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Cottage Food Laws in the USA: What Small Businesses Need to Know

Cottage Food Laws in the USA: What Small Businesses Need to Know

Over the years, the trend of the cottage food industry has increased exponentially. Many food entrepreneurs are now selling their homemade food products at local stores and supermarkets.

According to the Harvard Law School Food Law and Policy Clinic (FLPC) report on the Cottage Food Laws in the United States, local food sales amounted to about $12 billion in the year 2014 and was expected to cross $20 billion by 2019.

The Harvard Law School Food Law and Policy Clinic (FLPC), in 2013, reported an increase in cottage food production business after many states updated their cottage food rules to expand the product type and scale of production.

What are the Cottage Food Laws?

Many local sellers are no longer selling only the fresh produce, rather they have upgraded to producing value-added products such as artisan baked goods, jams, candy, tea, cheese, and popcorn.

The food laws that regulate these home-based food businesses are called cottage food laws.

The cottage food laws regulate various factors including the amount of money you can earn, types of products you can sell, and the type of kitchen you can operate. You also need to be aware of the registration, licensing, and inspection requirements in your state.

The foods allowed in the cottage business are mostly non-perishable foods. As a general rule, if the product requires refrigeration, it is not allowed to be sold. Perishable foods like meat, dairy and eggs pose risks of foodborne illnesses.

Cottage Food Law Requirements

Cottage food laws vary by state, however, there are a few general requirements that may be stipulated by almost every state. Some of these requirements include:

  • Business license
  • Installing a proper kitchen
  • Kitchen inspection
  • Types of food allowed
  • Pet policy

For example, Virginia food laws do not allow catering from a home-based kitchen. In Ohio, you can sell perishable goods but pets are strictly forbidden in the kitchen.

How To Start a Cottage Food Business: Step by Step Process

Cottage food business is not similar to regular businesses. There are certain rules and regulations you need to follow to ensure your business doesn’t encounter any unexpected surprises and runs smoothly. Once you have established your business, you need to find the right venues to sell your products. Here is a step by step process that you can follow to start a successful cottage food business.

Step 1: Check local laws

Step 2: Check licensing requirements

Step 3: Set up your business

Step 4: Find customers

Step 1: Check local laws

The laws for cottage food business will differ from state to state. Although some states may show leniency in the kind of products you can sell, others can be very strict in their laws and regulations.

In some states like Michigan, Maryland, Wisconsin, Texas, and Florida, you do not need a license to sell your food as a cottage business. However, your annual sales may be limited to $25 – $50k.

In Ohio, you are allowed to sell perishable foods like creampies and cheesecakes under certain conditions. In Indiana, you can sell your food only at farmer’s markets and roadside stands. Selling food at events, restaurants, or retail stores in Indiana is prohibited.

Step 2: Check licensing requirements

When running a business at home, you need to be aware of the licensing and certifications you require to make your business legal. Having a license certifies that your business is in compliance with the local health department. This license is also called the “Business Tax Certificate.”

In addition to ensuring the local laws are being followed, having a license also facilitates the tax collection process for your business’ revenue.

Visit your local planning office to find out about the licenses and the permits you require. The office will let you know if you need to get your cottage food permit first or your business license permit.

Your city’s Department of Environmental Health (DEH) department is responsible for approving and registering your cottage food business. Check with your planning office regarding all the requirements that you need to meet before the registration process.

Some cities may also require a Home Occupation Permit. In California, for example, to operate a business you need to apply for a California city business license.

You can apply for a business license as a sole proprietor, partner, limited liability company (LLC) or a corporation.

A one-person business, where you are the owner or the CFO is considered a sole proprietorship or an LLC. In partnerships, another owner or co-owner of the business is involved. Corporations apply to larger businesses and organizations.

Step 3: Set up your business

Congratulations! You are now close to the final steps in starting your business. Here are a few pointers to keep in mind during this process:

Set up a DBA

Before you set up your business, make sure you have registered a Fictitious Business Name (DBA) for your business. This is a unique name that represents your business and will be used in all the paperwork and marketing.

