How to Start a Baking Business From Home and Cash In

People rave over your Dutch apple pie. They always take a second slice of your Texas sheet cake. Those oatmeal raisin cookies disappear in minutes.
Make sure you have the correct equipment, including an oven that maintains stable temperatures accurately, and space in your house for supplies. You’ll need a place where you can easily package your tasty goods.
Whether you want to launch a full-time business or just bake enough for a little cash on the side, we’re here to help.
Search what is available locally online if you want to sell online. Visit different vendors at local farmers markets if that is your goal. Figure out a target market for your home bakery business.
Writing a business plan might seem intimidating, but there are templates you can use. Different plans allow different levels of details. Here are 16 tools to help you launch and run a small business.

Start Your Mixers

Estimates range from ,000 to ,000 to start a home baking business with monthly income from ,000 to ,000. Of course, those numbers depend on a lot of variables, including how extensive you want the business to be, where you live, how many hours you want to work a week, and more.
Do you want organic ingredients, or gluten free flour? Is there a specific chocolate brand you are loyal to? The cost of your ingredients will determine the prices you charge, so this is an important area to keep track of.
Granola

First, Find a Support System

The first thing to do is know what your state’s laws require of your home baking business. Are there licenses or tax forms required by your state or municipality? It’s fun to shop for equipment and chocolate, but understanding what to do legally early on reduces stress later. Decide if the legal status of your business will be an S-corporation or LLC, and how you will handle taxes. More information about legal and taxes.
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An example:
Source: thepennyhoarder.com
Some states require food handling certificates, business licenses, and a sales tax permit. Florida does not require a license or certificates to start a business. California does. New Hampshire doesn’t initially but then does if your business grows successfully.

Decide on a Specialty

Some states require food handling certificates, business licenses, and a sales tax permit. Florida does not require a license or certificates to start a business. California does. New Hampshire doesn’t initially but then does if your business grows successfully.

Do Your Market Research

Some states require food handling certificates, business licenses, and a sales tax permit. Florida does not require a license or certificates to start a business. California does. New Hampshire doesn’t initially but then does if your business grows successfully.

Home Baking Business Regulations

Some states require food handling certificates, business licenses, and a sales tax permit. Florida does not require a license or certificates to start a business. California does. New Hampshire doesn’t initially but then does if your business grows successfully.

Devise Your Marketing Plan

Some states require food handling certificates, business licenses, and a sales tax permit. Florida does not require a license or certificates to start a business. California does. New Hampshire doesn’t initially but then does if your business grows successfully.

A group of women laugh as they bake desserts.
Getty Images

Equipment and Logistics Needed for Bakery Business

There are wide variations in laws. According to the Institute of Justice, which follows what they call “food freedom laws,” 37 states allow home bakers to sell food online, and 21 states are allowed to sell food in grocery stores. States often ban selling home baked goods wholesale, which means restaurants and food trucks cannot use those products.
Your dark chocolate raspberry ginger brownies have a fabulous reputation. But if you are going to be offering a brownie menu, you should look to see who else in town is making them. Then decide if yours are different enough to stand out, or if you should pivot to another treat.
Deciding to make your baking business dream come true is truly like a roller coaster ride. It is thrilling and terrifying at the same time. There are customers who sing your praises and ask you to cater their big office brunch. Yay! Then there are more complicated challenges. Like taxes. Or licensing questions.
Luckily there are lots of resources to help.
“Off-premises consumption packaged food” (that’s the technical tax language for home bakers’ products) is often considered tax exempt. Learn about local regulations as the home based bakery business owner. There are no national laws regarding cottage food production.

Space at Home

It will get old quickly if you have to move things out of the way every time you bake or pack. Check to see if your state requires separate equipment from personal use items, or even separate sinks or storage. This can have a big impact on your budget.
This year, New Jersey created its own cottage food laws, meaning that finally all 50 states allow food entrepreneurs to start their businesses in their own homes.

Transportation and Delivery

“Cottage Food” laws govern what home-based food entrepreneurs can legally make and how they can sell their products. State laws have expanded what foods can be made at home and sold to consumers.
You might decide that you have 20 hours a week to devote to starting a home bakery business, but not much cash. Everyone loves your vegan cookies, and you have all the equipment needed to make them. You need photographs, customers, packaging and a way to connect the customers with the cookies.

Setting Prices

Many states waive licensing and inspection requirements. Earlier this year New Mexico changed laws requiring extensive kitchen upgrades, saving those who want to start a home bakery thousands of dollars
An important part of the plan is getting baked goods to the customer. Many home bakers offer multiple options. Picking food up at home could include contactless pick up. They might deliver the food themselves. Some states allow food delivery apps to transport your food (there may be fees for both the buyer and seller).
You can accept cash, checks, or set up a payment service like Paypal or Venmo. Those are also free to set up, but there are fees for use. You can get started with your home baking business for practically nothing but the ingredients for your baked goods.
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Order packaging material and labels online. Most states have specific language that you have to use on labels, so pay attention to that when thinking about your packaging sizes and design.

Ready to Go!

Cookies including bar cookies like brownies
Fans tell you repeatedly you could sell your tasty treats. Maybe you should.
A business plan will help you understand all the factors that go into starting a small business. It will help you shape the business around your life, rather than the other way around.