Hi everyone!
I've been a lurker for awhile now, but just decided to make an account! I'm sorry if this topic has already been discussed, but I couldn't really find anything about information from WV.
I actually had no idea that selling cakes was illegal!! I knew WV had a cottage food law, so I assumed that covered me. Well, it doesn't. Only if you sell at Farmers Markets...which I don't. When I found out what I was doing was illegal, I called my health dept. and asked what I needed to do for my home business to become legal.
Apparently in WV, or at least my county, you need to have a completely separate kitchen etc etc. I rent an apartment, so that's impossible! Lol. She also said I need to have a food handlers card and something called a ServSafe card. I don't need the ServSafe until 30 days after I make my first legal sale. However, both of these classes and tests are available online for $15 dollars a piece and you just print out your certificate at the end. So that's simple enough!!
As for the kitchen, my Fiance's brother owns a daycare, so I called him and he is willing to let me use his licensed kitchen...FOR RENT FREE! I couldn't believe it!! :) So if I am understanding this all correctly, I will be completely legal as soon as I get my two cards!
I do have a question about liability insurance. Since we rent, we are going to get renters insurance and I am hoping there is some sort of umbrella policy that will cover this. I'm not sure though. Anyone have any advice on the insurance part? Thanks for reading all this!!
Happy baking, ya'll
AI was under the assumption that renters insurance is just for your stuff if it gets stolen or damaged in someway. Don't think it covers liabilities as far as covering yourself for your cake business. You could also choose a business structure that limits your liability as well
I read on another thread someone had renters insurance and it covered their liabilities. I'm just going to have to call and see what my insurance company says.
AThat would be the best thing, I'm sure it varies by state too, I'm gonna check mine to just to see
AYou will absolutely need a separate liability policy for your business. State Farm, The Hartford, and FLIP can provide $1-2M in business liability coverage for ~$400-500/year.
When you put together your business plan and create your pricing structure, be sure to factor in the market value of your kitchen rental. For example, if a similar kitchen would rent for $15/hour, price your products as if you were paying an extra $15/hour (on top of your wage of course) and use the profit to reinvest in your business.
BTW, chances are you will have to be inspected separately in the daycare kitchen since you are running a separate business. Contact the health dept for more info on this and be sure to budget for the inspection fee.
A
Original message sent by jason_kraft
You will absolutely need a separate liability policy for your business. State Farm, The Hartford, and FLIP can provide $1-2M in business liability coverage for ~$400-500/year.
When you put together your business plan and create your pricing structure, be sure to factor in the market value of your kitchen rental. For example, if a similar kitchen would rent for $15/hour, price your products as if you were paying an extra $15/hour (on top of your wage of course) and use the profit to reinvest in your business.
BTW, chances are you will have to be inspected separately in the daycare kitchen since you are running a separate business. Contact the health dept for more info on this and be sure to budget for the inspection fee.
A
Original message sent by BakerBee7468
That what I thought, that u had to have separate liability insurance or be a LLC. Here in my state though you don't have to rent a commercial building or kitchen if you don't want. People can use their home kitchen. There are specific requirements for that too though.
Even if you have an LLC you'll still want business liability coverage. Your liability policy is your first line of defense, the LLC is there as a safety net in case you exceed your coverage limit or you get hit with something that isn't covered by insurance.
For example, say you are sued as a result of food poisoning and settle out of court for $50K. If you have no liability coverage, you will owe the $50K out of pocket (plus attorney fees) regardless of whether or not you have an LLC. With no LLC, the plaintiff could go after your personal assets to pay the judgment (forcing you to sell your home, etc.) if the business does not have enough to pay. If you still don't have enough to pay, you would probably need to file bankruptcy and the judge would set a payment plan to pay for the judgment. With an LLC (assuming it has been maintained correctly) you can pay the judgment with whatever assets the business has, and if it's still not enough the LLC can file bankruptcy, leaving your personal assets and credit intact. You can then create a new LLC and start fresh.
If you do have business liability coverage, in most cases the insurance provider should pay for everything.
Even if you have an LLC you'll still want business liability coverage. Your liability policy is your first line of defense, the LLC is there as a safety net in case you exceed your coverage limit or you get hit with something that isn't covered by insurance.
If I am the sole proprietor, will liability insurance cover me? I am not a registered LLC or anything yet. This is my first cake I am actually selling so I'm going to wait and see if business will even pick up above 1 or 2 orders a month before spending $300 on an LLC. The same goes with the insurance. I wish there was an insurance I can only use when I need it. I don't want to spend $500 out of pocket and not even make that much in sales for the year!