If your business name includes your own name or your partner’s name, then a DBA is not required.

Get an EIN

If you are going to hire employees, you will need EIN. As a sole proprietor, your social security will be considered an EIN. When you hire an employee, you will need to request an EIN from the federal government.

Open a Business Account

Open a business bank account to keep your expenses separate. Many banks offer credit cards for business accounts with great cashback deals and fee waivers.

Label Your Food

Food labeling mentions the type of food you are selling and the ingredients involved in making the product. Follow the labeling requirements for cottage food products to ensure everything is in order before the launch.

Step 4: Find customers

The sales venue or outlet for most cottage businesses includes farmer’s markets, roadside stalls, retail stores, catering, and online sales. Some states may permit indirect sales or wholesale distribution as well.

Your customers are the main audience you are trying to reach to sell your products. Your audience can be identified by demographics, attitudes, beliefs, and values.

It’s important that you build a website for your business to showcase your products and build credibility. Many businesses have shifted online and for this reason, having an online presence is essential for getting traffic and sales. Building social media profiles to promote and market your food is also a great way to get started.

Conclusion

Cottage food business allows local artisans to sell their products from home. Although the cottage food laws are quite lenient compared to regular food business laws, there are certain factors you need to consider before launching your business. Visit your local planning office and get all the required details and forms before setting up your business.

Over the years, the trend of the cottage food industry has increased exponentially. Many food entrepreneurs are now selling their homemade food products at local stores and supermarkets.

According to the Harvard Law School Food Law and Policy Clinic (FLPC) report on the Cottage Food Laws in the United States, local food sales amounted to about $12 billion in the year 2014 and was expected to cross $20 billion by 2019.

The Harvard Law School Food Law and Policy Clinic (FLPC), in 2013, reported an increase in cottage food production business after many states updated their cottage food rules to expand the product type and scale of production.

What are the Cottage Food Laws?

Many local sellers are no longer selling only the fresh produce, rather they have upgraded to producing value-added products such as artisan baked goods, jams, candy, tea, cheese, and popcorn.

The food laws that regulate these home-based food businesses are called cottage food laws.

The cottage food laws regulate various factors including the amount of money you can earn, types of products you can sell, and the type of kitchen you can operate. You also need to be aware of the registration, licensing, and inspection requirements in your state.

The foods allowed in the cottage business are mostly non-perishable foods. As a general rule, if the product requires refrigeration, it is not allowed to be sold. Perishable foods like meat, dairy and eggs pose risks of foodborne illnesses.

Cottage Food Law Requirements

Cottage food laws vary by state, however, there are a few general requirements that may be stipulated by almost every state. Some of these requirements include:

  • Business license
  • Installing a proper kitchen
  • Kitchen inspection
  • Types of food allowed
  • Pet policy

For example, Virginia food laws do not allow catering from a home-based kitchen. In Ohio, you can sell perishable goods but pets are strictly forbidden in the kitchen.

How To Start a Cottage Food Business: Step by Step Process

Cottage food business is not similar to regular businesses. There are certain rules and regulations you need to follow to ensure your business doesn’t encounter any unexpected surprises and runs smoothly. Once you have established your business, you need to find the right venues to sell your products. Here is a step by step process that you can follow to start a successful cottage food business.

Step 1: Check local laws

Step 2: Check licensing requirements

Step 3: Set up your business

Step 4: Find customers

Step 1: Check local laws

The laws for cottage food business will differ from state to state. Although some states may show leniency in the kind of products you can sell, others can be very strict in their laws and regulations.

In some states like Michigan, Maryland, Wisconsin, Texas, and Florida, you do not need a license to sell your food as a cottage business. However, your annual sales may be limited to $25 – $50k.

