Talk with others about the cottage food industry in California
Do I need to form an LLC? And nutritional labels
- May 13, 2014 at 5:07 am #5698
Thank you for posting the information on insurance and the Flip program. For someone who is just starting out and risk adverse, should I look into forming an LLC or some other legal set up? What do most new cottage food makers do?
Also David do you have any favorite resources for nutritional labels?
AngelaMay 13, 2014 at 2:01 pm #5702
I formed an LLC since I’m targeting people with severe food allergies and wanted to make sure I’m protected, even though I’ve gone to great pains to make sure all of my ingredients are made in plants that are entirely free of the allergens I avoid (peanuts, tree nuts). I’m also incorporated for the same reason (although the annual State tax is $800). I also recently decided to have nutritional testing done on my granola bars before I approach local grocery stores (since most people will want nutritional information for granola bars). I’m using NutriData in Aliso Viejo. It’s very pricey to get a Nutritional Facts Panel, so think carefully about this decision! Happy to expand on any of this information…I’ve learned a lot in the past few years since I started my business!May 14, 2014 at 11:55 am #5714
Thanks for the info Jenny. I recently came across a site called ReciPal that has really affordable nutritional labeling. In case you haven’t heard of it, it may be worth checking out.May 16, 2014 at 12:41 am #5741
Angela, as Jenny noted, I think you really need to know your market before committing to a corporation structure. She has very good and specific reasons for choosing it. The $800 franchise tax has been a big wake up call for some CFOs that over anticipated their success, later realizing that they didn’t really need an LLC. My personal recommendation is that except for some specific cases, it’s not necessary. The insurance does cover you for most things, and a lot of people are not aware that an LLC doesn’t completely protect their personal assets anyway, even though it does help. A big company needs to be much more concerned with getting sued.
In terms of nutrition facts resources, I don’t know of any, but I do know that most CFOs prefer to not include it. It makes everything a lot simpler, and most customers don’t need it anyway. I will say that there is a difference between a legitimate nutrition analysis and a lot of the nutrition facts calculators online. It’s not really an authentic panel if the product is not lab tested, and that does cost a significant amount of money unless it’s subsidized by the govt.May 19, 2014 at 3:24 pm #5799
OK that makes a lot of sense on the LLC front and frankly I’m glad to hear that advice.
Silly question but if the nutrition calculators exist and you can have labels made are they really even legal to use if a lab is the only authentic way to test your product?May 20, 2014 at 12:50 am #5816
I’m not sure if they would be legal, though I’d like to know the answer to that question. My guess is that they are not, because everyone I know that is required to put nutrition info on their label has sent a sample into a lab. The calculators are still pretty accurate and are good for quickly determining the approximate nutrition facts for a recipe.June 11, 2014 at 1:27 pm #6952
Can CFO’s be partnership or do they have to be sole proprietorships? My partner and I are starting up a mustard business and are wondering whether or not we can proceed as under one name or as partners as we pursue a CFO Class A permit. Also, do the requirements change for a Class B permit?
SamJune 12, 2014 at 2:01 am #7013
You can run it as a partnership, but each business has the $45,000 sales restriction, so that’d be $22,500 of sales (not profit) max per person.
The requirements don’t change much for Class B. You need to get an inspection so you can sell to stores and restaurants, and you can only do those indirect sales within your county, unless another county has an agreement with yours.September 18, 2014 at 12:12 pm #13577