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Baking out of a Church kitchen?

post #1 of 25
Thread Starter 
Ok...I have a legal and the ONLY cake shop in my town.
A church in my town just finished a new building with a a commericial kitchen. I heard through the grapevine that they have a few church members that come in and bake and then sell to farmers market. THEN I heard that one of them would be baking for a local sandwich shop some non decorated dessert cakes and cookies.
Can anyone just bake anything out of a commercial kitchen and then sell where ever they want?
They dont have a tax permit or a business license so in my opinion it is wrong to bake for PROFIT in a non profit non taxed church....am I wrong on this?
If it is open for members to bake....I think I will join, sign me up! No taxes, no lease, no insurance.......hmmmmm
What are YOUR thoughts?
When going up the ladder of life, be nice to people on your way up. You never know, when you will see them on the way back down.

A Sweet Success
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When going up the ladder of life, be nice to people on your way up. You never know, when you will see them on the way back down.

A Sweet Success
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post #2 of 25
You must still have a business license and all the tax stuff worked out if you are going into business for yourself. You would just not need to have the health inspections and that sort of thing, because your business would be under the inspection already in place for that kitchen. But aside from that, yes the church can lease (per diem, month-to-month, annually, whatever) to anyone they wish for any purpose they wish (legal, of course), even if it's to turn a profit. So yes, while they still need to have the business end made legal, there is no rule or law that says you can't bake for profit out of a non-profit facility.

Edited to add:

Not to mention, as far as financials go: I'm not sure on the EXACT tax laws and all (You'd have to ask a tax accountant), but you are allowed to make up to a certain amount of personal income before it is taxable (it's very low) so it's it's small-beans (like in a yard sale) it's really not an issue. Sales tax, on the other hand, is another story... of course some states (like DE) don't charge sales tax, so that wouldn't be an issue either.

So if these women are using the church kitchen for a one-time thing, then even the business license and all wouldn't be necessary... only if they wanted to turn it into a full-fledged business.
Tara
<---wonders if anyone uses REAL ingredients anymore--sugar fruit nuts, cream, butter etc--instead of flavoring chemical cream from a bucket with pudding & jello and calling it "mousse"
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Tara
<---wonders if anyone uses REAL ingredients anymore--sugar fruit nuts, cream, butter etc--instead of flavoring chemical cream from a bucket with pudding & jello and calling it "mousse"
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post #3 of 25
There's so much you may not be aware of.

Indiana just passed a Farmer's Market bill that says you can bake in an uninspected kitchen TO SELL IN A FARMER'S MARKET. But you cannot sell for resale (i.e. to a restaurant). Does your state have such a law? Are the proceeds from the farmer's market sales going to the individuals doing the baking or are the proceeds going to the church?

Are churches exempt from certain laws and requirements in your state? i.e. You can't make a bunch of food from your home and charge folks $5 to eat it .... but in some states a church can because of their tax exempt status.

Do you know for sure they didn't get a HD license? In some states, you can get a temp food license, which is usually obtained for farmer's market sales.

Or if none of hte above applies, they could be just misinformed ... they may think as long as they BAKE in a comm'l kitchen, that it's ok. They may not know they need to be licensed, too.

Lots of "if's" in this one. And if you wanna find out for sure, just ask your HD inspector.
post #4 of 25
churches can rent spaces to 'for profit' businesses- however they must then pay taxes on the income they earn from the renting. And they should be paying property tax on the portion of the church that is used for the business for the percentage of the time it's being used (there's some IRS formula)

Renting the space won't jepordize their tax-exempt status- and there's nothing "morally wrong" about renting there- but a church not paying the taxes on the income the rent brings in will loose them their tax-exempt status and IMHO is what would be 'wrong'.

