Legal Home Bakers-Insurance

Business By bellsnbows Updated 20 Apr 2009 , 2:08pm by ziggytarheel

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bellsnbows Posted 17 Apr 2009 , 11:08pm
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AGGGHHHH! (Sorry, I needed to get that out!)

I am so frustrated. I have been trying to find out what I need to do to get legal here in Mississippi. I am a teacher and started doing cakes for friends here and there, which has now turned into my phone ringing off the hook and my email box always full. I would LOVE to be able to quit teaching and do this full time, but it's so scary! I think I am good enough to give it a go, but I just don't know. I think the least risky way would be to do a legal home kitchen.

In Mississippi, you have to have separate kitchen. This is not that big of a deal to me because I already have a garage that has been taken into my home and it backs up to my kitchen so all of the plumbing can be tied on to my existing plumbing. My dad has been in the construction industry for 25 years, so he can do most of the planning and work.

Here's the problem, no one can tell me what I have to have and need to do! I am getting the run around from everyone I call. When I do call, I get told something different every time! There is no document they can give me that tells me exactly what I must have. I am so afraid I am going to spend money that I don't have and end up with the wrong stuff and then have to go buy the right stuff, etc.

Problem #2, I called my home-owners insurance to find out what I needed to change on my policy, etc. and if I could get business insurance with them. Long story short, they tried to tell me that no insurance company would allow me to do such a thing! WHAT??? I told them I knew 100's of people all over the country who do this! (I just love CC!)

So, can anyone tell me what company you use and what your policy says, etc. Please, any help you can give me will be much appreciated! I am so mad because I am trying to do the right thing and no one will help me! icon_cry.gif

16 replies
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pattycakesnj Posted 17 Apr 2009 , 11:18pm
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you need to make yourself a corporation, a LLC etc and then get insurance that way. God forbid someone sues you, the corporation or LLC is liable and not you personally. So they can seize the company's assets (cake pans etc, LOL) if there is a judgement against your corporation but not your house or personal bank accounts.

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SugarLover2 Posted 17 Apr 2009 , 11:22pm
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I can't help you too much, as haven't gone through all of this but, try other insurance agencies and call around to see if any of them write this type of exposure. Each company is different and you might even want to google home baking insurance or something of the like. Insurance companies each have their own niche market they like to go after and someone has to have some sort of plan for this. I will admit-being in insurance-I believe it is hard to find a carrier that wants to write a home with a business exposure, but it can be done. Perhaps ask about a BOP policy that will cover the business and actual physical house and then a tenant homeowner policy to cover your personal belongings and liability. I work in personal lines, not commercial, but I have seen this done.

Good luck!!

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cakesdelight Posted 17 Apr 2009 , 11:24pm
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Hi Hopefully what I'm going to share will help. 1st get your business license, then contact your your states department of agriculture; tell them that you need to have an inspection done for a home based bakery w/ seperate kitchen. When the inspector comes out (it costed me $10 in Ohio) they'll be able to tell you what you will need to be legal. As far as insurance, the policy does change (I have statefarm insurance)I had to cancel my homeowners insurance and transform that to business on peremiss(sp?) than add to that contract the homeowners. yearly the business insurance costed me $283. then of course I have my monthly homeowners insuransce.

These were the steps that I did inorder for me to be a homebased bakery, lisenced and insured. Hope this was a little help.

Good Luck.


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KookieKris Posted 17 Apr 2009 , 11:37pm
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Thanks for asking bellsnbows ~ you read my mind!!
I was going to post this same question tonight!
Thanks for the advice cakesdelight ~ extremely helpful since I'm in Ohio too!! thumbs_up.gif

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costumeczar Posted 18 Apr 2009 , 12:14am
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I was insured as a sole proprietor, but they did have trouble figuring out what category to put me in. They finally figured that they'd look into catering insurance, since that's the only thing that was close enough to what I was doing. They found some policies that would cover me once they looked at it from that angle, maybe that would help.

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kellertur Posted 18 Apr 2009 , 12:41am
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I agree with becoming an LLC.

I have $1 million in coverage for my business at a very affordable rate. There are definitely insurance companies that will work with you, it may take a few calls to find one. My homeowners won't cover home businesses, so I found a company that insures just my business. I feel much better knowing I'm covered. I also have a lawyer, just in case...

Good Luck. icon_smile.gif

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indydebi Posted 18 Apr 2009 , 12:42am
post #8 of 17

YOu need to find a new agent. I've never had a problem getting the insurance I needed, no matter what stage I was at (i.e. where I was baking). If he can't find you the coverage he needs, then he's not the agent you need to be dealing with.

You will also have a better chance with an independent agent that represents a number of insurance companies, than you will with a single company agent (i.e. a State Farm agent ... not picking on state farm, just using as an example).

