Do you dream of having a beautiful bakery but you’re not ready for THAT level of commitment? I hear you and that’s why cottage baking is a wonderful first step! Selling your homemade goods has MANY advantages! In this post, I’ll provide an overview of what cottage baking is all about and things you should consider to take your next steps.
what is cottage baking?
Did you know that 20 years ago it was illegal to sell food produced from your home? No joke! Starting in about 2007 and then through tough economic years that followed, states slowly started adopting what are known as “Cottage Laws” or “Cottage Food Operations”. These laws allow individuals to legally sell homemade goods made in their home and are exempt from state inspection. These laws provide a HUGE opportunity for people to establish small businesses or serve as a stepping-stone as they grow their businesses. Over the last two years, there has also been a huge boom in Cottage Baking Food Producers as people have been looking for more ways to make an income from home and to follow their passions. YAY!
sounds great! where do i sign up?
I wish it were that easy! While it’s not very difficult to establish a Cottage Baking business, every state has their own regulations, laws and procedures. The fantastic news is that all 50 states have some sort of cottage laws allowing the sale of food made at home. This is actually something to be celebrated because New Jersey held out for a LONG time, only putting their law into effect in October 2021! It is wonderful that people from every state now have this opportunity!
That said, every state’s laws are very different with some being VERY strict and some being VERY lenient. Generally speaking, Wyoming, California, Maine, Montana, Arkansas and Alabama have the most freedom and opportunity in their laws. On the flip side, Connecticut, New Hampshire and Oregon have very strict and limiting requirements. All the other states fall somewhere in between.
why are they so different?
There are a few main areas where the laws differ between states. These include:
food allowed for sale
Some states allow for a wide variety of items to be made and sold from home, whereas some states only allow certain items. It is safe to say that across the board, states do not allow foods that must be temperature controlled or that are considered hazardous. Examples include meat, dairy and seafood, which seem pretty understandable. But some states get really finicky and don’t allow things like royal icing that contains meringue powder or cream cheese frosting. So, depending on your recipes and items you are considering selling, you’ll want to look into your particular regulations.
where you can sell your cottage baking goods
The vast majority of states require the Cottage Food Producer to sell directly to the consumer, not allowing the sale of items in stores. Most states allow for the sale at farmer’s markets, but not all.
shipping of goods
New in 2021, there are three states (Arkansas, Floria & Oklahoma) that allow interstate shipping of goods for sale. Also new last year, three more states (Alabama, California and New Mexico) allow for shipping of goods within the state. All others generally don’t allow shipping of homemade goods. But this is definitely an area that experts see evolving so hopefully many more states will get on board with selling and shipping goods across state lines.
cottage baking sales limits
There is a big spectrum on the total gross (not net) sales a Cottage Food Producer can sell annually. In 2021, we did see more states increase or eliminate their sales cap, which is awesome! However, there are still several states with pretty low limits which do not provide the opportunity for bakers in those states to make a livable income. For example, Louisiana only allows gross sales of up to $20k annually, whereas Alabama has unlimited sales.
These are just some of the biggest differences between states, so you should absolutely look into your own state’s laws. Typically, you can find details on your state’s laws by going to the Department of Agriculture site or Department of Health.
compliance to laws
I know I’m kind of a broken record here, but again, every state’s rules are different. It’s safe to say you will be expected to comply with labeling requirements. States will require at varying levels, what needs to be included in your product labeling, such as allergen information. Historically, most states required the exact address where the food was produced to be included on the label, but more states have removed this requirement for privacy. Labeling is not nearly as much fun as baking, I get it, but once you create your template, it’s very easy to just keep your labels updated, so don’t let this deter you.
so how can i actually start?!
Again, look at your specific state’s process. Some require completion of a food handling safety class, an application and a fee. Some states require virtually nothing to start selling.
Outside of being able to legally sell, there are a couple other areas you should consider when launching your business. After all, you ARE starting a business (so exciting)!
- Most Cottage Bakers are set up as sole proprietors, but if you want to be set up as a LLC, for example, you’ll need to take steps to set up your business structure.
- Liability Insurance: Not everyone gets liability insurance. But I would feel better having it. The last thing you want is someone suing you or accusing you of something.
in summary
I know, it can be a lot to digest, but setting up any kind of business is! I helped my then 13-year-old daughter set up her cottage registered business and if we can do it, you can too! And while it may sound like a lot of work to set up, it’s really not, just make a list and start checking things off. I live by lists, I have one for EVERYTHING and could not function without them. Which is why I created a list for you! Now this is not exhaustive of everything you may need to consider, but it’s a helpful starting point for you! Simply subscribe to the blog and it will pop into your inbox!
If this is the next step in your journey, I’m so excited for you and can’t wait to celebrate your success! Bestie, remember to let me know when you want to be a Featured Baker to share your story with the world!