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cottage food community

Frequently Asked Questions

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Laws

The short answer: It is a law that allows you to make certain types of food from your home kitchen, and then legally sell them at certain venues.

The long answer: In 1993, the first federal food code recommended that food made at home should not be sold in a commercial food establishment. Almost all states adopted that ruling to some degree, and since then, most have had a firm stance prohibiting the sale of homemade foods. In the late 90’s and early 2000’s, a select few states adopted laws to override that prohibition, allowing certain kinds of home food products to be sold — these were often known as “baker laws” or “pickle bills”.

Starting in 2007 and throughout the Great Recession, many more states started adopting such laws to help give their citizens an easier way to make some income, with the side-benefit of helping local economies. Many of the more recent laws used the term “cottage food”, and the name stuck, thereby creating the unofficial “cottage food industry”. The term “cottage food” helps describe many of the small and local home-based food businesses (also known as “cottage food operations”, or CFOs) that are cropping up throughout the country.

As the local food movement has become more popular, more states have added or improved “cottage food laws” to allow these home food businesses to exist legally. Cottage food laws are different in every state, but each law allows home food sales in some way. Most cottage food laws have limitations such as what types of products are allowed, where a business can sell, and how much they can sell in a year. You can learn more about each state’s cottage food laws here.

If you can’t use the cottage food law in your state, then that means that you must make your products in a commercial kitchen and you can’t produce from home (unless you build a commercial kitchen in your home, which can be very expensive).

Food businesses come in many shapes and sizes, and usually the best first step is to call your local health dept and see what it will take to get licensed as a commercial food processor.

Usually states can override federal guidelines, counties can override the state, and cities can override their county. This results in an unbelievable inconsistency in terms of what rules, laws, and interpretations apply to you.

The law pages on this website serve as a guideline, but the only way to get definite answers and clear things up is to pick up the phone and call your government officials. Government departments are notorious for having little to no information online, and the only way you’ll get it is by directly talking to someone who works there.

And who, exactly, should you call? You guessed it… this is also inconsistent and totally dependent on where you live and what’s required. For instance, if you want to learn about sales tax, you might be talking to the Department of Revenue, the Department of Taxation, the Tax Commission, the Comptroller, or some other department. Keep calling and asking until you find the person you need.

As a general guideline, a good place to start is with the local department that regulates zoning laws (often called the “planning division”). They can help you learn if you’re allowed to start a home business in your area, as well as guide you to some of the licenses or permits you’ll need.

Also, if you do not own your kitchen (for instance, if you are renting a house), then you must get approval from your landlord to start your business. Please be aware that a landlord has the right to prevent your business from starting and approval from them should be a first step before proceeding.

Finally, you should check with the department that regulates the cottage food law in your state, which is usually the health or ag department (except in states, like Texas, where those departments cannot regulate CFOs). If you haven’t already learned about business licensing, find the department that regulates that in your area, keeping in mind that you might need a license from the city, county, and/or state.

Those three departments (zoning, health/ag, licensing) should be able to guide you to the rest of the people you need to talk to in order to get your business off the ground. Yes, it’s confusing, but amazingly, it’s probably not as complex as starting a regular food business.

It depends on what state you live in, but most states have an exception that allows you to donate your non-potentially hazardous food items to a church bake sale or similar cause, without getting any kind of approval from the government.

If you are not selling at a bake sale that is solely dedicated to a cause, the rules may be different. For instance, say you want to sell at a farmers market and donate all sale money to a nonprofit. This would not fall under the exemption above, and therefore, you would be required to meet license requirements to do this. However, some states do allow this kind of activity without getting approval — you should probably call your health department to get the most accurate answer, as it’s often hard to find this kind of info online.

Probably not. Except for a few states, cottage food operations are only allowed to make their products in their home kitchen. They cannot make food in a commercial kitchen, mobile kitchen, or at their food stand. If a state allows a CFO to make food elsewhere, then that is listed in the “Workplace” section of that state’s law page.

An operation like this is extremely common. In fact, this is part of the reason cottage food laws have been created, since the main food laws (with their very high barrier to entry) are forcing so many producers under the table.

First you should ask yourself: what are your motivations to report this person? Have they gotten people ill? Is their business too big for their home kitchen? Is their business disturbing you (too much traffic in the neighborhood, for instance)?

You will help them the most by talking directly with them about their motives. Many people are unaware that it is illegal to sell homemade goods without approval. Maybe they want to become legal, but can’t afford it right now. Maybe they are only selling to family and friends and don’t think there is much risk for their small business.

