To Make Or Not To Make The Cake? (Long)
Decorating By xiswtsawluiix Updated 17 Nov 2009 , 10:33pm by pattycakesnj
K8memphis, I think here in TN we're a little luckier than MI as we're able to bake from home via the farm market ruling. There are strict health rules as to food storage, prep areas etc., but nonetheless doable. I find it interesting though how some states views homebaking business a no go while others accomadate these cottage industries. Who knows, maybe MI will eventually allow it if people get on the bandwagon there. The state is definitely missing out on some tax revenue.
I think NYC has these cottage industry laws, but I don't know if I fall under this. I think it's ridiculous that people have to find ways to sidestep their way around the law for CAKES!!! If only the process to being legal was easier. 
Not on the home based cake business....there is no tax. You have your fees for licensing (if you so choose to go that route - not required).
Now, INCOME tax, yes, of course you have to claim your income and pay that.
Hell, I even pay a separate property tax. LOLOL I'm moving south LOL
Mike
I am wondering if the OP can just not charge for the cake? If this is going to be a potluck party and I did not make cake and say made deviled eggs, would they pay me? Doubtful they are paying every employee to bring items...OP save your own behind and do it without charging. People can still taste your creation and see your work and you do not have to worry about getting in trouble.
After reading what some folks have to deal with to be able to do cakes in other states, I count myself very lucky to live where I do. That is something I would research well if we ever thought of moving too. It is taken to the ridiculous level in some states.
IMHO, you can choose to play by the rules or not....but you can't just decide what the rules are and which ones apply to you. You are either following the rules, or not following the rules.
Mensch, here's a kid who agrees with you.
Jamie, let me condense this for you and all--the kid's Dad told him to stay put, the Dad goes below and dies. The ship catches fire in a battle. The kid burns to death 'cause he wasn't raised to think and get off the ship with the others he was raised to obey and died doing it.
I mean some think it's noble and some don't.
The boy stood on the burning deck
Whence all but he had fled;
The flame that lit the battle's wreck
Shone round him o'er the dead.
Yet beautiful and bright he stood,
As born to rule the storm;
A creature of heroic blood,
A proud, though child-like form.
The flames rolled onhe would not go
Without his father's word;
That father, faint in death below,
His voice no longer heard.
He called aloud'Say, father, say
if yet my task is done?'
He knew not that the chieftain lay
Unconscious of his son.
'Speak, father!' Once again he cried,
'If I may yet be gone!'
And but the booming shots replied,
And fast the flames rolled on.
Upon his brow he felt their breath,
And in his waving hair,
And looked from that lone post of death
In still yet brave despair.
And shouted but once more aloud,
'My father! Must I stay?'
While o'er him fast, through sail and shroud,
The wreathing fires made way.
They wrapped the ship in splendour wild,
They caught the flag on high,
And streamed above the gallant child,
Like banners in the sky.
There came a burst of thunder sound
The boy! Oh! Where was he?
Ask of the winds that far around
With fragments strewed the sea!
With mast, and helm, and pennon fair,
That well had borne their part
But the noblest thing which perished there
Was that young faithful heart.
BTW, I am from MI too. Yes it is strict, but you can do it. I didn't find it that hard, just a lot of hard work, and of course money.
IMHO, you can choose to play by the rules or not....but you can't just decide what the rules are and which ones apply to you.
Oh, but I can and do. 
I am wondering if the OP can just not charge for the cake? If this is going to be a potluck party and I did not make cake and say made deviled eggs, would they pay me? Doubtful they are paying every employee to bring items...OP save your own behind and do it without charging. People can still taste your creation and see your work and you do not have to worry about getting in trouble.
This is not a potluck event. No one is going to bring anything because they want to. A planner on the committee asked me to make one because she thought my cakes were pretty. She said the company was going to pay me. They ordered catering for the actual food and other desserts. I feel like maybe I should do the job and get reimbursed for the ingredients only. I guess I can use this opportunity and chalk it up to marketing for my cakes? I am currently looking into getting a license for my kitchen and making it legal. I made sure this lady knows I am not licensed, but she wanted a cake anyway.
