I've read every all the post and taken everything in. I do sell my cakes from home and I always take cakes in to bake sales and only if some one asks for a business card do i give them one. I know here there are a alot of people that sell food and such out of their homes. (I live in an urban area) they even give out advertisments and post in the police station bulliten board (in the lobby next to the ATM-which is the only reason I'm in a police station) and I know these people aren't licenced. I even know of a couple of people that are home bakes. This right now is a side hobby and when I do make a little money from it (ususaly about 20 or thrity dollars) I buy dinner or something for my kids. eventually I do want to become legit and have a small store front, but right now I'm happy doing what I'm doing.
I agree that not all states/counties care one way or another about the home businesses. A friend of mine has been catering dinners for the last 2 years, all from her home. I don't really mind getting legit, but for now I simply can't afford it. I am unable to work due to serious back problems and needed something to do that I could work my own hours and be my own boss. Social Security isn't getting in to big a hurry to give me my disability. I am only 48 and they have a problem with me being "so young" and drawing disability. So, I enjoyed cake decorating so much, I thougt I might as well make money doing it. And I will continue to do it out of my home until either I get rich or get caught and have to quit. I think it is really kinda unfair to us little guys to make us be certified. And as long as your customers know you are doing it from your home, I see nothing wrong with it. I make sure everyone who asks for cakes understands I bake & decorate from home and so far no one had a problem. As a matter of fact, most of them have liked it because they get "home made" cakes and frosting and not something that sits in a 5 gallon bucket. Also, they say that doing it from home tells them I love what I do and will show on the cake, unlike bakeries.
So alot of us are all in the same boat. Glad to know I'm not the only one.
I went to the PA Dept of Agriculture website (they oversee all food and drink businesses in PA) and one of the things I did get from there is I do need to be certified in Sanitation and Food Handling to sell any food in PA. I used to be certified about ten years ago, but I never recertified. (You have to after five years, so I've decided to take a home course and get certified. It's $135.00 so I'm gonna wait until I get my tax refund and do it then.
I am in the same boat you are in. Trying to figure out how to become legit without going into debt up to my cake topper. I heard of an idea that I plan to pursue and it might help you too. Find a caterer that does not do wedding cakes. Rent the use of their kitchen. You don't have the huge expense of establishing a commercial kitchen that meets code and it gives you the added benefit of getting referrals from the caterer.
I think that is a good idea, Susan. If I didn't work full time, it might be something I would consider.
Well, remember that most caterers are in it full time so their kitchen is probable occupied during most regular hours. You could be like the second shift working lets say 5 to 10 on the days that you need to. That way you aren't in their hair. They aren't in your hair. And they make their equipped kitchen start paying extra for itself. A real win, win situation. Your professional background would help since they wouldn't have to worry about your misusing their equipment. Depending on how very honest you are you could even do some of the advance work at home and bring it in to save time away from home.
I just did my first wedding cake this past Sat and the weding was in a rec center and there was a kitchen there. I think these may be certified by the state since they do offer cooking classes there. I might check that out also.
I to am trying to find a legal kitchen, but i do have a diffrent perspective I used to own a restauraunt, and during expansion designed and built a legal kitchen. The health dept. depending on where you live can be a great source of info, they are generally not scarry. As for sub-letting a kitchen I know a number of cateres that got started that way, but due to insurance and liabilty issues churches and friendly society org. have stopped this as they are scared you will burn the place down. I have had 2 diffrent friends explore this issue recently, one is still looking, the other took over a seasonal deli and has access to the kitchen year round.
As for the sba borrowing money, I have been this route and do not beleive the publicity, you need money to borrow money, if you own a house they want collateral. NEVER take this route if you fail remember your home is on the line.
I know none of this postive, but I am still hunting and working my way through the options, and know I will find the solution, hope some of this helps.
I have been decorating cakes for almost 10 years, out of my home. In MI you must have a seperate kitchen, no ifs, ands, or buts about it. I just recently got very lucky with my community center. (I've been after them for 2 years to let me use their kitchen.) I wrote a letter to the board members, told them what I do & what I wanted & what I would do for them in exchange for use of the kitchen. It doesn't have to cost alot. Be creative! The things I had to do were 1) get a DBA ($10.00) & 2)get a license for the kitchen ($70.00).