When I talked to my health dept., the lady said as long as I have a licensed kitchen to cook in I am fine. No other inspections required. As long as I am cooking in a licensed kitchen with a food handlers card and a ServSafe, I am legal. It just seems like that was really easy. I feel like I am missing something! Lol.
Well, I take that back. I just called again and talked to someone else and she said I need a Food Permit card and you were right Jason, they will need to come inspect the kitchen. I thought it sounded too easy!! Haha.
So I need to go down to the health dept. and fill out all the applications and pay a $150 fee.
A
Original message sent by bakerbee16
If I am the sole proprietor, will liability insurance cover me? I am not a registered LLC or anything yet. This is my first cake I am actually selling so I'm going to wait and see if business will even pick up above 1 or 2 orders a month before spending $300 on an LLC. The same goes with the insurance. I wish there was an insurance I can only use when I need it. I don't want to spend $500 out of pocket and not even make that much in sales for the year!
Liability insurance will cover a sole prop, you just need to make sure to meet the insurance company's requirements. They may need to see a business license (which usually comes from the city) and your inspection cert from the health dept before coverage kicks in.
The LLC can wait if you think volume will be low, but if you are selling to anyone beyond close friends and family your business liability coverage should be in place before you take your first order.
Also don't forget to carefully track your startup expenses, since they may be tax-deductible. If you are doing your own accounting on software like QuickBooks you should enter expenses regularly so you don't forget, if you hire an accountant instead just keep the receipts and notes on expenses in a folder.
Liability insurance will cover a sole prop, you just need to make sure to meet the insurance company's requirements. They may need to see a business license (which usually comes from the city) and your inspection cert from the health dept before coverage kicks in.
The LLC can wait if you think volume will be low, but if you are selling to anyone beyond close friends and family your business liability coverage should be in place before you take your first order.
Also don't forget to carefully track your startup expenses, since they may be tax-deductible. If you are doing your own accounting on software like QuickBooks you should enter expenses regularly so you don't forget, if you hire an accountant instead just keep the receipts and notes on expenses in a folder.
I was thinking i should have an LLC before i get started up to protect my personal assets, as well as the business liability. I plan to sell my cupcakes to people beyond my friends and family but i don't think i'll be selling to anyone beyond them at first. I also havent figured out what would be best as far as tracking expenses. how hard would be to track my own expenses? I know it would probably be expensive to have someone do it for me.
I was thinking i should have an LLC before i get started up to protect my personal assets, as well as the business liability. I plan to sell my cupcakes to people beyond my friends and family but i don't think i'll be selling to anyone beyond them at first. I also havent figured out what would be best as far as tracking expenses. how hard would be to track my own expenses? I know it would probably be expensive to have someone do it for me.
Have you made any sales yet? My first wedding cake is Saturday (Ahh!) but when I found out earlier I also need a food permit to be legal, I had to tell her the cake will be my gift to her. She's a good friend that I went to nursing school with so I was going to give her a gift anyway. I also have an order of 6 dozen cupcakes for early June..hopefully I can get everything in order before then so I can actually make a profit because I am not close with her, so gifting over 70 cupcakes is not something I want to do lol.
A
Original message sent by BakerBee7468
I also havent figured out what would be best as far as tracking expenses. how hard would be to track my own expenses? I know it would probably be expensive to have someone do it for me.
All it takes is some basic accounting knowledge to set up QuickBooks for your business, the software is about $180. If you don't want to learn it on your own you can hire someone to help you set up QB and walk you through what to do, this will be much less expensive than paying an accountant every year. Once QB is set up, the main things you have to do on a regular basis are entering receipts for expenses, invoices for sales, and tracking where customer payments are deposited (they should go into a separate business account).
A
Original message sent by bakerbee16
Have you made any sales yet? My first wedding cake is Saturday (Ahh!) but when I found out earlier I also need a food permit to be legal, I had to tell her the cake will be my gift to her. She's a good friend that I went to nursing school with so I was going to give her a gift anyway. I also have an order of 6 dozen cupcakes for early June..hopefully I can get everything in order before then so I can actually make a profit because I am not close with her, so gifting over 70 cupcakes is not something I want to do lol.
A
Original message sent by jason_kraft
All it takes is some basic accounting knowledge to set up QuickBooks for your business, the software is about $180. If you don't want to learn it on your own you can hire someone to help you set up QB and walk you through what to do, this will be much less expensive than paying an accountant every year. Once QB is set up, the main things you have to do on a regular basis are entering receipts for expenses, invoices for sales, and tracking where customer payments are deposited (they should go into a separate business account).
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