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Sales Tax

This topic contains 37 replies, has 2 voices, and was last updated by  Rachel parada 1 month, 1 week ago.

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    I bake and sell custom decorated cookies from my home in FL. I have been advised by my CPA, and several other lay-persons, that the state considers those functioning under the cottage food law akin to a grocery store where sales tax is concerned, and therefor I don’t need to charge sales tax for my goods. However, I don’t usually pre-bake cookies and then put them out for sale; I mainly make them when someone places a specific order for a custom product. I’m pretty sure my local Publix store doesn’t charge sales tax on a pre-made box of cookies, but they do charge tax if I custom order a cake from the bakery. Shouldn’t I do the same?


    David Crabill

    April, I’m not the ultimate guru on this but I did a little research for Florida (I’m more familiar with California’s tax laws, but Florida’s look similar). The bottom line is that it doesn’t look like you need to charge sales tax.

    One important factor for charging sales tax is whether the product is intended to be consumed on the seller’s premises. As a cottage food operation, since you’re giving your cookies to customers for them to consume off of your premises (your home), you don’t have to charge sales tax. You’re also supposed to be packaging your cookies in a way that shows the customer that you intend for them to take them to go (e.g. placing them in a box). If you were selling at a farmers market and warming your cookies there and had a table and chairs next to your stand for your customers to eat at, then there might be a case for charging sales tax, but only if all of those apply, and even then it would be a gray area.

    Also, if you’re selling at an event that charges admission, like a fair, then you probably have to charge sales tax, but in that case the event organizer should know.

    I didn’t see anything about there being a difference with custom made goods. I think it has to do more with where and when the product is heated. There are a lot of rules about this… if you want to read more, here’s the document I looked at. Please let me know if you learn any more about it.



    Thanks so much! That was just the information I was looking for, and the reassurance I needed.


    David Crabill

    April, I just want to further clarify my response. I still think that you are exempt from all taxes, but since I wrote this answer, I have learned that in some states, only state taxes are exempt, and local (city and/or county) taxes still apply to cottage food sales. To be sure for your region, you should contact your County Tax Collector or Business Tax Office.


    haimara baez

    Hola, igual que muchos otros me he decidido a empezar un pequeño negocio, he leido muchos tips en este foro, y les doy las gracias, empezare a hecer mis tortas y cupcakes, envasar individualmente y etiquetar, ire a los mercados verdes a ofrecer mi producto y aplicar para colocarme en ellos a vender, por todo lo que he leido aqui hasta este punto no hay inconveniente ?? verdad??


    haimara baez

    la unica duda que surge en mi, es si debo entregar una factura a cada cliente por su compra?? usar contabilidad, estoy en broward, debo cobrar impuesto? de cuanto seria?, es la unica duda que me queda, saludos!!


    David Crabill

    Hola Haimara, asumiendo que tu torta no requiere refrigeración, toda información respecto a tu negocio suena bien y sin ningún inconveniente. Siempre y cuando tu producto esté apropiadamente etiquetado, no tienes que dar factura por cada venta. Por igual, no necesitas cobrar impuestos.


    sonia Raghunandan

    I bake cupcakes at my home and sell them at the farmers market. I have my food safety certificate do i need a agragricultural license I live in the state of Florida


    David Crabill

    You don’t need a license from the ag dept. You may need a business license, depending on where you live.



    Is there a way to get snap for the products im selling?


    David Crabill

    You mean food stamps? I really don’t know.



    Still confused about income tax. How do you calculate if you just take cash or check only ?


    David Crabill

    End-of-year income tax is going to be based on gross sales, and probably as a self-employment tax. You just add up the total sales, remove your deductions, and your tax program should tell you what you owe. If you make enough money, you may have to submit estimated taxes quarterly.



    I know there are a limit on gross sales ($15,000) but how are those regulated?? Also, can some states change the regulations on gross sales?

    I’m doing a research project on the Cottage Food Law so i’m trying to piece together all the information. Do you know where I can find a list of all the states that have adopted the law?

    Thank you so much!


    David Crabill

    The limit isn’t actively regulated, but a health or ag dept could shut down an operation if it was clear that they were making too much. I’d say it’s more self-regulated, in that people know if they make more than $15K then they’re doing something illegal. That limitation is baked right into Florida’s law, so an amendment to the law would need to be passed for it to change.

    Each state with a law has their own version, and many states don’t call it a cottage food law. This site is going to be your best bet if you want an updated list of the states that allow some form of homemade food sales. I don’t know of any other updated list that exists. Please know that the map doesn’t necessarily show states that have laws; it shows states that allow people to sell homemade food in some form, and that form is usually defined by a law.

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