California

Hi Jennifer,
If you are only selling direct to consumers (cottage food operation class A) and your product is served at room temperate (baked good, nuts, chocolate, etc) and no one is eating on site as in like a restaurant space, then you don’t need to charge sales tax. So no sales tax for online orders, delivery, pickup, or farmer’s markets.

You would charge sales tax if your food is hot and people are eating in rented space that you pay rent on (in which case you wouldn’t be able to sell hot food with a cottage food operation permit, you’d need a regular health permit and would have to rent a commissary (shared) commercial kitchen space).

Depending on the county you live in, you will more than likely have to apply for a seller’s permit, which is free. It’s part of the requirement for getting a cottage food operation permit at least where I am in Los Angeles County. They also required me to have a business license and seller’s permit before issuing the cottage food operation permit. Even though you won’t be collecting sales tax, you will still have to file what your quarterly gross income is to cdtfa.ca.gov and report your income as nontaxable food sales, which will show that you owe zero 0. CDTFA is super helpful with filing the forms online if you call them, they will walk you through it over the phone when the time comes, it’s pretty straight forward.

Hope that helps!!

You’re welcome. Yes, the same knowledge applies for class B as well, which is the permit I use to have. It will also be nice for you to be able to buy supplies wholesale with the sellers permit. Good luck with your business :) Take care!

Yes, indeed lots of paperwork to file…will drive you crazy, but you got this!!

Do you plan on having an employee? EIN numbers are generally used if you have employees. If you have no employees you won’t need an EIN.

If you’re just starting without employees (only you and family members) it’s best to start as a sole proprietor and use your own social security number to apply for the seller’s permit. And, pay for the Doing Business As (DBA) for the name of your business. This is what I did. I think you’re only allowed to have 1 non family member employee as a cottage food operator anyways, but that depends on your city. And, in the event that you go bigger, you can get an EIN and change your business type to an LLC, but of course that cost big bucks $800 in taxes.

• This reply was modified 4 years, 4 months ago by  Marlyn.

Just want to chime in that having a seller’s permit will also allow you to purchase some items with tax exemption. Make sure to ask the places you purchase packagings and equipment from to see if they have something like that. A good place to keep costs down.