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I started it, let's talk about it...

post #1 of 183
Thread Starter 
I had another post which brought up the fact that I would potentially be accepting money from a bride (if hired) for a cake. It started a whole discussion on the fact that I live in Florida, and am not a licensed home bakery, because currently, Florida does not allow it.

I do actually have a corporation for another business, that I was going to run my contracts through as to protect my family, should I ever become sued, and run the money through. By first trade, I am a bookkeeper, and have that part covered. Now this certainly would not protect me against any health inspector, or anything to do with the food aspect of this, that's a risk I understand I have to take.

My question is, let's be honest, if someone doesn't have the money to rent any type of kitchen, etc. They are going to do this out of their home for a while until enough money is earned. I had thrown out the idea, half in jest, that I could accept donations, rather than calling it a "form of payment", someone suggeted that if you accept anything with monetary value or even barter, that is still considered monetary value. Really? So if I watch a friends kid so her and her hubby can go to dinner and she gets me a gift card to say thank you, I'm in trouble because I'm not a licesed daycare?
I think it's very unrealistic to keep making cakes for friends or friends of friends, for free. It's actually costs money. I'm not even reffering to my time at the moment, but the actual supply cost.

So there has to be a way. I'd love to hear what other's have done in the same situation as me, to start this up and accept some type of compensation. This is NOT meant to start an arguement, I simply would like to hear of some solutions instead of "what can happen to me".
post #2 of 183
Try renting a kitchen for the times you need it. Keeps yourself out of trouble and reassures your client that you aren't doing anything illegal. Lobby for cottage law, get involved in getting it changed.
And if you decide to go the illegal route...keep your pricing in mind. Don't try to underprice licensed businesses. As we work hard at becoming legal, pay the extra expenses and deserve to have competition that is doing the same. Sorry if it isn't what you wanted to hear...I offered a couple of ways to help but, I'm definitely in the mindset that the laws are for everyone. And truthfully the time you are spending trying to get around them would be better spent in trying to get yourself licensed. JMHO. Good luck to you...
post #3 of 183
The rules for day cares are much different than caking. You are only considered a day care if you keep 6 or more kids for more than 3 hours (might vary by state) on a routine weekly basis for compensation. Keeping your friends kids so they can have a date night is not even close to the same thing.

Yes many on this site are selling their cakes "under the radar". I don't condone this behavior, but I certainly would not whistle blow on anyone, not even my direct competition who severely undersells me. Even as a home baker you have overhead costs. Because you are small you have to pay retail for your ingredients instead of wholesale thus driving your price point up, not down. But since you are a bookkeeper and seem to have a good biz head on your shoulders you would understand that concept easily. There are other things to consider as well, deed restrictions of your neighborhood, zoning if you live in an area that practices zoning, and insurance. Even if you fly under the radar, if there is a mishap, your homeowners insurance will not cover any damages brought on by a suit. The suit could stem from a bevvy of things, not just the dreaded food poisoning possibility - which is actually pretty rare for cakers. But, can stem from an angry bridezilla claiming you ruined her wedding because the pink on her cake was not the shade she wanted (yes it does happen). Eventhough a judge would probably throw that one out, you will still be out time and money over the issue. And if the judge was drinking that day and you lose, then your insurance won't help you in that cause. If there were any medical issues due to a food poisoning event (like I said extremely rare) then that would be a class action and bam you are no longer in biz, and homeowners Insurance won't cover it at all. So I guess what I am trying to say is get insurance, but to do that you have to get a dba, and in some states a tax ID. Both things of which can alert your local HD of your existance. So you can by all means do your cakes illegally, or you can give them away, or you can bite the bullet and rent a commercial kitchen to start, then grow into a storefront of your own. icon_smile.gif
post #4 of 183
Niki, if you look around on this board for a while, you will find this topic has been discussed over and over and over....well, you get the idea. The specific issue you discussed about taking care of someone's child, that has been discussed too.