After talking with them, if you really feel like their business needs to be shut down, then you can try to report them to your local health department. You should know that health departments are already very aware that there are tons of businesses like this, in every state and county. Many departments are already swamped just managing the legal food facilities in their area, and they may simply ignore your report. Some departments will take the effort to ask the individual to stop doing business — most likely with a simple warning, but sometimes with a fine.

Please remember that this home business, even unregulated, is still likely to be very safe, especially if they are only selling non-potentially hazardous items. Many people have started very successful food businesses from home without getting government approval (like Paula Deen) — just imagine if someone had tried to shut them down when they were just getting started.

Venues

As a general rule, interstate sales are not allowed. The Federal Food Code does not contain a cottage food law, so cottage food laws are only applicable in the state where they were created. This means that if you live close to a state border, you cannot go across the border to sell at a farmers market. It also means that you cannot set up an online shop and ship your products to customers in other states.

You also cannot live in one state and register under the rules of another state. This is even true if you have another home in a different state, because (in almost all states) you can only use your primary residence to make cottage food products.

There are very few exceptions to this. For instance, Pennsylvania is the only state that explicitly allows interstate sales, because their cottage food laws are structured much differently than other states. However, many states disallow sales of homemade goods from other states, so the number of states that Pennsylvania CFOs can sell to is still limited. Even though Pennsylvania allows interstate sales for their CFOs, a CFO in another state can still not sell there.

Basically, if you cannot find any information that indicates that you can sell in a different state, then you should assume that you cannot.

In almost all cases, yes you can. One exception is in California with Class B CFOs, who cannot sell indirectly outside of their county unless they have permission from the county they want to sell in. Also, intercounty sales may be a problem in Missouri, where each county has a different stance on cottage foods.

Food

The basic, short answer is that most foods that don’t need to be refrigerated and don’t contain meat are non-potentially hazardous. But the definition of a non-potentially hazardous food is a bit complicated and actually varies from state-to-state. Some products, like low-sugar jams, are borderline and often need to be sent into a lab for testing, which is the only true way to determine if something is a non-PHF. If you’re dealing with a borderline product, you probably should talk to your health dept and see what they say.

It is also common for health departments to disallow certain non-PHFs if they are potentially dangerous to produce. The most common case is canned vegetables, where improper canning practices can lead to botulism.

And just in case you’re curious, a common definition of non-potentially hazardous is any food that doesn’t contain protein and has both a pH level of below 4.6 OR a water activity level (Aw) of below 0.85. This means that the food either needs to be acidic or have a low moisture content (usually foods with a low Aw have a low moisture content, but not always). Many states also allow foods with a water activity level above 0.85 if the pH level falls in a certain range. For instance, oftentimes foods with a pH of 4.6 – 5.6 AND a Aw of 0.85 – 0.92 would be allowed.

Most states do not specifically allow or disallow these items, so you may or may not get approval. First, you need to make sure that a non-alcoholic version of your item is allowed in your state (e.g. cakes need to be allowed in your state if you are trying to make a rum cake).

You can call up the health (or ag) department to see if your item is allowed. Even if they do allow it, you may still have to get special licensing for selling alcoholic items.

Michigan and Alaska are the only states that specifically allow extracts and baked goods with alcohol. Colorado is the only state that specifically allows confections with alcohol.

Yes. Recipes usually can’t be copyrighted, and even when they can, you should still be able to sell an item made with it. The copyright would only protect the recipe from being copied (aka published) somewhere else. That means that if you don’t want anyone to steal your recipe, you just have to keep it a secret!

Some states specifically disallow pet food because they only allow foods intended for human consumption. Usually the ag department oversees the production of pet food, so in states where the health department manages the cottage food laws, they don’t even have the option to allow it or regulate it.

Most states do not specify whether or not it is allowed, and in this case, you should call your health department for clarification. It may take awhile to find someone who will actually know. There is no state that specifically allows pet food in their cottage food law, and it’s possible that none of them allow it to be made from home.

If you are only selling uncut homegrown produce, then you don’t need any kind of special licenses to do so.

Cottage food laws are for “value-added” food products, meaning that you are processing ingredients in your home kitchen. Most states allow you to use homegrown produce in your baked goods, but some do not.

Labeling

You should just copy the ingredients from the box onto your label, exactly the way they are. The ingredients on your final label should be ordered from most to least (by weight), but in the case of a boxed mix, you don’t know how much each ingredient weighs. If you can’t make an educated guess about where your other ingredients should fit in, you have a some options. You could add the boxed mix as an ingredient and then put all of its ingredients in parentheses (as subingredients of the mix). Also, sometimes ingredients can be separated: for instance, a cake with frosting could have one ingredient list for the cake, and another list for the frosting.

