California

All of your products need to be packaged and labeled in your home, regardless of how they’re sold. The section of the law that you mentioned is intended for a restaurant that buys your product and then integrates it into their menu. Since your mom is appears to be a convenience store and not a food facility (which would have a commercial kitchen), I don’t think she would be legally able to serve your food.

Yes, you just report it on your quarterly estimated and yearly taxes.

How do they know if you go over? They probably won’t. But, once you go over, you’re no longer operating legally, so if you got sued, you wouldn’t have any legal ground to stand on. The laws are there to protect you — once you leave their umbrella, you’re no longer covered.

Glad to hear your business is going well! And don’t worry about sending more questions.

You don’t report sales, aside from reporting income on taxes. One protection you would get from the law is simply being a legal business, and nobody can sue you as long as you stay within the law.

The state would never have time to sue… more likely it would be a consumer or someone who didn’t like you. This is a rare occurrence that might happen if you grew to a large size, and then perhaps a legal, existing bakery would sue you because you are clearly overstepping the bounds of the law, and taking away their potential business. Existing bakeries have a lot of overhead to deal with due to kitchen and licensing requirements, so sometimes they do get upset when they see illegal bakeries thriving.

Aside from all the potential ramifications, for me, the law is the law. It’s there for people to follow, not abuse. It’s there for a reason, and whether or not I agree with the reason isn’t a factor in my decision to follow it. There are other laws that I wouldn’t want people to break if they didn’t agree with them, so based on principle, I would change the law before breaking it. Typically when people try to change a law they don’t agree with, they begin to understand why it’s there.