I'd make sure the church is planning on paying the taxes before I rented from them to avoid any "bad blood" later. (there are 3 critera for them paying the taxes- the business is not related to the church (cakes would fall under that), it's paid on a regular basis (monthly rental would fall under this), and the business is a trade or a business (selling cakes would qualify)

((my DH is a tax guy and I used to work for a chuch)) icon_smile.gif

You'd also have to make sure the kitchen is being inspected, who is paying for the inspections.... You wouldn't want to get into trouble in your state because the kitchen wasn't up to code.
When life gives you lemons...trade them for limes and break out the tequila!... Sox
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When life gives you lemons...trade them for limes and break out the tequila!... Sox
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post #5 of 25
In my state there are different "levels" of commercial licensing, one of which is for churches. That license is one that requires that the kitchen be inspected periodically and to have to meet certain qualifications that are lesser than a full fledged commercial restaurant grade....This license allows the church to serve for church functions or non- profit type functions that the church chooses to support (such as boy scouts' awards dinners). Even if the church is charging per plate or whatever, as long as it is a church related function, this level of licensing is fine...In these cases the church remains qualified for its tax exempt status.

However, the next level, which is for a food service businesses, is available to churches who wish to use their church to rent out for profit or if they will be doing ongoing food service such as catering for weddings or running a full fledged soup kitchen. This is where tax status gets fuzzy...do your research, since federal and state laws can differ on how they handle taxes in these cases.
post #6 of 25
Thread Starter 
Quote:
Originally Posted by indydebi

There's so much you may not be aware of.

Indiana just passed a Farmer's Market bill that says you can bake in an uninspected kitchen TO SELL IN A FARMER'S MARKET. But you cannot sell for resale (i.e. to a restaurant). Does your state have such a law? Are the proceeds from the farmer's market sales going to the individuals doing the baking or are the proceeds going to the church?

Are churches exempt from certain laws and requirements in your state? i.e. You can't make a bunch of food from your home and charge folks $5 to eat it .... but in some states a church can because of their tax exempt status.

Do you know for sure they didn't get a HD license? In some states, you can get a temp food license, which is usually obtained for farmer's market sales.

Or if none of hte above applies, they could be just misinformed ... they may think as long as they BAKE in a comm'l kitchen, that it's ok. They may not know they need to be licensed, too.

Lots of "if's" in this one. And if you wanna find out for sure, just ask your HD inspector.
When going up the ladder of life, be nice to people on your way up. You never know, when you will see them on the way back down.

A Sweet Success
Reply
When going up the ladder of life, be nice to people on your way up. You never know, when you will see them on the way back down.

A Sweet Success
Reply
post #7 of 25
Thread Starter 
Sorry....goofed up the poting on that.

Deb, I knew someone would say ask the HD so I did they have passed them...as far as inspection. BUT she thought like I did that to bake and to sell they must have a tax permit and a business license. They don't have either of those.

Maybe....I am just being witchy, but I had to jump through nine miles of red tape...not to mention all the cost involved in owning my own business...I am probably being touchy!
lol
BUT I still don't like it and by gosh whatever they have to have I will make sure they do it!!
When going up the ladder of life, be nice to people on your way up. You never know, when you will see them on the way back down.

A Sweet Success
Reply
When going up the ladder of life, be nice to people on your way up. You never know, when you will see them on the way back down.

A Sweet Success
Reply
post #8 of 25
In the state of MI, you will get a license as long as you bake in an inspected kitchen that includes churchs and party halls.

So I guess you are allowed to bake at a church and sell at the local farmers market for profit making it perfectly legal. Not sure how the laws are laid out in other states.
post #9 of 25
Do you know for sure they don't have a license? You said you heard all of this through the grapevine, so it may be possible you didn't get the whole story. I'm kind of mixed on this, because I see your side of it, nobody wants competition, especially when you've been the only shop in town, but on the other side, a lot of us newbies get harped on, being reminded over and over about having to use a commercial kitchen and go through all the proper procedures. If they are going through all the correct channels, which they very well may be, there's not much you can get mad at, aside from the fact there is now someone else around.

