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Talk with others about the cottage food industry in Louisiana
Home Based Business -> Cottage Business
This topic contains 3 replies, has 2 voices, and was last updated by 
David Crabill 10 years ago.
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I want to migrate my already running home based custom cake shop to a cottage business. What would be the benefits? Currently, we are inspected once a year and pay for various operating permits and file monthly taxes. Recently we have experienced some significant changes in our family responsibilities and have cut back dramatically on orders. Would happen to have any advice on how best to handle this transition. On a side note, I spoke with both the permit office in my community and the health board and neither had a clue. I am here hoping for information. Thank you so much for your time.
Is your kitchen fully-licensed as a commercial kitchen? If you’re just using a basic residential kitchen, then I wasn’t even aware that you could run a home bakery like this without using the cottage food law.
Anyway, usually people start as a cottage food operation and then transition into a commercial bakery, but if your orders are down, then switching to a CFO might make sense. One big reason people choose a CFO over a commercial business is because of the complicated setup, but you’ve already done that.
I think the main reason you might choose to convert to a CFO would mainly be because most things are less complicated. You wouldn’t have to get your kitchen inspected or even need a permit from the health dept (though I have heard that health depts in LA are asking to see product labels before you start). Labeling requirements are significantly minimized and permits/fees would be reduced. However, with the ease comes restrictions like a $20,000 sales cap and the requirement to make only cakes that don’t require refrigeration. That last point might be a deal breaker for you.
Again, I’d be interested to know how and when you initially setup your business.
Thanks for the reply. We set up our business (www.sweetcompositions.net) about four years ago. First we built a commercial kitchen, to code specs, onto our home as an addition. We then had it inspected and registered with all of the permit offices, health department, sheriff’s office, etc. It was a pretty involved process. Cottage law was not a thing here at the time, so we jumped through all of the hoops. There are no internal doors or windows between the adjoining kitchen and house, it has a grease trap, etc. We home-school, another thing we have to get permits for every year, and as our girls have gotten older and their curriculum are getting more advanced we have to shift our resources from the cake shop. Our cakes are not refrigerated, we are a custom shop and everything is made to order.
I will contact the health department again and see what they want in our area. Let me ask you another question I may already know the answer for. Does cottage law affect taxes, monthly and yearly, in any way? I guess I also need to get the stickers that state that the cake was made in a home-based kitchen to put on the bottom of the cake boards as well. I am trying to simplify things as much as possible and keep things legal.
Okay that makes sense. That’s such an expensive process and it’s a lot of work! I know a number of people have setup a commercial kitchen at home, but it’s uncommon.
Taxes are so inconsistent between counties (or in your case, parishes), that I don’t include much info about them on the site. Often there are exemptions for bakeries, but I vaguely recall that LA isn’t one of the ones where you get a break on sales tax, as all parishes have their own rates. Anyway, you would certainly know more about me, but my feeling is that no, switching to a CFO wouldn’t change anything tax-related, either with sales taxes or with income taxes. Are there any other taxes you pay?
I’m curious to hear your opinion based on your experience. It’s not too often that I hear from someone who has done the whole commercial kitchen setup in their home, much less from someone who’s had one for multiple years. However, people often ask me if they should make the leap to build a commercial kitchen at home so they can start/continue their home business without the restrictions. What has your experience been like? After four years, are you glad you went to all that effort and expense?
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