's comp was not required). We eventually hired an unpaid intern, and worker's comp coverage for her is about $600/year here. Not sure about disability.

You may be able to get around this by forming a multi-member LLC with all family members who will be helping listed as officers...you'll have to pay the NY LLC tax of $500/year but at least you will get something for it (additional protection from liability). I don't know if this will work in NY so you may want to consult a lawyer specializing in this field.

For the size of your start-up, you do not need to hire an employee. (Family members who occasionally help out are not considered employees.) As a sole proprietor you will be able to do most of the work yourself the first year or two. IMO you needn't worry about worker's comp and disability insurance when you begin. There are enough other issues to worry about...

And of course your insurance broker is suggesting you may need worker's comp and disability insurance. She just happens to have a policy sitting on her desk. ("When you're a hammer, everything looks like a nail.")

In NJ, as an LLC, I am automatically required to have Worker's compensation insurance. I do not have to cover myself (which would double the bill). If I'm not mistaken, disability is taken out of paycheck wages. I'd check on that and I'd also get several quotes. I don't know about your area, but in mine there are many insurer choices.

My business is in NY state. If you are the owners of the company and the only ones working you can waive the workmen's comp and disability. And your insurance company should know this because it was our insurance company that told us this.

Unless it is a requirement for the place where you are renting the kitchen, then your insurance company is trying to sell you something you do not need. This means you should find another insurance company.

As owners of our company, and having it as an S corp through NY state, we are allowed to waive the need for workmen's company and disability for ourselves, which we do. It cost enough to run a business in this fricking state. Every little bit helps.

I think owners can waive disability in every state. They don't care if you hurt yourself. But I remember with my construction company, they did offer me WC for a discount after I bought it for employees. If you don't have health insurance, a deeply discounted policy for yourself may be something to look into. But I had 21 employees. You may not get much of a discount if you only have one employee. It is worth asking.

And for those who are not required to provide WC, please be aware that you and all of your assets will be held responsible for an accident. This is not a savings because employees do get hurt. One emergency room visit for a burn will probably be more than the yearly policy. And for larger claims, WC easily pierces any corporate structure and LLC.

Linda,

Thank you once again for your insight. I believe that you rare 100% correct in what you have stated, in all aspects.

I do want to make a few clarifications, not that it matters in the end lol . . just to give a more honest perspective:

I don't believe my Insurance agent was trying to scam me. I was putting a 30 minute conversation with her, into one sentence. She did a detailed job of explaining to me that I may not need this, however it was their past experience that a Health Permit would not be issued until we had all 3 (liability, WC, and Dis). But again, she recommend that I call my contact in the Health Department for a final answer. My agent was going to get me a liability quote and hold off on the others, until we had a final answer from the Health Department. She did give me some ball park figures, if indeed, I would need this. To her best knowledge, she thought the HD was going to require me to have this, but urged me to find out through them. I honestly did not feel she was pushing me into getting the other insurance. . .

I thank you for providing as much detail as you have. I know that certain areas are personal to each of our 'business' and there are certain areas I need to explore on my own . but thank you for sharing as much as you could.

In a nutshell:

For a year or so I made cakes and desserts for friends and family . . because I worked for a bakery decorating cakes, during college. It was a passion of mine, even though it was not my career choice.

As more and more requests come in, I realize that I can not bake cakes for free anymore . . . and a "Thank you bottle of wine" does not help pay my expenses, although it is appreciated.

I exhausted my research in looking into a "home food processor exemption" but this has too much red tape, and I would be violating every aspect. My cakes are special order, birthdays, events, etc. I can't do that from a home kitchen.

Unfortunately, I only do about 12 cakes per month, as it stands. I don't make enough profit to really afford a retail establishment . .yet. But I believe, I have the passion, and commitment, and sacrifice . . . as well as an outstanding product . . to make this work.

I found a shared kitchen that will also allow me to put my product on their retail store front for a small commission. I think this is a great opportunity for me to keep my costs/rent down ($500 month) and give me the chance to put my products on the shelves of an established retail outlet.

But with the $500/month rent, comes cost of ingredients, equipment, boxes, stickers (holy guacamole lol . . . logo stickers are gonna run me about $1,000/month to have our name on our boxes) . . . insurance . . .and it goes up and up and up.

All I really wanted to do was sell a few cakes and do what I love . . and I am forced to get into a commercial kitchen to do that . . so be it.

It is an adventure I am ready for . . . but still trying my best to get to the bottom of how to make this happen.

I don't want to rush it, but at the same time . . I really need to get my product on those shelves by late October . . . the holiday Season could certainly help keep me afloat.

After reading all of your information . . .I honestly feel the best thing for me is to remain a Sole Proprietorship, for a few more months - and see how things go profit wise. See if I am event able to keep my head above water. Hopefully, I will learn that as a Sole Prop . . I may not need WC and Dis insurance . . and for a few months I can test the waters.

Then, as things improve . . . I can take on an attorney and accountant to incorporate in the best way possible. Or, if things don't improve, I can cut my loss and close my doors . . .

Thank you again . . for your insight and experience.