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The expansion of broadband Internet, cloud services, and e-commerce in the last five years has made it extremely easy for regular folks to start home businesses without the traditional costs associated with a brick-and-mortar retail store, facilities, insurance, rent, and everything that comes with a physical business location. And those online businesses have included everything from plumbers to writers to pet accessory stores. Home cooks and food specialties have been no exception, also increasing in scale and capability as the Internet grows with convenient technology. The ability to combine electronic payment, multi-media, and online logistics has made shipping food just as easy as selling computer parts through the mail too. However, home-based food sales do come with additional regulations, and those rules must be followed to ensure standard scrutiny has been applied to products people will eat.
A home-based food business might seem like the easiest business to start but, in reality, it can be quite complicated to start selling dinners of your home. A lot of rules for selling food from home have to do with food safety. Secondarily, there are also zoning issues. Not everyone wants to have an industrial-level food smell next to where they live all the time. Can I sell food from my house? With limitations, the answer is definitely “yes,” and there are various cottage food permits possible. However, a home food business owner does need to be prepared to go through a few hurdles to make it happen.
Do I need a license to sell food from my home? Any food for that matter? Do you need a license to sell baked goods from home? Do you need a license to sell food in Canada? Do I need a license to sell homemade food in California?
The answer to all of these questions is again the same, "yes."
Food regulation is applied at multiple levels for selling home-cooked food to the public, and home sellers are going to run into what feels like a combined bureaucracy very quickly on first exposure. The Food & Drug Administration, FDA, regulates food nationally, especially as it crosses state borders. States apply their own rules and agencies under state law for regional control. And even cities might apply ordinances for anything sold within their jurisdictions, usually focusing on food health and physical stores or dining areas. A common example of the lowest level of food regulation tends to be health inspections of restaurants and their letter grades put on the entrance window for customers to see.
For the home business, individual cooks might be very skilled and experts at what can be produced with minimal effort or consumer tools versus commercial or industrial equipment, but regulations may not give the home cook latitude to choose or where he or she can operate at all. This is why it is best to go through general business establishment processes first before even getting started with food production at all.
Whether one is in California or Canada, the business structure is essential. It can affect how which food permit Ontario authorization is possible, for example. And, whom you do business with can affect a food service license California choice as well. Similarly, other states and provinces have comparable questions.
Do I need a license to sell homemade food? Yes. The first step any home food seller should take care of is business structure and business licensing. Your business structure will be how you create your company that sells homemade food. The most common starting structure is a sole proprietorship. You can include all the costs and income earned in your tax return as a Schedule C report, and you control the business entirely as the sole owner. It’s the easiest approach to start. If you are working with someone else, you may want to consider a partnership instead. Ideally, as your business grows, you should change it to a limited liability company for legal protection, but that can be updated as you get settled and operating. Just understand as a sole proprietor, your business liability becomes your own personal liability with the simplest model. That’s not the case with an LLC, mostly.
Business licensing in most states involves getting a seller’s permit to sell a product for collection of sales tax and a business license or permit to operate in a given city, county, or area. Both should be established first before doing any business or the next step of how to get a license to sell food itself. And, as covered in detail below, health permits can be an added layer. How to get a permit to sell food from home with depends on who the customer is and where you are shipping to.
In some cases, depending on location, existing zoning rules will restrict or bar manufacturing in a residential location and require a permit to sell food from home. Ontario food regulations can be different than those in the states, a surprise ex-pats find out sometimes. It’s better to confirm the exact ruled and ordinances for your area out before investing in food supplies and equipment versus after the fact. Zoning allowances will be covered when one declares and applies for their business license type with the city-county. Just understand few food operations do not need permits in California, Ontario, or elsewhere.
Selling food from home California 2020 efforts or how to sell food in Canada from home will both frequently run into health code expectations in addition to legal requirements. Some states will outright require additional permitting from the state health department or agricultural agency. This type of permitting can come in two forms, depending on the type of operation setup your homemade food business will use. Most of the difference comes from whom you will sell to.
Whether you are selling prepackaged food in California with a business permit to sell food from home, California still has extra hoops to go through, which makes it one of the most extreme examples to use for preparing to start a home bakery license California venture, even if in Canada or another state.
For example, if you sell directly to end customers (retail), which tends to be common for folks selling a farmers markets, you will need to likely self-certify your kitchen operations to certain standards, that you follow specific cleaning processes, and your food is packaged with specific requirements being met for food safety. This lower level of permitting is usually handled by mail and probably won’t have a personal inspection, although you can always be audited after the fact.
If, on the other hand, you will be selling to wholesale or other stores that sell your food product as retail to their customers, then you will need a different class permit focused on manufacturing safety. This covers sales to other businesses, restaurants, and distributors. You can expect with this choice that your home kitchen will be inspected in person at some point every year.