Why does the government make this so difficult and confusing? I mean, at this point, it seems that getting a street vendor license in NYC is easier than legalizing your home kitchen for business.
That's how it is here in TX, you can sell nasty tacos from a greasy van on the side of the road easier then you can sell cakes!
Amen to that!!!
I am wondering if the OP can just not charge for the cake? If this is going to be a potluck party and I did not make cake and say made deviled eggs, would they pay me? Doubtful they are paying every employee to bring items...OP save your own behind and do it without charging. People can still taste your creation and see your work and you do not have to worry about getting in trouble.
This is not a potluck event. No one is going to bring anything because they want to. A planner on the committee asked me to make one because she thought my cakes were pretty. She said the company was going to pay me. They ordered catering for the actual food and other desserts. I feel like maybe I should do the job and get reimbursed for the ingredients only. I guess I can use this opportunity and chalk it up to marketing for my cakes? I am currently looking into getting a license for my kitchen and making it legal. I made sure this lady knows I am not licensed, but she wanted a cake anyway.
I think your exactly right. Have the company reimburse you for the supplies only. And hey, if they happen to throw a little extra in there for tip so be it.
When I make a cake for someone and they pay me I do not feel like I am 'breaking the law' neither am I 'operating a cake business'. I'm not aware of a law that says I cannot bake a celebration cake and get paid for it.
Running a cake business from my home is not legal. So to me there's a difference between 'running a business' and making one random cake for something. That's how I view it and that's how my Health Department views it.
Making a few cakes a year is not a crime.
So, at what point does it become a business?
I feel like K8 does. My sister has ordered from me for her office parties and puts my name out there for me. I dont do every order that comes my way. But out of this I have allor of repeat customers that I talk to ona regular basis.
But as sweet thing asks "when does it become a business? Does it become a business when I feel like a business person??? I dont know.
I think if you feel like you should get paid for it then get paid for it. If you are to worried about some one getting sick then dont do it. You will still feel bad if the person gets sick and you didnt get paid for it.
IMHO, you can choose to play by the rules or not....but you can't just decide what the rules are and which ones apply to you.
Oh, but I can and do.
okay then...tread softly
........It is for the company party I work at. A colleague from the holiday party planning committee approached me to make a cake for the holiday party after she saw a cake I made for a friend. She said the company would pay for the cake......
Ok this is as far as I have read so far.
I feel this is along the lines of K8's feelings. Yes, I have had a health dept official tell me it's ok to do an occasional cake from home (& get pd for it!) as long as I don't 'advertise'. Now, having said that, each and every hd official has their own opinion.
I have done 4 'craft shows' in the past few weeks. There are many people selling baked goods to the general public (strangers) and not one hd official in sight 
From what I have quoted you saying ^^^ I think this is very OK for you to do this.
The only problem I foresee is that you will be getting lots of people wanting to order from you and then you will be in another upheaval wanting to know if you
should.
I have been on both sides of the fence. I have been an illegal home decorator selling to strangers - some people even sought out such a person (for their wedding cake) rather than buy from a popular (dirty!) bakery.
I have also been a bakery owner. It's tough. I understand both arguments.
Considering the company knows your situation, do it, get reimbursed for your ingredients, consider any extra a "tip" and get exposure for yourself for when you go legal which is obviously what you want. If anybody gets sick at your company party it will probably be from too much booze and not from eating cake.
Thanks guys! I appreciate everyone's suggestions and opinions. Very informative.
You guys are great!!! 
Sorry that I don't have time to read all responses here today, but I saw a couple comments questioning the "severe consequences". I am a hobby baker. I don't charge for my cakes, no matter WHO I bake them for. I've done wedding, shower, christening, and birthday cakes for over 10 years for family only and I do not charge. I have brought cakes to work as gifts for staff birthday parties and have not charged. I have been asked for business cards by caterers and guests at parties inquire about my doing cakes and charging for them, and I turn them down (as tempting as it is to want to say YES!). I even have had people say they understand I'm not licensed, but "you can do it under the table and no one has to know". That MAY work, until someone who does what I do gets upset because they have a storefront and jumped through all the legal hoops and I didn't. That's just ONE reason it is a risk that I (personally) am not willing to take.