Another option, to become "patially" legal (a friend of mine did this) is to get an LLC. (Legal liability company.) This will cost you about $50.
I have been handing out business cards for about 3 yrs., posting flyers in the local stores, etc. It was a personl decision to go legal. Not because I was afraid I would get caught or that I HAD to. Whatever decision you make must be based on your needs, wants & what you have to work with. I do suggest you be careful. I would hate to see you get in trouble, but I, along with others who posted, don't believe you would go to jail because your selling cakes! One thing to think about is the IRS. If you are selling cakes & you're making money, make sure you claim this on your tax returns. You can do this under self employment income. Write it down as a hobby or whatever as long as you pay your taxes. This was a hot topic on Ladycakes.com.
I hope this helps to give you a little more info to work with!
I have to agree with Jackie. Handing out a business card indicates you are in business providing some sort of service to the public, whether it be babysitting, mowing yards, pet sitting or doing cakes. There is no way that Uncle Sam can monitor the "cash" business, unless one is turned in to the proper authorities. That is why the government is trying to go to the no cash society. One day we will not have cash, and everything will be monitored by a card, if you think you can beat the system, think again, you will not be able to buy anything without the government knowing it. It will create the bartering until you have nothing left to barter. The government knows that they are loosing billions of tax dollars , this would be the only way they can get their money. It is scary!!!!Operating a small business is tough, the laws, taxes and requirements are getting ridiculous.I have a bakery, and started out after years of working for someone else in restaurant and bakeries. I have all the culinary education, and practical know how, but until you actually open your own place it can be a nightmare on the obstacles and the things you don't know.By the time you pay mortgage, liability, personal property tax, unemployment taxes, state sales taxes, and etc etc, you are in the hole. You have to have enough working capital to make it at least 6 months. From experience I opened a full scale retail bakery. I realized after 2years that I was working just to pay all that crap. I decided to down size, and now operate on custom only. It has saved me thousands. I no longer work 80 hours a week, I have a life, enjoy what I am doing and have some peace of mind. In the long run, I make more money doing it this way. I work with wedding coordinators and caterers, let them do all the work, I just provide the wedding cake. I designed a CD with a slide show presentation that each of my vendors have so they can show it during their presentation. When the client signs up, they then call me and we set up a private consultation for the cake. Works for me. I no longer have to do any advertising. I established my reputation in the beginning, and it has all been word of mouth or through my vendors. They do all the advertising. I keep my delivery to 350 miles, which most decorators keep their mileage maybe to 50 miles. This gives me an edge for those who wish not to travel. When I downsized, I sold my building, and bought some property and built a free standing facility, which is more then adaquate for what I am doing. Anyway for those of you looking to start a business, be prepared to work, sacrifice and be commited. Be true to yourself and your clients and it will all fall into place.Good Luck .
Hello, everyone! I am new to this site and I want to start by saying ... I LOVE IT
Now for my question. So how much money do you have to be making before you have to start claiming it on your taxes and therefore for them to notice??? I am am wanting to start my own business eventually but do not have the means to at this time. And I dont want to be illegal.
Right now im making cakes for friends and family and some at work so not really making any money
Well, thats all for now.
Jessi, as I understand it, as soon as you start making any money you need to report it on your income tax.
Jessi, as I understand it, as soon as you start making any money you need to report it on your income tax.
Actually that depends, if it is not a true business, you can claim it as a hobby if you are not making that much money on it. A hobby means not for profit, that it is mostly for fun. You still have to report it, but you may not be liable for it until a certain point.
If you claim it as a hobby, you can deduct your expenses up to the amount of profit.
Same thing with a business too. Just keep all reciepts. You have to make a certain amount to be charged Self-Employment Tax and you would be doing a Schedule C for it.
BTW, this is not word of mouth, I do taxes for a living.
Check out www.irs.gov/cdorders for a cd that you can order for $22 (US only of course) for documents, forms, etc
Check out this site. It has a different spin on working from home. www.cakencrumbs.com
Wow..after reading all this I am actually scared to make cakes for anyone....
This is kind of scary!
What about the laws in Canada???
Any Canadians out there that know if all this applies to us??