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cakesdelight Posted 18 Apr 2009 , 3:43am
post #9 of 17

like OP posted, become LLC... Thats what the person in the secertary of States office told me was best. I'm so sorry I totally forgot to put that down, thankfully others here are thinking clearly. icon_biggrin.gif


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Ruth0209 Posted 18 Apr 2009 , 4:04am
post #10 of 17

If your state has sales tax, you need to visit your state's Tax Commission and get a seller's permit. This will allow you to buy stuff wholesale, too, which is nice. You also need to get a tax ID number with the IRS if you're going to be an LLC. And you need to talk to an accountant who does small business taxes so you understand how to do your taxes and take advantage of any write-offs you can get with a business in your home.

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bellsnbows Posted 18 Apr 2009 , 4:10am
post #11 of 17

Thanks so much everyone! I am feeling a little better now, just still overwhelmed! I want SOOOO badly to do this, and I want it to all be done now! (It's the end of the school year, my patience is worn thin!)

I have absolutely no idea what a LLC is so I just googled it. I still don't think I know what it is or how to do it! Ha! I am also looking into the BOP. I am going to spend some time this weekend researching this so I can tell him on Monday that it can be done and I will go elsewhere if need be! I really hate to though because everything is through this company (home, car, boat, life, etc.) and we have a discount for having everything there. My other issue was that when we bought this house no one wanted to insure it because it is so far out in the boonies and that the nearest fire department is more than a certain number of miles and its a volunteer fire department at that. So I have to find a company that will accept that, too!

Thanks again!

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Ruth0209 Posted 18 Apr 2009 , 4:16am
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A lot of small businesses use an LLC status. It's a limited liability corporation, and it's different from a regular corporation in a variety of ways, one being that you don't issue stock. It's a lot simpler than a regular corporation.

Look up the SCORE office in your state through the Small Business Administration. They have FREE counselors who are usually retired business owners who will meet with you and answer your questions. They've been very helpful to me. There are a bunch of helpful on-line free classes on the SBA web site you can look at, too.

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margaretb Posted 18 Apr 2009 , 6:52am
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LLC - I'm in Canada, so specifics are probably different than in the states. However, basically, a corporation is a legal "person" -- once you create it, it can enter contracts and own property just like a person. In canada, there are professional corporations (so accountants, doctors, optometrists, etc might or might not incorporate themselves) and there are small business corporations -- Canadian controlled (ie Canadian shareholders), limited number of employees, limited amount of revenue (something like under $400,000, ha ha ha). Your corporation will pay it's own taxes (small business tax rate, which is awesomely low for us). The biggest benefit of incorporating, as mentioned, is that it LIMITS the LIABILITY of the shareholders. If your COMPANY gets sued, it's assets are seperate from yours. If your COMPANY goes bankrupt, same thing. Of course, in some cases (e.g. getting a small business loan), you as the shareholder will probably have to co-sign for your company, because after all, as a small business, you pretty much ARE your company and they don't want you to just shut down the business and not repay the loan. We incorporated our small business (husband is a welder) and it cost around $300 in registration fees, but it's more now. I did all the stuff myself using info from the Self Counsel Press incorporation book. I'm certain there must be an equivalent book in the US since you have ten times more people. I would guess a lawyer would do it for you for around $1000 -- ask first, it's not really complex and probably there is a set rate. You might want to give an accountant a call as well and ask about what benefits there are to incorporating and HOW MUCH IT COSTS to get a corporate tax return done.

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auntmamie Posted 18 Apr 2009 , 7:22pm
post #14 of 17

Insurance - try out I know, they aren't a household name, but they are a specialty underwriter, and have food liability policies. They also cover vendor booths (at wedding shows, etc.) If you have heard of WedSafe wedding insurance, they are affiliated.

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Kitagrl Posted 19 Apr 2009 , 1:56am
post #15 of 17

I got mine through Zurich, I believe, and its fairly reasonable and they cover my baking business at home.

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Bethkay Posted 20 Apr 2009 , 12:52am
post #16 of 17

I have business insurance through The Hartford. Our home and auto insurance company will not insure food operations, so our agent gave us the name of an independent agent to work with. My insurance is around $350/year--I work out of licensed kitchen away from my home.

As far as becoming an LLC or any other type of corporation, I would find a good small business lawyer to talk to before you make a decision. I have someone who helped me out when I was getting started and he is always available now if I have a quick question. When I talk to him, I know I am not being led astray, which is easy to do if you are researching these things on your own.

Best of luck!

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ziggytarheel Posted 20 Apr 2009 , 2:08pm
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I work for an insurance agency and I'm giving you permission to go somewhere else to get your business insurance. icon_smile.gif If you want to be loyal to your agent despite this rather huge hole in his knowledge and helpfulness, you should not feel bad at all about going somewhere else to get this policy. After all, not only did he make it abundantly clear that he couldn't help you, but that he also wasn't interested in helping you.

Our agency is a national, big name company. However, as many many such agents do, we also broker a large number of policies. Big name, main line companies work hard to keep up their rating and therefore do not take certain risks, even in personal lines. Therefore, if our company cannot provide a particular customer with a particular type of insurance, we bend over backwards to find a brokered policy that can fit this need.

I've never found a situation that couldn't be insured, but sometimes the risk is so high that it may not be worth it to insure!

A home based bakery is not terribly high risk, even though some companies may not cover it for various reasons.

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