For either type of health department permit your product details will be required. Labeling and documentation are big issues for selling food from home in Florida or selling food from home in Ontario. The given local health agency will want to know what food you are making, ingredients, labeling for each item sold, packaging details, your kitchen layout with equipment used, and any required food safety training completion. They will also probably want to confirm your business licensing as well and business status for selling food from home.
Now you can begin planning the actual food product. Again, what different states allow to be sold from homes and shipping varies, so you’ll want to do some research on what your specific state allows. Typically, the homemade food categories that do seem to get approval tend to be:
As you can see above, the theme focuses on foods that can stay in packaging for a while in shipping without going bad. Foods that spoil quickly or have a high risk of bacteria growth after cooking will not be allowed.
Remember, if you’re operating a business with food, there will tend to be risks to your safety as well as anyone else in the household who comes into the kitchen area. This is why food processing safety training is a requirement in most states. Your business will need to be able to show your normal family home activity for food is kept separate from your food manufacturing activities, even if in the same physical kitchen (think shifts of when things are allowed to happen). Children cannot be in your work area at all when cooking for your business, and all equipment used has to be in good condition and repair. That old ladle from 20 years of cooking won’t cut it.
Your working environment will have restrictions on behavior as well. No smoking or tobacco use will be allowed in the kitchen, even if it is your home. You will need to make sure your kitchen is pest-free, and if there are ants, for example, they are eliminated. Anyone in the house who might be sick will need to be kept away from the kitchen and processing area or your operations need to be shut down until the sickness has passed. You will have to practice personal safety regularly washing hands, wearing protective gear, and using safe containers for storage and preparation. Finally, your working water source must be potable, clean, and not mixed with other water sources.
With the permits and licensing out of the way, the next thing to do is to establish a business bank account with a recognized bank. Don’t rely on a personal account. Your business finances should be separate and distinct. This makes it far easier to prove your business income later when it comes time to report taxes on sales. Most banks will require a copy of your business license before creating the account, so only pursue the bank after taking care of the licensing.
Your kitchen should have a special rider on your homeowner’s insurance for your business. Also, you will have other insurance needs. Due to selling a product that is also food, you will want to have a product warranty insurance as well as an insurance policy covering food safety specifically. This can get a bit specific, so you will want to work with an insurance agent who is familiar with food businesses and food products, not a generalist. A good way to identify such an agent is to talk to other home food business owners or restaurants whom they use. If your food will be delivered or served from your vehicle, also consider business vehicle insurance protection as well.
Home businesses can employee support staff just as well as any other kinds of businesses. In addition to the labor accounting requirements for labor taxes and payroll, you will also need to make sure your business has workers compensation policy in place to cover your employees in case of a work-related injury. This is a serious requirement, and your business and you can face civil and criminal penalties for skipping this step, especially if someone gets hurt. Don’t assume because you have someone work as an independent contractor your business is off the hook either. Even temporary help has to be covered.
Lastly, many people want to take advantage of making food that can be shipped and sold to people across the country. Note that wherever your licensing and permits are provided, that jurisdiction may have rules or criteria for selling food that leaves the county, state, or even country. Your business will have to meet both the requirements as a business, in general, selling homemade food online, as well as any rules specific to packaging and labeling of selling prepackaged food online. This can be extensive. State and federal rules require an assortment of items to be met such as clear labeling, no false statements, detailed dietary information, bar code information, contact and address information, specific types of packaging use, and import/export data being displayed. Folks who are selling prepackaged food online over borders have found this is probably the most challenging part of home food business methods possible.
As for an Internet-based selling platform, Amazon is going to come to mind. It has the largest e-commerce audience in one place and the most likely to cater to unique and specific food interests that homemade food can serve. That said, selling homemade food on Amazon also comes with an assortment of rules for that company and its sellers. While they conveniently provide an app for selling home-cooked food on Amazon’s platform, users have to be adept in meeting all the seller account requirements, or they could lose their account and be banned from Amazon entirely. Some choose to ship from their home address and others use Amazon’s warehousing feature for stock distribution. That too comes with requirements sellers need to follow and stay up to date with.
The above said, for anyone discouraged on how to sell home-cooked food online, think again. There are lots of home-based businesses in Ontario, elsewhere in Canada, California, New York and Florida, and many other locations that are doing just fine. They spent the time studying their requirements and learned from mistakes what not to do. Many provide their insight online via video channels as well. Take time to watch these as they are extremely useful in advice and what minefields to avoid, even for specific locations versus in general. And the best part of it is that the information is free; you just need to find the time to do the research.
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