I don't know who does your inspections, but call the NCDA - I'm pretty sure the number at the bottom is the first one I called http://www.agr.state.nc.us/fooddist/ that person will send you a letter with the state requirement for home inspections and who your county inspector is. You can go from there to become licensed and insured.
I don't really understand what you mean about donating money from cake sales? if you accept money without being legal, it's illegal, no matter what you do with the money. You can donate cakes all day long if they want to accept it from an unlicensed facility.
For what it's worth, there is no such thing as a home bakery " licensed" by the department of agriculture in North Carolina. The department of agriculture performs inspections...period. Licenses to do business are issued by your county or other local governing body. You may or may not need one to legally sell baked goods that are made in your home.
and definitely -- this is a MUST -- check the zoning ordinances for your area. That could be a deal breaker too.
Dept of Health NOT involved
Dept of Ag (as previously well explained) handles this.
Register w/ both county and city.
Register w/ state for tax ID (Fed is optional at this point, can just do on regular taxes) YES - you MUST collect and pay taxes.
Get insurance rider on your home and car! -- must have to protect yourself.
Consider incorporating to further protect personal assets.
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OH -- and #1 deal breaker for the Dept. of Ag.
NO -- absolutely NONE -- pets of any type -- even fish - indoors or outdoors.
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