Taking care of someone's child occasionally does not mean a business, however, if you take in kids every day, well, you're running an illegal business.

EVERYONE has faced this issue and it's an extremely HOT topic. What most people get upset about is people that open an illegal business from home, undercut prices, and advertise. I would say that a huge majority of people, first making cakes, made cakes for someone and took money for it, usually it's friends and family. Like I said, the hot point is advertising, whether it's business cards, craigslist, website, whatever, and running a business illegally.

Best of luck to you!
post #5 of 183
Quote:
Originally Posted by hsmomma

Try renting a kitchen for the times you need it. Keeps yourself out of trouble and reassures your client that you aren't doing anything illegal. Lobby for cottage law, get involved in getting it changed.
And if you decide to go the illegal route...keep your pricing in mind. Don't try to underprice licensed businesses. As we work hard at becoming legal, pay the extra expenses and deserve to have competition that is doing the same. Sorry if it isn't what you wanted to hear...I offered a couple of ways to help but, I'm definitely in the mindset that the laws are for everyone. And truthfully the time you are spending trying to get around them would be better spent in trying to get yourself licensed. JMHO. Good luck to you...



ditto! and very well said! trust me, it cost me a lot of money to do free cakes for friends and family for two years before i got legal (i now have a legal home bakery). but in that time, i was able to perfect my recipes and build a good portfolio of work. therefore, when i launched my business, paying thumbs_up.gif customers saw how many cakes i had done up to that point.

and yes, it's quite frustrating when illegal bakers want to "just charge for the ingredients" ...how are the licensed bakeries going to compete with that? and why do we have to get the short end of the stick when we are the ones who did it the right way?

i do appreciate you asking the question in a nice way...there are some others on here that have gotten totally nasty about it and again, i don't know why they're so upset when we're simply explaining what the rules are.

and here's another thought...and i don't know how much it costs in your state, but to get a license here is relatively cheap. you already have a corporation set up so that's taken care of. if you could find a kitchen to rent, you could charge the going rate for the wedding cake and probably still make money!

at the end of the day, we are providing food to the public, and i'm glad that there are strict rules in place. you just never know what litigous person is lurking around the corner...another reason why i think it's so crucial to get legal!
post #6 of 183
Quote:
Originally Posted by NikiH

someone suggeted that if you accept anything with monetary value or even barter, that is still considered monetary value. Really? So if I watch a friends kid so her and her hubby can go to dinner and she gets me a gift card to say thank you, I'm in trouble because I'm not a licesed daycare?



The IRS does consider bartering income. If you have exchanged/ traded goods or services with another person you have generated reportable income for the both of you. If you are watching someones child and she decides to give you a gift as a thank you in the form of money or gift card or whatever, that would be considered a gift.
post #7 of 183
Thread Starter 
Thank you for the replies so far. There is nothing that I want to hear, or don't want to hear. Simply wanting opinions. I absolutely saw that recent post on the cottage law in Florida and sending a letter to the proper authority, which I will do. As for spending time getting legal, it's my very simple understanding that you CAN'T here. I could be wrong, but that's everything I've read so far. My intention is not to fly under the radar or go illegal because I'm "lazy", like many other's our state doesn't give us a whole lot of choices.

You can't be a licensed home bakery.
If you go to "rent" church space, the church can lose it's non-profit status because YOU are selling your items for a profit.
PLUS you need liability insurance, which you can't really afford because you're only doing this every once in a while.
To rent commercial space as in a restaurant, might also cost and arm & leg since this is a once in a while type thing, but I haven't checked that out yet. Just now kind of getting all my ducks in a row and seeing the best way to go about everything.

A S-corporation prevents anything happening to you and your family and your home . Yes your business can be sued and would cost a ton in lawyers fees, but they can not come after your personal assets. That's why I have a corporation. Also, to have a corporation, you have to have a tax ID (in FL), which does give you the ability to purchase items wholesale. I haven't done so yet, because again, I'm at the very begining of this.