In Ohio, you are allowed to sell perishable foods like creampies and cheesecakes under certain conditions. In Indiana, you can sell your food only at farmer’s markets and roadside stands. Selling food at events, restaurants, or retail stores in Indiana is prohibited.

Step 2: Check licensing requirements

When running a business at home, you need to be aware of the licensing and certifications you require to make your business legal. Having a license certifies that your business is in compliance with the local health department. This license is also called the “Business Tax Certificate.”

In addition to ensuring the local laws are being followed, having a license also facilitates the tax collection process for your business’ revenue.

Visit your local planning office to find out about the licenses and the permits you require. The office will let you know if you need to get your cottage food permit first or your business license permit.

Your city’s Department of Environmental Health (DEH) department is responsible for approving and registering your cottage food business. Check with your planning office regarding all the requirements that you need to meet before the registration process.

Some cities may also require a Home Occupation Permit. In California, for example, to operate a business you need to apply for a California city business license.

You can apply for a business license as a sole proprietor, partner, limited liability company (LLC) or a corporation.

A one-person business, where you are the owner or the CFO is considered a sole proprietorship or an LLC. In partnerships, another owner or co-owner of the business is involved. Corporations apply to larger businesses and organizations.

Step 3: Set up your business

Congratulations! You are now close to the final steps in starting your business. Here are a few pointers to keep in mind during this process:

Set up a DBA

Before you set up your business, make sure you have registered a Fictitious Business Name (DBA) for your business. This is a unique name that represents your business and will be used in all the paperwork and marketing.

If your business name includes your own name or your partner’s name, then a DBA is not required.

Get an EIN

If you are going to hire employees, you will need EIN. As a sole proprietor, your social security will be considered an EIN. When you hire an employee, you will need to request an EIN from the federal government.

Open a Business Account

Open a business bank account to keep your expenses separate. Many banks offer credit cards for business accounts with great cashback deals and fee waivers.

Label Your Food

Food labeling mentions the type of food you are selling and the ingredients involved in making the product. Follow the labeling requirements for cottage food products to ensure everything is in order before the launch.

Step 4: Find customers

The sales venue or outlet for most cottage businesses includes farmer’s markets, roadside stalls, retail stores, catering, and online sales. Some states may permit indirect sales or wholesale distribution as well.

Your customers are the main audience you are trying to reach to sell your products. Your audience can be identified by demographics, attitudes, beliefs, and values.

It’s important that you build a website for your business to showcase your products and build credibility. Many businesses have shifted online and for this reason, having an online presence is essential for getting traffic and sales. Building social media profiles to promote and market your food is also a great way to get started.

Conclusion

Cottage food business allows local artisans to sell their products from home. Although the cottage food laws are quite lenient compared to regular food business laws, there are certain factors you need to consider before launching your business. Visit your local planning office and get all the required details and forms before setting up your business.

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Over the years, the trend of the cottage food industry has increased exponentially. Many food entrepreneurs are now selling their homemade food products at local stores and supermarkets.

According to the Harvard Law School Food Law and Policy Clinic (FLPC) report on the Cottage Food Laws in the United States, local food sales amounted to about $12 billion in the year 2014 and was expected to cross $20 billion by 2019.

The Harvard Law School Food Law and Policy Clinic (FLPC), in 2013, reported an increase in cottage food production business after many states updated their cottage food rules to expand the product type and scale of production.

What are the Cottage Food Laws?

Many local sellers are no longer selling only the fresh produce, rather they have upgraded to producing value-added products such as artisan baked goods, jams, candy, tea, cheese, and popcorn.

The food laws that regulate these home-based food businesses are called cottage food laws.

The cottage food laws regulate various factors including the amount of money you can earn, types of products you can sell, and the type of kitchen you can operate. You also need to be aware of the registration, licensing, and inspection requirements in your state.

The foods allowed in the cottage business are mostly non-perishable foods. As a general rule, if the product requires refrigeration, it is not allowed to be sold. Perishable foods like meat, dairy and eggs pose risks of foodborne illnesses.