If the product is an allowed food under your state’s cottage food law, then from a legal perspective, there’s no difference between doing this as a cottage food operation or with a commercial food license. However, if you repackage the exact product and slap your own label on it, this may be illegal, depending on if the original product is copyrighted, patented, or trademarked. Even if it isn’t technically illegal, it could still be considered unfair competition in many states if your business got big enough. It’s generally better to significantly change the product or create your own from its ingredients.

Business

Most states do not require CFOs to get liability insurance, although some venues (like farmers markets) may require you to be insured. It is up to you to determine how risky your business venture is and if it’s worth the cost (typically $200-$400 per year). Some people say, “all it takes is one” person to sue you and you’ll wish you had it. On the other hand… many, if not most, CFOs do not get insured and do not have problems. If you are running a small business and selling only to family and friends, it is likely that you won’t need insurance. But as your business gets larger, it becomes more and more important to get insured. If you are totally risk-averse, getting insurance is one way to make sure your assets are as safe as possible.

Most CFOs get insured through the owner’s current home insurance agency. You can ask your insurance agent what they can offer for liability insurance for your business, and this will probably cost around $300 to $500 per year. A popular alternative for small food businesses is to get insured through the FLI Program (FLIP).

Most CFOs are setup as a sole proprietorship or partnership. However, some have chosen to become LLCs. CFOs can become an S-corp or C-corp, but that is rare.

CFOs often consider an LLC because they want to protect their personal assets (home, bank accounts, etc.) in case something in the business goes wrong (such as getting sued). A big advantage of an LLC is that it will limit your personal liability if someone else in your company does something wrong. However, if you do something wrong, your personal assets may not be protected. Because of this, an LLC is not a replacement for getting liability insurance. Because most CFOs consist of just one person, an LLC often doesn’t give them the kind of protection they think it will.

A CFO might choose an LLC to minimize risk, but the cost of an LLC can be risky to a small business in-and-of itself. The setup and taxes of an LLC can get expensive (especially in CA, which has a minimum yearly $800 franchise tax). For that reason, some CFOs have regretted the decision to form an LLC, especially when their businesses didn’t take off like they had hoped.

There are some instances when having an LLC is wise, like when your business is getting particularly large, or you are hiring people that you don’t know well, or the nature of the business is relatively risky. Cottage foods, by definition, are some of the least risky foods, and we are still unaware of any lawsuits or even health complaints against a legal CFO.

So which one should you choose? There’s no one-size-fits-all answer, but most people have no problems with a basic sole proprietorship. If you need more security, a sole proprietorship with insurance is a great alternative to an LLC.

Note: Colorado requires CFOs to be sole proprietorships.

Usually sales tax comes in multiple forms: state, county, and even city sales tax. Taxes vary widely between regions, but as a very general rule, most states do not require CFOs to collect state sales tax because their items are consumed off of the premises where they were produced. There are a few states that do collect sales tax from CFOs, but if you are having trouble finding info or are getting conflicting info from the government, just assume that you don’t need to collect state sales tax. Even if you are exempt from state sales tax, you will likely have to collect local sales taxes.

Unfortunately, there is no consistent governmental department to learn about sales taxes. Search the internet for “{your state} sales tax” to learn who you should contact. You’ll also want to contact a department on your local level that can tell you about local taxes. Quite often, they will not know whether or not you are exempt. If you really can’t find a firm answer showing that you are exempt, assume you are not exempt from local sales taxes.

This question does not apply to most CFOs, since most states do not allow them to use both a home and commercial kitchen.

However, if you do need a commercial kitchen, there are a number of ways to find one. If you live near a large city, you may be able to find a community kitchen that operates as a nonprofit and has relatively low rental rates. Most for-profit commercial kitchens for rent are fairly pricey (usually at least $25/hour), and again, you’ll only find one of those near a city.

If you don’t live near a city, there are still probably a number of commercial kitchens around you. All restaurants and other types of food facilities have one, and many larger churches and community centers have one. Some may even offer their facility to you for free while you get your business off the ground.

If you’re really having trouble finding a commercial kitchen, call your health department. They are responsible for inspecting all commercial kitchens in the area.

There is also the possibility of building a commercial kitchen yourself, but that can be prohibitively expensive, since most states have hundreds of requirements that commercial kitchens must follow. In most areas, it is possible to build a commercial kitchen on your personal property. Before you invest in building a kitchen, you must talk to your health department to know what they allow and what you’re getting yourself into. That being said, many people have done this successfully, and it’s the right answer for some businesses.

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