I believe even if you attend the party and are not licensed and they pay you anything for the cake it is still considered illegal. Not that you would get caught, but the person hosting the party still purchased goods from you and that is considered a sale.

This is my point too.. if you ask I will tell you what the laws are.. what you do with that info is your business. That is what I have said the whole time. The only place we differ is that I don't think it's wise to tell people to live and let live. Who cares if Betty Baker is making Elmo cakes because Disney isn't watching?? Well I do.. because then people look at me like I am mad as a hatter when I tell them I can't because it's illegal.

I want to make one thing clear.. I am not upset or offended at you or anyone. I just wanted to let people know the right way to go about growing their business.. the rest is just back and forth.

Another answer to the "what is unlicensed" question. It definitely varies depending on where you live. In SC, you can bake for family and friends and even accept money from them, but you can't do anything that suggests you're actually IN BUSINESS to sell food unless you have a licensed kitchen. The minute you have a business name, website, business cards, advertising - basically anything to solicit business - that's when you get into trouble. It's more about advertising and selling to strangers than about taking money.

WOW! Didnt realize my question would turn into such a heated debate!

So I did NOT originally post on craigslist to advertise my cakes, I was just looking for pans and ran across a woman doing cakes from her home. thought it might be a good idea, but wanted to see if it was OK first.

I finally got all the Idaho laws, which are different from your state laws. Idaho law states you can not get a home bakery licensed, however you can sell, bake, whatever so long as it is clearly written in your kitchen, advertising and whatnot, that it is not a licenced facility.

I have since advertised my services for decorating on craigslist, as that IS legal here.

I guess it is determined by your particular state what the law governs as legal or not.

I am a homebaker, have been doing cakes for family and friends for a long time, and have overnight it seems got a huge response for my cakes. I have been selling like crazy, yeah!, but just wanted to clarify the rules. I dont want to take customers away from any local bakeries, we really dont have many anyway. I offer a more custom style cake than most bakeries here will do. I am thinking about getting a shop now, but that is another post.

wow there are alot of wadded up panties in this posting eh?

WOW! Didnt realize my question would turn into such a heated debate!

So I did NOT originally post on craigslist to advertise my cakes, I was just looking for pans and ran across a woman doing cakes from her home. thought it might be a good idea, but wanted to see if it was OK first.

I finally got all the Idaho laws, which are different from your state laws. Idaho law states you can not get a home bakery licensed, however you can sell, bake, whatever so long as it is clearly written in your kitchen, advertising and whatnot, that it is not a licenced facility.

I have since advertised my services for decorating on craigslist, as that IS legal here.

I guess it is determined by your particular state what the law governs as legal or not.

I am a homebaker, have been doing cakes for family and friends for a long time, and have overnight it seems got a huge response for my cakes. I have been selling like crazy, yeah!, but just wanted to clarify the rules. I dont want to take customers away from any local bakeries, we really dont have many anyway. I offer a more custom style cake than most bakeries here will do. I am thinking about getting a shop now, but that is another post.

okay, let's get this back to what the OP was trying to accomplish (which I think.....) was to find out what the exact laws on running a home-based business are???? In that case.....I was just curious....do any of you charge sales tax??? I don't, because I always assumed that it was paid because I buy the ingredients retail and I pay the tax when it's purchased...is this true though?? Also do you just file the profit as "extra income" on your taxes?? or are there actual forms for this sort of thing??? I do NOT wanna be breaking any laws.

By the way....just a crazy little tidbit...I live in a rinky dink town in Ohio and Disney actually hired lawyers to sue someone here for selling those shaped star iced cakes!!! They were threatening like 20,000 dollars in fines too! Crazy stuff, I won't touch the licensed characters for paying customers with a ten foot pole!

All the threads on here lately seem to be quite heated....is the wedding season getting to everyone?

In regards to the comments about selling licensed characters - this is where the unlicensed bakers cause issues for those of us who are inspected/legal by our state laws. I have run into it several times recently where so and so contacts me for a licensed cake. They've gotten them before from other bakers whom I have found out after wards are flying under the radar. When I tell them no, you would think I've shot their dog. Yes it's illegal, and yes the big companies actually do hire people who's job is specifically to travel around the US trying to purchase products. Cakes being one of them. I know personally it's not worth the risk and I won't do it.

As far as sales tax. If your states charges sales tax on food (PA doesn't have tax on food and I believe DE is the same way, well they don't have any sales tax) then yes you are required to charge it and you must file at least in VA monthly. If you fail to file on time they hit you with a penalty. Even if you are paying tax (and this is one of the benefits of becoming legal and obtaining a tax exempt cert.) you have to charge tax no if ands or buts.

no kidding loriemoms! I agree, lots of posts seem to be a bit, um, shall we say spicy?!