I just found this forum today and it is VERY timely for me I have been researching this very subject.
The city said it is an allowed home business and I just need a business license and sales tax number but then I called the health dept.
although the health dept recommended I rent space they did not say I could NOT put an approved kitchen in my home and I am waiting for them to get back to me on the details Unfortunately this would be a 3rd kitchen for me I also run a family childcare and even though it is inspected there is the possible cross contamination issue.
BUT either way I suppose Ins is definately needed so...... where do I go to find it what do I ask for and how much would I expect to pay when running a small operation?
what city are you from???
what city are you from???
I am in Missouri just outside of the capital city
Oh, sorry, I thought you were in Canada for some reason.
I've been trying to reach our municipal office with no luck.
If any Canadians find out our laws over here for home based cake businesses, please post your findings!!
I know lots of people have given advice but I just have to throw my two cents in. I live in Ohio, USA. The trick here is to not live in city limits. The state and the county are fairly disinterested in what is going on if it is small scale. All I had to do was get a vendor number (for taxes, $25.00) and have a state health inspector come to get liscenced ($10.00.) And i am allowed to advertise anywhere I choose as I am ligit. The requirements for a one oven, in house bakery were pretty lenient. No indoor animals, basic cleanness, ingredient lists printed out in case someone asks, etc. However, one mile away within the city limits no home, attached kitchens allowed. So if you have control over where you are moving I recommend just barely outside city limits. The fewer government people you have to go through, the better. Also, caterers have TOTALLY different rules. Take their advice with a grain of salt. The health inspector who came here made it VERY clear that I could sell cakes, cookies, cheesecakes, bread but not pizza, NO MEAT, etc.
okay i called health dept. to day about this they told me the only thing i need to do is print out what's in my cakes and my name and addy. and that the items are from a home based baker that is it . if i have more them 5 stoves then and only then i will have to get a perment/licene (sp) but i'm not going to have more then 2 ever in my home...
i live in the city also..
so you should really call and just ask if i would ever like to start a cake business what do i need if anything....
Ya know DianneKay, I remember hearing this same thing in Burlington NJ when I was there. A home based cake business (if you want to call it that) was told also since she's just one person and so on and so on, that for her to make sure everything is written down when someone wants a cake.
SO!!!! She makes up individual cake ingredient sheets (1 for choc 1 for vanilla and so on) she sticks with those recipes only for the most part, and when a customer asks her to do a cake she has her/him read the ingredient sheet for that flavor cake/frosting sign one, gives them a copy, and puts the original with the cake order. Then when they pick up the cake she gives them a copy of the reciept and the paper they signed has them initial the one the "store" keeps that she has picked up the reciept and ingredient chart. It helps her. But she isnt a big baker/bakery either she doesnt want a huge following until she is able to get into a bakery!
I hope this helps you and anyone who reads it...if I ever do something like this I will probably also do the same thing.
hello all! i am trying to be legal, i have started a seperate kitchen in my basement then found out that i have to get zoned first....no prob. except now i have to have a "special zone" which means i have to inform my neighbors and get their approval so i can bake cakes in MY basement. that alone is an 80 day process if there are on problems...then on to the licsence hoops. good grief....i just want to bake and sell my cakes. i already report earnings to gov. and pay taxes on that......just frusterated because "being legal" is a pain.
anyone else from kansas?
Gawd, Oregon is easy.
All that's needed here is an inspector to come and evaluate your kitchen... be it a separate building, second kitchen, or - lucky me - your only kitchen. Got to meet sanitation requirements, which are basic, and maintain a second fridge/cabinet for bakery-only storage, which can be in a garage as long as there's no contamination risk from pesticides/chemicals.
And, under $5k in profits, the license is only $75 per year.
Let's see... Oregon doesn't do sales tax/tax ID licenses/resale license #s, only business licenses if you're operating underneath an assumed name. If you're not, then you don't need one, oddly enough. Oregon has a standing exemption - here, if you're dealing with a company that says that they need a resale ID #, they can kiss off 'cause we don't have them here.
All you have to do is report income to state if it's over something like $3k. I don't know, I haven't had to file taxes in years, being unemployed and then a student and all.
Of course, (insert generic disclaimer here), so take my $0.02 with a grain of salt.