I do appreciate everyone's input and keep em' coming!
post #8 of 183
The problem with operating this way is you have no leverage. You have to operate at the whim and mercy of each client. That's how you have to do it. You can't push back and you know in many threads there's tons of push back necessary to be fully functional.

So as far as how to do it, it only makes sense to do it for real and legit otherwise it's just not good for you. It's not right to do wrong in order to have a business.

I understand the kids and the time and everything, btdt.

Go get a job, part time if necessary. If you have muchkins still at home then you have to cut expenses and be poor some more and wait it out. When a friend or family member needs a cake --go for it. Otherwise no. But if you're not even pricing right why freaking bother.

Every Tom Dick and Harry can bake and decorate a cake. Ever hear of Wilton or Cricut? Huge market. Huge. Matha's in on it now? Oh yeah cake making is so exclusive--NOT!!

Then everybody who eats it says, <in sing song voice> "You need to open a bus-i-ness".

It's too hard to make money doing this unless you open it up right or move to Virginia or Kentucky or Ohio or someplace where it's ok from the home. Just say no. Not worth it. Go get a real job.
my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

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my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

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post #9 of 183
Hi Niki, I am in a similar situation and can understand where you are coming from. I have a business (not food related) and I cannot use it as protection for selling home baked goods. It's important to hold on to your dreams, though, and when one door closes, look for one that's open.

It does seem to be the "easy" way; but you don't need to do cakes illegally to obtain the funds to operate one legally. Now I know what everyone will say about the state of the economy, but... There are other ways to secure funding for a business, such as having a part time job and setting aside most or all of that income, or setting aside a part of your main income for your confectionary dream, having a money jar for bills and spare change (it adds up quick, you'd be surprised!). I'm sure you can probably come up with other (legal) ways to secure funding, such as loans, investors, etc. Of course, it may take longer, but you'll be able to sleep at night without the risk of getting caught. (For some the penalty is steep.) For the cake end of it, bake whenever you have the opportunity. Do it for family and friends. Give to bake sales, gas station attendants, post office employees, neighbors... (Yeah... I mean for free. icon_wink.gif ) This way you can still practice your skills and try out new recipes and techniques.

I sincerely wish you the best of luck and hope that things work out for you. icon_smile.gif
* Gentleness isn't for the weak or the weak-minded. It's for the blessed who understand what grace is all about ~ Anonymous
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* Gentleness isn't for the weak or the weak-minded. It's for the blessed who understand what grace is all about ~ Anonymous
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post #10 of 183
You can do bookkeeping from your home legitimately for other businesses with your computer and some Quickbooks action.

I mean I wanna be a rock star but I hate to sing in front of people. Do you think I could make it in the rock music world if I couldn't meet the requirements? Maybe I could just hold the mike backstage and they could just watch my band and listen to me from behind the curtain.
my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

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my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

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post #11 of 183
Think of it from this angle then.

What if you are caught. Have you looked at what the laws are in FL for illegally selling baked goods and food? In some states it is a very hefty fine and jail time.

Personally, I wouldn't risk it if that was the case. And don't assume that for something like this a judge wouldn't throw the book at you. Sometimes they like to set examples to send a message to the rest of the people doing the same thing.

It is more than just satisfying the government. And kudos for taking an illegal profession and reporting it. Most people probably don't.

And I will also bet you that running your contracts through your other company would do nothing to rescue you and your family from losing everything should, heaven forbid, someone get sick within days of eating your cake. There are opportunists and good lawyers every where. The loophole of it being an illegal business is so large a Mack truck could drive through it. The only way to protect against something like that is liability insurance. And I don't know if an insurance company is going to insure an illegal business.

You are looking for justification, and you will not find it here. And even if one person agreed and you felt vindicated in doing that. In the long run if you are caught, justification here will not help you legally. Like the OP said, do a search. This comes up all the time. Bottom line is - it is illegal. And no matter how you think you are doing a work around with having another legit business, you aren't. It is kind akin to having a dry cleaning business, but selling cakes. After all it is a business where I can report the income, so I must be able to sell anything else I want, right? Wrong!

