What Do I Need to Start a Home-Based Food Business?

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While starting a food business out of your home can seem like an attractive way to turn a hobby or a passion into a career, you'll have to meet local requirements to legally open for business. Because what you make has the potential to make customers sick if the facilities are inadequate, you'll have to demonstrate that your production area meets health department guidelines first.

Legalities

Food businesses are regulated on the local level, and each jurisdiction does things differently. Checking on the rules in your area before you start can nip problems in the bud. You'll need to make sure your zoning laws permit home-based food businesses, for example -- if not, the concept is likely a non-starter. Even if your city allows it, your homeowners' association may not.

While the popularity of the cottage food industry has made some areas more willing to allow these businesses, you still may be limited in what you can sell and who you can sell it to. Note what permits you'll need to acquire, when and how your kitchen will be inspected, any safety rules you'll have to follow, and rules for labeling your products.

Structure

The easiest way to set up a home-based food business is as a sole proprietorship, but it's also among the riskiest. You'll be responsible for every aspect of your business, and if you don't have adequate business insurance you also could find yourself personally liable if your products make people sick.

Tip

  • Structuring your business as a limited liability company or a corporation can explicitly protect your personal assets in the event of any business-related mishaps.

Equipment

Some of your equipment will depend on what your local laws require. In many cases, you'll need a separate kitchen, with a clear separation between that and the kitchen you use to prepare your family's meals. Even if that's not the case, you'll have to prove to health inspectors that you have adequate ventilation and other safety features. You'll also need to show you have the facilities to process, store and ship your products.

For equipment specific to what you plan to sell, a restaurant supply shop or other outlet that facilitates buying in bulk may be the best option. Consider how easy it is to find replacements for key items, and how dependent your business will be on key ingredients or supply sources. Project how much business you'll do, and arrange your deliveries accordingly. While you don't want to lose business because you don't have enough ingredients to make your trademark muffins, for example, nor do you want excess milk and eggs to spoil because of overoptimistic forecasts.

Customers

Without a market to sell to, a home-based food business can't succeed. Looking locally is your best bet. Selling online is tricky, as the FDA doesn't allow food that comes from a home kitchen to be sold in other states. Take samples of your products to local restaurants, farmer's markets, grocery stores and anywhere else that seems like a likely customer. Include information on what makes your product unique, such as locally-sourced ingredients or gluten-free baked goods.

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