I mean, if you read about their story on here without knowing where they were from, and they were doing everything legally, you'd probably be encouraging them. Is there any way you can go talk to them and (nicely) inform them of all the proper policies? That way, you could even get the inside scoop about what their business plans are!
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♫ Don't worry that it's not good enough for anyone else to hear, just sing, sing a song! ♫

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post #10 of 25
In MN, which is one of the strictest states (or so I've been told), even if you rent space in a commercially licensed kitchen, you still have to have an individual certification/licensure which you get by passing the Food Handlers test & paying for the license, etc. in order to transact business (ie take money) as a baker. But for food sold at a Farmer's Market, you can make it at home & label it as such and still be legal. Something to do with people knowing that the food they get at a Farmer's Market hasn't been through normal inspection channels.

As I understand it, church kitchens are exempt from the commercial license requirement if their only purpose is to bake/cook for their members and people who come to their facility. So, as a baker, you can't just go & use any church's kitchen...you have to look for one that has done the extra steps for the licensure.

I wouldn't worry too much about the folks who are selling at the Farmer's Market...that's probably not your target audience anyway.

And the other people that are baking for/selling to restaurants? If that's the only thing they're doing, I wouldn't worry about it much either...unless you aim to do that yourself. Put your energy into churning out FANTASTIC baked goods & the rest will take care of itself. Good luck!
--Tammy
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--Tammy
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post #11 of 25
It doesn't actually sound like they are any competition for you. I looked at the pictures you have posted and I can't imagine some ladies baking cookies and dessert cakes from the church kitchen at the farmers market are going to be able to compete with your beautiful cakes. icon_smile.gif It sounds like they are just trying to raise some money for the church. I know illegal is illegal but I think I would have let them get caught on their own, if in fact they are breaking the law.
post #12 of 25
Does anybody know how this works in Texas? Renting from a church I mean.
post #13 of 25
I live in OKC and I learned while I got my license that no you cannot do that, you must have what is called a manufacturers license ($150)to sell food items other places in the end they end up being sold to the public and their safety comes first.

If you are going to get a license through New Church or whatever other church kitchen not only does it have to be commercial but must be approved by the Health Department, you must also have your food handler's certification, register your llc and get a tax id number and finally Zoning and Plan Review has to approve your license.

All that just to get the license...

Good Luck
post #14 of 25
Quote:
Originally Posted by jlsheik

Sorry....goofed up the poting on that.

Deb, I knew someone would say ask the HD so I did they have passed them...as far as inspection. BUT she thought like I did that to bake and to sell they must have a tax permit and a business license. They don't have either of those.

Maybe....I am just being witchy, but I had to jump through nine miles of red tape...not to mention all the cost involved in owning my own business...I am probably being touchy!
lol
BUT I still don't like it and by gosh whatever they have to have I will make sure they do it!!



I know how you feel I just got my license and it was very pricey, and time consuming I live in north OKC and I know here in Oklahoma a place that gives cake decorating classes for close to nothing, there is also Midwest Bakers and everytime I go there to buy stuff I see ladies buying tons of boards and boxes and makes me wonder why the health department does not require this place to sell to people with tax id numbers only because who knows how many of those aren't actually licensed.

I went to a baby shower where they served a 12" round cake iced very poorly and asked where they got it and she she said the kitchen manager at a hospital bakes them and she thought it was so cute to add "oh yeah we all get our cakes from her" then I asked how she paid and she said $25!!!!!!!
I thought I was going to throw up and then I tasted the cake and it tasted like a $25 cake! She didn't even doctor the mix!

I do not worry about competition my biggest concern is reaching out to those Oklahomans that can afford my cakes!

I decided once I became licensed my biggest concern was never going to be the homebakers, or reporting them because they wished they were in my shoes.

Our mottos should be to stick to one thing and do it right
I do not work for the health department it is their job to get them not mine.

All I know is they better hope they don't make anyone sick or someone with allergies eats their cake because they will have a mess in their hands.

Also when it comes to weddings lots of venues only allow food made by a licensed baker.

Good Luck with your business. I'm jealous I wish I had my own shop but I will someday. Where is yours?

You went through all the red tape because it is better then being the lady that makes cakes.

Patty
post #15 of 25
By the way check your link to your website I clicked on it and it takes you to the godaddy website.

Good Luck with everything
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