I was actually going to use selling drugs as an example. Both are illegal after all. And in the eyes of the law they are not going to be any less lenient because it was cake and not drugs. They do not work that way.

BTW, I too have an S corp for another business. We make apps for iphone and droid. It has nothing to do with cakes. I live in NY and can have a home processing permit, which I went through the process and obtained. I did not assume that because I went to a lawyer and the government to set up an S corp that it meant I had cart blanche to sell whatever I wanted, even illegally. I have yet to take advantage of my permit. But when I do I will put earnings through the S corp. But I was not going to fool myself into thinking just because I did all the paperwork right to protect myself, that it meant it would protect me from every other business endeavor either. The Health Department is there for a reason. I have seen my share of restaurant and bakery kitchens. I happen to think they are a little bit more lenient in their inspections, but it does work to prevent widespread problems. I guess my level of what should be cleanliness is higher than what I thought it would be for inspections.
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I am no longer active on CC.  They will not let me delete my account.
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post #12 of 183
Quote:
Originally Posted by NikiH

PLUS you need liability insurance, which you can't really afford because you're only doing this every once in a while.


Liability insurance typically costs $400-500/year, that's not too expensive.

Quote:
Quote:

To rent commercial space as in a restaurant, might also cost and arm & leg since this is a once in a while type thing, but I haven't checked that out yet.


There are many rental kitchens out there that are up to code. Depending on the number of hours and the location, the cost would be in the $10-25/hour range with little or no startup costs.

Quote:
Quote:

A S-corporation prevents anything happening to you and your family and your home . Yes your business can be sued and would cost a ton in lawyers fees, but they can not come after your personal assets.


If you are sued because you are selling goods illegally from your home, it would be trivial to pierce the corporate veil and put your assets at risk. This is especially true if it can be shown that you knew you were operating illegally and were running orders through a facade business, that's approaching fraud.
post #13 of 183
As far as I know there are no commercial rental kitchens in my area. In order to rent space from an existing business like on their off hours, the existing business has to be up to exisiting code.

For example, we have The 19th Century Club here. It is a really old really cool vintage venue with some ovens that barely work & stuff.

They can 'get away' with this set up and remain viable as is because they are 'grandfathered in'. If I rented their kitchen for a separate business it would have to be up to 2010 standards every bit.

It would impact a younger existing business less but still it makes it awkward and more difficult. Why would an existing business improve just to rent out a space that they have to improve once again if they get a new tenant. Why would a new baby business toss money into someone else's business just to rent--sure it's doable but it's rarely if ever done around here.

It's easier in some places. Harder in others.
my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

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my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

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post #14 of 183
Quote:
Originally Posted by -K8memphis

It's too hard to make money doing this unless you open it up right or move to Virginia or Kentucky or Ohio or someplace where it's ok from the home. Just say no. Not worth it. Go get a real job.



Before a bunch of people get their hopes up, it is NOT legal to have a home-based food business in Kentucky, unless you build a separate, licensed & inspected commercial kitchen. I wish we could!
Jen
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Jen
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post #15 of 183
Quote:
Originally Posted by CakesByJen2

Quote:
Originally Posted by -K8memphis

It's too hard to make money doing this unless you open it up right or move to Virginia or Kentucky or Ohio or someplace where it's ok from the home. Just say no. Not worth it. Go get a real job.



Before a bunch of people get their hopes up, it is NOT legal to have a home-based food business in Kentucky, unless you build a separate, licensed & inspected commercial kitchen. I wish we could!



That means you can do it.

I have a friend in KY who redid her basement.
I'd do that in a heartbeat.
I'd build a building on my property if I could.
my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

Reply
my cookies are prettier than your cookies because this is the second time i substituted my opalescent sanding sugar when i ran out of sugar to make the batch ha!

 

Reply
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