As far as the income from a cake business, you're supposed to file the income as self-employment income on a separate form with your 1040. I think it's schedule C, but I could be wrong, that's just off the top of my head. It's a separate form, though, and you should probably look into whether you need to pay estimated taxes throughout the year if you're making enough to put you into the next tax bracket up when you add it to your spouse's income. The first year that I made decent money doing cakes was the one that I didn't pay enough estimated, and I ended up having to pay a penalty at the end of the year . Now I pay estimated throughout the year and it's no problem.

As far as sales tax goes, check with your state laws. Here, we're taxed not like grocery stores, but like caterers. It's a different tax rate, so even if you don't pay a food tax at the grocery store you might still have to collect sales tax. The way they do it is to ask you for your total sales, then they take out a percentage to reimburse you for the sales tax that you paid at the store for materials, then they calculate the amount you owe based on what's left after the discount. So you pay sales tax on the ingredients that you buy, but they end up reimbursing you for some of it before they figure the amount they use to calculate your sales tax.

And that's why when I move to the US next week I won't be making any cakes for money! Man, this post is enough to scare the pants off of anybody. Who would of thought that cake could be so complicated. I think I'll stick to doing my son's birthdays...

Knowing the legalities is a good thing. Different rules for different states. You can advertise anywhere you want, but like was stated before, if you are not license you could get in trouble.

Knowing the legalities and doing things the right way saved me fines, when I was turned in by someone who said they were a customer who came to my house to pick up a cake. I work from a licensed kitchen and am insured. This person did not know that. They knew enough about my home life that they mentioned specifics to the Department of Health, so I know it was someone I knew who was being hateful.

I mind my business and others should mind theirs but sometimes they don't. It's always better to be safe than sorry when it comes to Dept. of Health, IRS and copyright.

PS: I do have to charge taxes on the cakes and file quarterly.

HTH

brandibakes, do you have different information than i do? What did the people you spoke with tell you? I read the laws on the webpage from idaho health and welfare department. I am in meridian, if that makes a difference.

do you bake from your home? I haven't seen your shop, but checked out your web page, very cute!

I have also seen postings on CL and found out it is legal to post on there as long as it is for a service, such as baking and decorating a cake. Why would a bakery turn in a CL listing I dont understand.

brandibakes, do you have different information than i do? What did the people you spoke with tell you? I read the laws on the webpage from idaho health and welfare department. I am in meridian, if that makes a difference.

do you bake from your home? I haven't seen your shop, but checked out your web page, very cute!

I have also seen postings on CL and found out it is legal to post on there as long as it is for a service, such as baking and decorating a cake. Why would a bakery turn in a CL listing I dont understand.

thanks brandibakes! I will definately keep that in mind! and, call and speak with someone.

If you dont mind telling me, do you lease space from someone, and if so how much does it cost?

wow, bet that is sucking up the profits!
looking forward to seeing your storefront and sampling your goods in 2009, always love to try new tasty treats.

I'll admit it - I have sold some of my cakes, but I charge for ingredients only. Tell them to buy me some crisco or 10X sugar in exchange for the cake.

I also babysit under the table. (I am sure nannies hate me)

I pay my neighbor's son cash to mow my lawn. (I am sure the landscapers hate me)

I am breaking all kinds of laws!

I understand being licensed and selling food out of your home. Honestly, I could care less what other people do. But anyone lecturing, judging, or pointing a finger is most likely a hypocrite - mainly for reasons like the ones above.

Would you like mild or spicy with that taco??? Lots of people opting to go spicy....'cause the mouths are on FIRE in here. WOW! It's getting hot, hot, hot....hot, hot, hot.
I wish it was this much passion towards fighting corrupt local government. Ooooh how about the problem with education.....oh but now, GAS!! Can we get someone on that gas issue quick fast & in a hurry. Just jokes people...no one is perfect and everyone is human. A little compassion for the little people that don't have the big dollars to get those fancy shops. One day they will....and thanks for all the information to help them build a successful biz!

costumeczar, thanks so much for that info.!

I just want to second the importance of checking with the officials in your own state. I'm amazed at how much the regulations vary, but I SC, I've always found the people in charge at DHEC to be very helpful (I don't do cakes, but I've dealt with them a lot for another food-related business).

For instance, in terms of the advertising/accepting money issue, this is what the South Carolina regulations say. I interpret it to mean that you can charge friends if you like, but the instant you advertise or attempt to get business from strangers, you are required to be licensed:

"RETAIL FOOD ESTABLISHMENT - any operation that prepares, packages, serves, processes, or otherwise provides food for human consumption, either on or off the premises, regardless of whether there is a charge for the food.

Retail food establishments do not include:
- Bake sales, including weekend home bakers who prepare nonpotentially hazardous breads and pastries for friends and neighbors only and who do not advertise or possess a business license."