Operating a bakery involves manufacturing the product (baked goods), displaying and selling the product. Running a bakery from a small apartment presents several logistical and legal challenges. Because food is involved, your municipal health department may require that your kitchen facilities are inspected and licensed in order for you to sell food to customers. You may also be required to obtain a business license which may not be available to you, depending on how the property is zoned.
If you are considering running a bakery from your small apartment, there are many practical issues to deal with as well as legal ones. If you will be selling product from the apartment, you must deal with customers coming in and going out of your apartment regularly. This could impact your relationship with your neighbors and landlord. You must also find display space to merchandise your baked goods and set up a payment-taking area. In a small apartment, there is little room to set up a selling space effectively. If you plan to sell your baking at a farmer's market or other venue, you must follow health department rules regarding storing and transporting food.
Most municipalities require all businesses to register and to purchase an annual or biannual business license.Each city has its own rules in regard to running a legal business, and your apartment may not qualify. The municipal zoning commission may also have to approve the business license application. If your apartment is zoned as residential-only, you may not be allowed to legally run a business from that location. Before setting up your bakery, research the municipal rules in your city to ensure that your apartment will be able to comply.
Most city or county health departments regulate any business that serves or sells food to the public. Kitchen facilities are inspected on a regular basis to ensure that they comply with food safety laws. Some health departments will not approve a residential kitchen for food sales under any circumstances. Some have laws so strict that residential kitchens would not be able to comply without major renovation. Inspections often focus on raw food storage areas and the temperatures foods are held at as well as sanitation facilities. Check with your health department to find out what the rules are in your area. You may find that renting a commercial kitchen to bake in might be a more practical idea.
At a minimum, your home bakery should have property and casualty insurance. You should insure any equipment you use for the business. Anything you use for the business will not likely be covered under your homeowner's policy. Check with your current insurer to find out how to put a business rider on your home policy. Also consider liability insurance for your bakery if you have customers coming and going from the premises. If they get hurt, they could sue you for medical costs and damages. Also, if something you sell makes people sick, you may also be liable. Liability insurance helps manage any legal fees or awards from a lawsuit.