Cottage Food Law Requirements

Cottage food laws vary by state, however, there are a few general requirements that may be stipulated by almost every state. Some of these requirements include:

For example, Virginia food laws do not allow catering from a home-based kitchen. In Ohio, you can sell perishable goods but pets are strictly forbidden in the kitchen.

How To Start a Cottage Food Business: Step by Step Process

Cottage food business is not similar to regular businesses. There are certain rules and regulations you need to follow to ensure your business doesn’t encounter any unexpected surprises and runs smoothly. Once you have established your business, you need to find the right venues to sell your products. Here is a step by step process that you can follow to start a successful cottage food business.

Step 1: Check local laws

Step 2: Check licensing requirements

Step 3: Set up your business

Step 4: Find customers

Step 1: Check local laws

The laws for cottage food business will differ from state to state. Although some states may show leniency in the kind of products you can sell, others can be very strict in their laws and regulations.

In some states like Michigan, Maryland, Wisconsin, Texas, and Florida, you do not need a license to sell your food as a cottage business. However, your annual sales may be limited to $25 – $50k.

In Ohio, you are allowed to sell perishable foods like creampies and cheesecakes under certain conditions. In Indiana, you can sell your food only at farmer’s markets and roadside stands. Selling food at events, restaurants, or retail stores in Indiana is prohibited.

Step 2: Check licensing requirements

When running a business at home, you need to be aware of the licensing and certifications you require to make your business legal. Having a license certifies that your business is in compliance with the local health department. This license is also called the “Business Tax Certificate.”

In addition to ensuring the local laws are being followed, having a license also facilitates the tax collection process for your business’ revenue.

Visit your local planning office to find out about the licenses and the permits you require. The office will let you know if you need to get your cottage food permit first or your business license permit.

Your city’s Department of Environmental Health (DEH) department is responsible for approving and registering your cottage food business. Check with your planning office regarding all the requirements that you need to meet before the registration process.

Some cities may also require a Home Occupation Permit. In California, for example, to operate a business you need to apply for a California city business license.

You can apply for a business license as a sole proprietor, partner, limited liability company (LLC) or a corporation.

A one-person business, where you are the owner or the CFO is considered a sole proprietorship or an LLC. In partnerships, another owner or co-owner of the business is involved. Corporations apply to larger businesses and organizations.

Step 3: Set up your business

Congratulations! You are now close to the final steps in starting your business. Here are a few pointers to keep in mind during this process:

Set up a DBA

Before you set up your business, make sure you have registered a Fictitious Business Name (DBA) for your business. This is a unique name that represents your business and will be used in all the paperwork and marketing.

If your business name includes your own name or your partner’s name, then a DBA is not required.

Get an EIN

If you are going to hire employees, you will need EIN. As a sole proprietor, your social security will be considered an EIN. When you hire an employee, you will need to request an EIN from the federal government.

Open a Business Account

Open a business bank account to keep your expenses separate. Many banks offer credit cards for business accounts with great cashback deals and fee waivers.

Label Your Food

Food labeling mentions the type of food you are selling and the ingredients involved in making the product. Follow the labeling requirements for cottage food products to ensure everything is in order before the launch.

Step 4: Find customers

The sales venue or outlet for most cottage businesses includes farmer’s markets, roadside stalls, retail stores, catering, and online sales. Some states may permit indirect sales or wholesale distribution as well.

Your customers are the main audience you are trying to reach to sell your products. Your audience can be identified by demographics, attitudes, beliefs, and values.

It’s important that you build a website for your business to showcase your products and build credibility. Many businesses have shifted online and for this reason, having an online presence is essential for getting traffic and sales. Building social media profiles to promote and market your food is also a great way to get started.

Conclusion

Cottage food business allows local artisans to sell their products from home. Although the cottage food laws are quite lenient compared to regular food business laws, there are certain factors you need to consider before launching your business. Visit your local planning office and get all the required details and forms before setting up your business.

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