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cottage food community

Frequently Asked Questions

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Laws

What is a cottage food law?

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.

The cottage food laws in my state won’t work for my business. How do I get legally setup to sell my food product?

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.

I make food for friends and family — At what point is this considered a “cottage food operation” that needs a license?

Although there is no universal definition, essentially a “cottage food operation” (CFO), is a for-profit business that sells homemade food products. Giving homemade cookies to friends and family is fine, but once you start selling your cookies, you need to look into the legal implications and see if it’s allowed in your region.

I am not selling my food for personal profit, but I’d like to accept donations for a charitable cause. Is this legal?

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.

Can I make food outside of my home?

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.

I’m just getting started. Aside from the laws, are there any other things I should know?

You should contact your local planning division to see if any other requirements apply to you. 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 when getting started.

Also, generally speaking, it is better to start small with a few of your best products and go from there. It will probably take longer than you think to get your business to be profitable.

I know someone who is illegally running their food business from home. How do I report them?

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 to 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

My farmers market won’t let me sell there. Can they really do that?

In every state, farmers markets are allowed to turn away CFOs and it happens all the time. It is their marketplace and they get to determine who can sell there. However, most farmers markets do allow CFOs and you just need to try to find another one.

My state doesn’t allow indirect sales through retail stores, but can I setup a stand there to sell directly?

Most states have a rule that a non-food facility cannot sell on the premises of a food facility. Because CFOs are not food facilities in most of those states, then the only retail shops you could sell at would be non-food-related ones. And it is possible that the health dept would have an even more strict interpretation and disallow all retail locations.

Can I sell to someone in a different state?

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.

Can I sell to someone in a different county within my state?

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

My state allows all non-potentially hazardous foods. What does this mean?

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.

The product I want to sell is not allowed in my state. How can I legally sell my product?

Please see here.

Can I make beef jerky?

No, cottage food products cannot have meat in them. The one exception is Pennsylvania, which does allow meat jerkies.

Can I make extracts or other items (cakes, jellies, confections, etc.) with alcohol?

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.

Can I sell an item I made using someone else’s recipe?

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!

Can I use a boxed cake mix to make my cakes?

Yes. Though it may seem like stealing, it is not illegal to buy a mix from the store and make your products from it. Quite the contrary: if you ran your business with a company’s boxed mix, they would probably be pleased! See also: labeling box mixes

No, with some exceptions. You cannot draw any copyrighted character or logo (like a sports team logo) on a food product, and then sell it, unless you have the copyright-owner’s written permission. If you don’t have permission, then the only legal way to make a Mickey Mouse cake would be to buy Mickey Mouse cake toppers (produced by Disney), and place those on the cake. You could also buy a Mickey Mouse-shaped cake pan and use it to make your cake, as long as you don’t draw Mickey Mouse on the cake.

Just to be clear: you can draw Mickey Mouse on your son’s cake for his birthday, but you can’t sell it because only Disney should be profiting from their character.

Can I make pet food?

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.

Can I sell fruits and vegetables I grow at 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

I don’t want to place nutrition info on my labels. How do I apply for an exemption?

Almost all cottage food operations are small enough that they would qualify for a Small Business Nutrition Labeling Exemption from the FDA. You can apply for one online by following this link. You cannot qualify for an exemption if you place a health claim on your labels — for example, “sugar-free” or “low-fat”.

Can I use the term “organic” on my label even if I am not “certified organic”?

No — and even if you were certified organic, at least 95% of your ingredients would have to be organic for you to label the product as organic. These rules were created by the Organic Foods Production Act.

I am using a boxed cake mix. How do I list that as an ingredient on my label?

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.

I want to buy food in bulk and repackage it with my own label. Is that allowed?

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

Should I get liability insurance for my cottage food operation?

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.

How do I get liability insurance?

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 FLIP Program.

Should I setup my business as a sole proprietorship or an LLC?

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 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.

Does the sales limit refer to gross sales or profits?

In all states, the sales limit refers to total gross sales of your products — not profits. So you will be making significantly less than the limit per year, once you deduct supplies, market fees, income taxes, etc.

Do I have to collect sales tax?

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.

Technical

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