But, I do know someone who got busted BIG TIME for selling homemade confections without a license. Her products were delicious, coming from someone who's enjoy a treat or two of hers! Anyway, her tax records were audited going back many years, and she was HEAVILY fined. She had to sell off a lot of her equipment and assets in an effort to pay them, and I am sure her financial records were scrutinized for some time afterwards. Also, if there is ANY monetary exchange, it is considered a business transaction. See, there are quite a few platforms where this is considered illegal. I know it stinks because you have no ill intent. But it is a risk you are taking. (... And yet, there are many here posting on this topic who charge for their cakes and have not had any issues for whatever reason.)
What the OP was asked to do is not the same as a church bake sale. This is a corporate event with a monetary exchange. Despite others saying to just go ahead and do it, my suggestion would be to contact your city/local health department and inquire what can and cannot be done. Laws are different, often from city to city, county to county, state to state. If, in order to do it legally, you have to do it for free as a "donation", then do it that way and get something in writing to protect yourself. If you do it for money, and the company's independent auditor questions it, you MAY have to answer to it. I am NOT in ANY WAY trying to scare you, or intimidate you, or put a damper on your dreams. But just keep these things in mind as you make your decision.
Some people have been successful at "blurring" the legal lines of doing cakes from home for profit without a license. And with all due respect, I choose not to debate them (just like the whole bake from scratch/box discussion). I am not here to debate. I am just offering my personal opinion with the OP's best interest at heart, just as I am sure that is what the rest of you are doing also.
Hope this helps and I wish you the best with your decision!
i don't like a heated debate either but just wanted to say that i love how sensible malibubakinbarb is.
i also appreciate kate being a rebel who questions the insanity of government regulation ( i grew up in the 60's)
I say just do it! You are gonna be eating the cake too, right? So if anyone else gets sick you would get sick too. And if you got sued for selling cake that made people sick, you can in turn sue the company for which you work, for buying cake from an unlicensed caker 
As for whomever it was that says if you sell something you are a business...NOT! If that were so , it would be completley illegal to have a yard/garage sale. If I sell my old coffee table to my SIL it does not make me an antique dealer . If I make one cake for someone and sell it to them it doesn't make me a professional baker either. I very seriously doubt that the government would require someone to spend all that money to get a license, rent or build a kitchen, pay for insurance blah blah blah, all for one cake. As long as it is a one time thing and the OP doesn't make it a habit.
You make a good point my_4_dumplins, and it is for her own company and they already know she is unlicensed. They are certainly not going to turn her in, and I doubt the IRS would go after her for one cake for her own people anyway. They have bigger fish to fry.
Sorry that I don't have time to read all responses here today, but I saw a couple comments questioning the "severe consequences". I am a hobby baker. I don't charge for my cakes, no matter WHO I bake them for. I've done wedding, shower, christening, and birthday cakes for over 10 years for family only and I do not charge. I have brought cakes to work as gifts for staff birthday parties and have not charged. I have been asked for business cards by caterers and guests at parties inquire about my doing cakes and charging for them, and I turn them down (as tempting as it is to want to say YES!). I even have had people say they understand I'm not licensed, but "you can do it under the table and no one has to know". That MAY work, until someone who does what I do gets upset because they have a storefront and jumped through all the legal hoops and I didn't. That's just ONE reason it is a risk that I (personally) am not willing to take.
But, I do know someone who got busted BIG TIME for selling homemade confections without a license. Her products were delicious, coming from someone who's enjoy a treat or two of hers! Anyway, her tax records were audited going back many years, and she was HEAVILY fined. She had to sell off a lot of her equipment and assets in an effort to pay them, and I am sure her financial records were scrutinized for some time afterwards. Also, if there is ANY monetary exchange, it is considered a business transaction. See, there are quite a few platforms where this is considered illegal. I know it stinks because you have no ill intent. But it is a risk you are taking. (... And yet, there are many here posting on this topic who charge for their cakes and have not had any issues for whatever reason.)
