Do you make your own super-hot salsa? Do you dabble in pickle-making, with award-winning dills that the buying public would be dying to try? Is your killer habanero clam dip always the first thing to go, when you bring food to a party?
If so, you’ve probably considered using your own home kitchen to launch the food-based business of your dreams.
While many of the largest empires in the food business today have humble origins in a home kitchen, including Paul Newman and his charitable salad dressings, Jimmy Dean and his frozen sausage kingdom, and even rapper Ludacris and his airport-concourse fried chicken restaurants, it’s often not as simple as bottling or canning up one of your favorite recipes, and selling your food to the public.
Start to dig into the laws and regulations a little bit, and you’ll see that many home cooks face strict regulations for selling food to the public, to ensure the health and safety of everyone involved.
If your new food product is as good as you know it is, finding customers isn’t the problem. Whether you’re selling at farmer’s markets, flea markets, civic functions, or even online, it’s vital that you research the laws in your state regarding the sale of home-produced food, or your business will get shut down before it even gets started.
Remember, if one person gets sick, and you haven’t followed the regulations in your state to the letter, you face the possibility of massive lawsuits, civil, or even criminal penalties.
Are Home-Based Food Businesses Legit?
The legality of your new home-based food business depends a lot on the kind of food you want to make. Most prepared hot foods, food that needs to be held at a certain temperature, or food that is ready-to-eat are forbidden in almost all states. It doesn’t matter how good your barbecue is; because of the high risk of contamination, most states won’t allow you to sling brisket out of the back of your car.
It’s not all bad news, though. Until very recently, almost all production of food in the home for sale to the public was strictly forbidden. There were a few loopholes, like selling pickles at church picnics, but for anyone looking to do any kind of medium-to-large scale production, the only available option was to work out of a licensed, inspected commercial kitchen, which can be very costly.
Fortunately, as more and more cottage cooking industries have emerged, state laws have evolved to allow the production of many different types of products right from your home kitchen. Special “cottage licenses” can even be issued, but the laws in each state are different based on the types of products you plan to cook, the kinds of ingredients you can use, and the maximum amount of income you can earn from your new business.
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There’s more room within these guidelines for what you can and can’t cook than you may think. In many states, products that fall under the special cottage laws include most baked goods, candies, sauces and condiments (including ketchup, mustard, and salsa), pastas, seasoning blends, jams, jellies, specialty popcorn, and much more.
Laws can vary wildly from state to state. In Maine, for example, the process is fairly simple; your home kitchen will need to be inspected by health officials, and you may need to obtain a special license to sell food to the public. Once that’s complete, though, there are very relaxed limitations on what kinds of shelf-stable foods you can sell, and where you can sell your product. Compare these regulations to a state like New Jersey, who has no cottage food laws, and where baking and selling a single cake pop can land you with a $1,000 fine, and you’ll see that knowing the laws in your particular state is critical.
What’s the Meaning of Cottage Food Laws?
If you want to be a cottage food operator, you’ve got to understand and follow the rules. Here’s a handy state-by-state breakdown that can point you in the right direction within your state. Word of warning, some states are better about publishing clear cottage food laws than others. The California Department of Public Health, for example, provides a straight forward outline for getting the licensed as a cottage food operator within the state. If you live in a smaller state, you may need to do some legwork and place some calls with other vendors that have already gone through the process to learn.
While laws vary from state to state, here’s a summary of what you’ll need to find out in order to operate in your specific area.
Licenses and Training – There’s usually some level of training or certification you’ll need to obtain in order to become a certified cottage food operator. In Colorado for example, you will need food safety training course and acquire a food handlers training card.
Labeling – Just because you’re creating food at home, doesn’t mean you won’t need proper labeling. This is an area you will need to be extremely detail oriented to ensure you disclose accurate label information to customers. As an example, the state of California requires that you list the name, city, and zip code of the operation clearly on your label. You must also list that the product was “Made in a Home Kitchen” or “Repackaged in a Home Kitchen.” Learn full labeling requirements within California here.
Approved Food List – There are only certain food types that can legally be sold under this law. Most low-risk foods can be sold under this law and more than likely your idea will fit into the approved list of foods. But just like everything else, you will want to get clarity on this point within your state. Here’s a list of foods that are approved in most states to get you started.
Revenue Restrictions – Cottage food businesses are intended to be small. As a result, by law there are limits to sales volume you can do in any given year. If you go over those limits, you will no longer have the cottage food operation (CFO) designation and need to choose between sole proprietor, LLC, Corporation, or other common business entity to operate. However, many entrepreneurs consider growth to be a high-quality business problem and demonstrates your food concept has broad market appeal!
Some states like Wisconsin, strictly limit revenue to $5,000 per year for this type of business. In California, you have a longer runway at $50,000 per year. As you can see there’s a wide range of revenue that can be generated depending on local laws.
The bottom line is: Get to know your state’s cottage food law. While starting a food business in your house may be one of the most cost-effective ways to get your business off the ground, it can also land you in serious trouble, if you don’t do your research. Get started legally and responsibly, and you’ll soon be growing your startup from a home-based business to the next zillion-dollar success story.