Setting Up Shop: What Home Bakers Need to Know

(This recipe appeared in the Winter 2022 issue of Pastry Arts Magazine)

By Deanna Martinez-Bey and Eric Greenbaum

“Lots of people are eying their kitchens right now as a way to earn a little extra cash in a bad economy.” –Emily Maltby, CNNMoney.com (2009)

My name is Deanna Martinez-Bey, and I operate The Fiery Whisk Bakery from my home. I also help other home bakers launch their operations as a Baker Success coach with Cottage Nosh, an online marketplace designed to meet the particular needs of cottage food businesses. I grew up baking with my mom, and the passion that she had and the love that she put into her baking were handed down to me. In 2010, I decided to expand from baking for family and friends to baking for customers. I was looking to work from home, doing something that I loved, and baking was the answer. Becoming a licensed cottage baker provided the flexibility I needed to work close to my family and the extra income stream that I needed.

In addition to allowing me a flexible schedule, I realized that my community needed me. There was a distinct need for baked goods and snacks that did not contain ingredients that could not be pronounced. In other words, people were looking for wholesome baked goods that were not ultra-processed for themselves, their families, and friends, and this was a need that I could fill as a cottage baker.

This column will explore a foundational topic particular to cottage food operators in the next four issues of Pastry Arts Magazine. We hope that it will be a helpful resource and will demystify the operation of a home food business. In this first installment, we’ll introduce the basics of cottage food law and present an overview of what a home baker needs to do to get started.

A Sweet Future for Cottage Food Business

Cottage food businesses tap into several social and economic trends which make them ripe for continued growth. One of these trends is the rise of the ‘gig economy’, which captures the sentiment that people want to be less dependent on an employer and want more control and flexibility with their work. Another trend is an increased awareness of the connection between food and health, resulting in people being turned off by mass-produced, highly processed foods. Cottage food operators can take advantage of these trends and craft a niche in their community by providing high-quality, locally made products that will meet unmet culinary needs.

Setting up a shop to sell food from your home kitchen is an enticing way to establish your own business doing something that you love. In doing so, you will delight your customers and strengthen your community. But, like many worthwhile endeavors, it requires some forethought and planning.

Introduction to Cottage Food Law

A cottage food business is a licensed or permitted business that enables operators to make and sell certain non-perishable foods from their home kitchens. The laws governing home-based food businesses are generally referred to as ‘cottage food laws’ or ‘cottage food legislation’. Each state has its laws and rules that cottage food businesses must follow. Usually, cottage food laws are overseen by a state’s Department of Agriculture or Department of Health.

When starting a cottage food business, the first step operators should take is to gain an understanding of the laws and regulations that will apply to their business so that they can build compliance into their operation from day one. Understanding the regulatory landscape should come before any significant time is spent on a business plan, because regulation will impact many other aspects of setting up the business. Imagine if a home baker built a business plan around selling cheesecakes only to learn later that cheesecakes were not a permitted item in their state. Similarly, a plan to offer mail order fulfillment of home-baked items would not work in a state that only allowed cottage food businesses to sell at farmers’ markets.

There are a lot of articles, blog posts, and even entire websites dedicated to posting and explaining various states’ cottage food laws. Some of these sites, pages, and articles will provide accurate information – others will not. However, one source with extensive, reliable information is a report published by Harvard Law School’s Food Law and Policy Clinic entitled Cottage Food Laws in the United States^[1]. This report gives an excellent overview and provides direction for finding information directly from each state’s relevant regulatory authority. It’s important to remember that the only truly reliable source of information is your state. Therefore, your state’s cottage food law, taken from a website or other source administered by your state, should be the only source of information that you use to make decisions about the scope and operation of your home food business.

Planning a Compliant Cottage Food Business

Explaining the intricacies of each state’s cottage food laws is beyond the scope of this article, but it’s helpful to understand the policy issues that each cottage food regulatory structure seeks to address. You can get to the heart of these issues by utilizing what we refer to as the cottage food ‘Four Questions’: The cottage food Four Questions are:

1. What does an operator need to do to get a cottage food license?
2. What products can a cottage food business sell?
3. Where can a cottage food business sell its products?
4. How much product can a cottage food business sell?

The way any given state addresses each of these questions will have a material impact on how a cottage food business in that state can operate and dictate what business strategies can be employed.

What does an operator need to do to get a cottage food license?

