Cottage Food Laws for a Home Bakery: What You Can Sell and How

A home bakery is one of the most accessible food businesses you can start. Cottage food laws in every state allow certain foods to be made in a home kitchen and sold directly to customers, without a commercial kitchen or a full retail food licence. But "cottage food" means something different in each state, and the details decide what you can bake, where you can sell and how much you can earn. This guide explains how the laws work and how to set up legally.

What cottage food laws do

Cottage food laws create an exemption from standard food facility licensing for low-risk foods made at home and sold under specific conditions. In exchange for that exemption, states usually require:

• Selling only allowed, non-potentially hazardous foods
• Labelling that discloses the food was made in a home kitchen
• Sales through permitted channels, often direct to consumers
• Sometimes registration, a permit, training or a kitchen inspection
• Sometimes an annual gross sales limit

Your state department of agriculture or health department publishes the rules. Some states have expanded their laws in recent years with so-called food freedom acts, so check the current version, not an old blog post.

Foods usually allowed and not allowed

Commonly allowed:

• Breads, rolls and bagels
• Cookies, brownies and bars
• Many cakes and cupcakes with shelf-stable frostings (such as buttercream made without cream cheese, in many states)
• Muffins, scones and quick breads
• Pies with fruit fillings (rules vary)
• Candy, fudge and granola in many states

Commonly not allowed (or restricted):

• Cheesecake and cream pies
• Custards and cream-filled pastries
• Cream cheese frosting and whipped cream toppings (in many states)
• Meat pies, quiches and anything containing meat
• Foods that need refrigeration for safety

The key concept is "time/temperature control for safety" (TCS) foods, also called potentially hazardous foods. If it needs refrigeration to stay safe, it is usually outside cottage food rules.

Sales channels

States differ on where cottage foods can be sold:

• Direct to consumers from your home, at farmers' markets, events and roadside stands is widely allowed.
• Online orders with local pickup or delivery are allowed in many states; shipping across state lines is often restricted or prohibited.
• Indirect sales, such as selling to cafes, restaurants or grocery stores for resale, are often not allowed under a basic cottage food exemption, or require an additional permit.

California, for example, uses two tiers: Class A operations sell directly to consumers, while Class B operations can also sell indirectly through local retail food businesses and require a county permit and inspection.

Sales limits

Some states cap annual gross sales for cottage food operators, while others have no cap. Caps vary widely by state. If you plan to grow, check whether your state's cap fits your goals, and plan the step to a commercial kitchen before you hit it.

Registration, permits and training

Depending on your state, you may need:

• Registration with the state or county, sometimes free, sometimes with a fee
• A permit and home kitchen inspection, especially for indirect sales tiers
• Food handler or food safety training
• A local business licence from your city
• Zoning approval for home businesses in some cities, especially if customers pick up at your home
• A sales tax permit, since many baked goods are taxable in some states and exempt in others

Labelling requirements

Labels are where many home bakers get caught. A typical cottage food label includes:

• The common name of the product
• Your name and address, or a registration number if your state allows it
• Ingredients in descending order of weight, including sub-ingredients
• Major food allergens, following federal allergen labelling: milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat, soybeans and sesame
• Net weight or quantity
• A required statement such as "Made in a home kitchen that has not been inspected by the [state] Department of Health" (wording is set by your state)

Tip: Make a label template for each product and keep a master recipe file listing every ingredient's sub-ingredients. When a supplier changes a product, update the label.

Kitchen practices

Even without inspection, behave like a professional kitchen:

• Keep pets out of the kitchen during production, as many states require.
• Sanitise surfaces, wash hands frequently and use hair restraints.
• Store ingredients off the floor and separately from household foods where practical.
• Avoid cross-contact with allergens; label clearly if a product may contain them.
• Keep production and sales records.

Insurance

Get product liability insurance. A customer reaction to an undeclared allergen or a foreign object can lead to a claim, and homeowners insurance usually excludes business activity. Farmers' markets and events often require liability coverage with them as additional insured.

Pricing your baked goods

Price from your costs:

1. Ingredient cost per batch, including packaging and labels.
2. Labour time per batch, valued at an hourly rate you want to earn.
3. Overhead, such as utilities, equipment wear, fees and insurance.
4. Profit margin on top.

Example: a dozen decorated sugar cookies

• Ingredients and packaging: $8
• Labour: 1.5 hours × $25 = $37.50
• Overhead allocation: $3
• Subtotal: $48.50, plus 20 percent margin = about $58 per dozen

Custom decorated work takes time. Many home bakers underprice it badly at the start.

When to move to a commercial kitchen

Consider renting a licensed commercial or shared kitchen when:

• You want to sell foods outside the cottage food list.
• You want to wholesale to cafes and stores, if your state does not allow it under cottage food.
• You are approaching your state's sales cap.
• You want to ship across state lines.

Shared-use kitchens rent by the hour or month and let you operate as a licensed food business without building your own.

Mistakes to avoid

1. Selling restricted foods. Cheesecakes and cream pies are frequent violations.
2. Missing allergen labels. It is a safety issue and a legal one.
3. Shipping across state lines without checking. Many cottage food laws prohibit it.
4. Skipping local zoning and business licences.
5. Underpricing custom work.

Taking orders and payments professionally

• Use a simple order form that captures date, product, quantity, flavour, allergies and pickup time.
• Take a deposit for custom orders and state your cancellation policy.
• Accept card payments through a reputable processor or payment link.
• Confirm orders in writing and send a reminder the day before pickup.

Keep a simple log of every order and sale. If your state has an annual sales cap, the log tells you how close you are, and it makes bookkeeping and sales tax filing far easier at the end of the year. It also helps you see which products earn the most per hour of your time.

Questions readers ask

Can I sell at farmers' markets?

Most states allow cottage food sales at farmers' markets, though markets have their own rules, fees and insurance requirements. Ask the market manager for vendor requirements before applying.

Your next step

Find your state's cottage food rules on the agriculture or health department website. Write down the allowed foods, sales channels, any sales cap, and registration steps. Then design a compliant label for your best-selling item.

The full guide, Starting a Home Bakery & Growing to a Storefront, covers cottage food compliance, labelling templates, pricing calculators, pre-order systems, markets and social selling, and a 30/60/90-day launch plan for $0.99.