What the OP was asked to do is not the same as a church bake sale. This is a corporate event with a monetary exchange. Despite others saying to just go ahead and do it, my suggestion would be to contact your city/local health department and inquire what can and cannot be done. Laws are different, often from city to city, county to county, state to state. If, in order to do it legally, you have to do it for free as a "donation", then do it that way and get something in writing to protect yourself. If you do it for money, and the company's independent auditor questions it, you MAY have to answer to it. I am NOT in ANY WAY trying to scare you, or intimidate you, or put a damper on your dreams. But just keep these things in mind as you make your decision.
Some people have been successful at "blurring" the legal lines of doing cakes from home for profit without a license. And with all due respect, I choose not to debate them (just like the whole bake from scratch/box discussion). I am not here to debate. I am just offering my personal opinion with the OP's best interest at heart, just as I am sure that is what the rest of you are doing also.
Hope this helps and I wish you the best with your decision!
Where is the applause smiley?? Excellent post!
This thread is starting to smell like the mortgage apple cake thread, eek.
If it were me I would do the cake for free. If I could not afford to do that then I would decline the offer of making the cake and move on. Why play with fire? And I get that one cake is not a huge deal yada yada yada but still...and if you do decide to do it and take money for it, well dont tell anyone on CC ha!
If you do it for money, and the company's independent auditor questions it, you MAY have to answer to it.
I was wondering this very thing. Any company I've ever worked for would have to keep a record of all expenses. How would that work? Would they just not be able to use that on their reports?
I'm not paranoid about the lawsuits over sickness. However, business insurance would be the only thing to help you there...not a paper from the HD guy saying he'd been to your house, right?
K8-how can you get business insurance if you're not a legal business? ...or did I read that wrong?
Just curious.
For the record...I am a legal home-baker who couldn't care less what others do in regards to selling cakes. Heck, I even sold illegally before I joined CC and read that I shouldn't be doing so.
?
K8-how can you get business insurance if you're not a legal business? ...or did I read that wrong?
Just curious.
I'm not interested in getting in on this debate, but I worry about someone getting some bad information from this thread and then suffering the consequences.
I work in the commercial insurance industry (NOT a licensed agent) and I can't see how this is true. Unless you mean that you can PAY for the insurance. That may be true. Whether or not you would actually have coverage is the more important issue. Insurance is a legally binding contract, and both parties are expected to keep their part of the bargain. I can't see any circumstance where an insurance company would pay a claim for an illegal activity. And I can tell you that I am seeing more and more that various companies are taking the extra step to make sure you are properly listed as a business.
Also, if you answer any question incorrectly on your insurance application, that is fraud and there also will be no payment for a claim.
If there is a situation where I'm wrong, I'll stand corrected, but I don't want anyone to think they have coverage when they don't. And liability coverage is for more than a product that makes you sick (that's actually a special coverage you need to be sure you have).
I've paid for a business rider on my home owners for years. I'm just saying one can have insurance and not be licensed 'cause I am. Covers my equipment--I have thousands of dollars of equipment. Some of it is brand new never been used. But I am not currently 'a business'.
If you consider doing two cakes this year for different friends a business that's ok with me. It's not my definition. That's one cake every six months. If I'm a business I'm not exactly hot competition.
Oh and I took a retainer on another order but they cancelled--I paid my taxes on all of it too.
Btw- fwiw--I never filled out an application and I have not perpetrated fraud and I'm not debating that either.
Hi, jammjenks: In response to your question on my comment, I threw in the word "MAY" because I could only speak from experience. I worked for a large company, and all transactions were scrutinized by Accounting and Audit. This type of scenario would definitely be. But I know different companies have their own policies.
~~~~~
And I'd like to send a sweet "thank you" to those who have kindly referenced my first comment.
And wish everyone a great evening!
i also appreciate kate being a rebel who questions the insanity of government regulation ( i grew up in the 60's)
I'm minding all the laws. I'm not a rebel really.
I've spoken to lawyers and to the Health Department too.
Menschkins thinks the rules apply to me more than my Health Department does. They don't care if I've done two cakes this year. They got work to do.
Some of the chicks who got shut down here advertised and frankly flaunted it--but for one of the ones who got shut down it was personal.
I worked for other people doing cakes because way before there was an internet cake message board I figured out it was illegal from my home in Tennessee.
I left professional cake decorating and went to seek my fortune in office work. I launched & now manage a bookstore. I don't run a business from my home.
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