Before any dough can be proofed or pie crusts filled, a cottage food business must be ‘licensed’. We put the word licensed in quotes because the process of getting approved to run a home food business may or may not involve formal licensing. In some states, such as New York, what the home food business is really doing is getting a documented exemption from the laws that govern other commercial food businesses. Your state will probably have a website, run by the Department of Health, or Agriculture, that will describe the steps necessary to set up shop.

Like many aspects of cottage food law, this process varies greatly from state to state. For example, California, Connecticut, Georgia, Minnesota (and several other states) require both the completion of a Food Safety or Food Handler course as well as a formal registration process in order to sell products made in a home kitchen. In many cases, the formal registration process will include a kitchen inspection by a state health authority. Several other states, including Alabama, Florida, Missouri, Nebraska, Virginia, Wisconsin, and Wyoming, do not require any formal certifications or submissions, and operators can start their businesses without any interaction with state authority.

What products can a cottage food business sell?

States generally limit cottage food operators to producing products that have a low risk of causing food-borne illness. These types of food products are sometimes referred to as ‘non-TCS’, which means they do not require time or temperature control to be safe. Examples of foods that are usually not available to cottage food operators include:

• Meats
• Eggs
• Fish and shellfish
• Dairy
• Cream or custard
• Cooked vegetables
• Potato dishes
• Protein-rich plants
• Cut-up vegetables

The universe of foods that are non-TCS leaves an enormous amount of room to select a menu that will enable cottage food operators to build a thriving business. Some examples of non-TCS foods that are allowed in most states include:

• Breads
• Cakes
• Cupcakes
• Cookies
• Brownies
• Candy
• Dry goods and mixes
• Pies
• High-acid canned preserves
• Snacks

Many cottage food operators choose to focus on baked goods because they tend to be allowed in most states, and they tend to be very popular with customers. Some of the trickier questions come up when cottage food operators are contemplating various types of icing, fillings, and add-ins to a baked goods menu. Remember, a cake that would be permissible under cottage food law may be deemed prohibited if the icing used is a TCS food, such as buttercream.

Where can a cottage food business sell its products?

The next question to address when planning a cottage food business is where to sell. In most states, cottage food businesses are required to sell directly to consumers and do not permit wholesale distribution to restaurants, retail stores, cafes, etc. As of this writing, only 12 states permit wholesale (indirect) distribution.^[2] Some states further limit direct sales by defining specific venues where cottage foods can be sold, such as farmers’ markets, the producer’s home, roadside stands, or county fairs. Like other aspects of cottage food operation, it’s important to understand the specific laws that apply so that you can design your sales strategy around what is permitted.

One venue that is available in virtually every state is online sales. The ability to make purchases online is something that is expected by most consumers today. Cottage food businesses that do not offer an online shopping experience put their businesses at a disadvantage. Until very recently, however, there was not an easy or convenient way for cottage food operators to establish a compliant online presence.

Cottage Nosh was founded in 2020 to provide a free e-commerce solution to home-based food businesses. With a cottagenosh.com account, licensed cottage food businesses can create an online store, arrange pickups and deliveries, schedule consistent business hours or one-day pop-up events, and use the network effect to meet new customers. In the spirit of full disclosure, we should mention that the authors of this column work with Cottage Nosh. That said, we believe it is one of the most useful tools to help cottage food businesses manage their businesses and get new customers.

How much product can a cottage food business sell?

One unpleasant surprise that some aspiring cottage food entrepreneurs will run into is a limit on total sales. As of this writing, 18 states limit how much money cottage food businesses can earn. If a business exceeds this amount, they become subject to typical food establishment licensing requirements. The states that impose sales limits have ranges from $10,000 to $50,000. Depending on a given business’s desired scale, this may or may not be a problem. As always, it pays to understand your state’s regulations so that you can plan accordingly.

Next Steps

We hope that this article provided some guidance on how to get started with your own cottage food business. Like any business, understanding the rules and regulations that govern your businesses’ operations is a critical step. At times this may seem daunting, but for those who have launched cottage food businesses from our homes, the benefits are well worth the effort.

[1]  https://www.chlpi.org/wp-content/uploads/2013/12/FLPC_Cottage-Foods-Report_August-2018.pdf

[2] The states that do allow wholesale distribution are: Arizona, California, Iowa, Louisiana, Maine, New Hampshire, New York, North Carolina, Ohio, Oregon, Pennsylvania and Vermont.

About Deanna Martinez Bey

Deanna Martinez Bey is a cottage baker, baking class instructor, content creator, and multi-genre author. With twelve published books under her belt and a certified cottage bakery, everything she does revolves around food and writing in one way, shape, or form. Deanna enjoys food and writing because she believes people bond over good food and books.