i live in an area where it is not possible to run a cake business out of home. plain and simple not allowed.
Ill plainly state i make cakes fron friends and family, and have done for friends of friends, for the price of ingredients.
I simply cannot afford to make cakes for free. i usuallly have $100 to do groceries for myself and my son per forntight. so for those of you who would say "its not that much money", i think it would be wise to keep in mind that its not the much money for YOU but is the difference between food on the table and going hungry for others.
I have weighed up the pros and cons of doing what im doing. i dont do cakes for strangers, i do what i do to get practise, and in the hope that one day i will be able to move somewhere where i CAN have a home bakery and then when i go to advertise, i will have a variety of things to show for it.
Why do you have to do illegal cakes to start a cake business? As it was stated before, do something else and save your money.... something that does not require a specialized license. Cakes are not the only way to make money. Clean houses, work a part time job, etc. If you are selling for ingredients, there is no savings for your dream business. At least a designated job would help save for that goal. If you have children, work out of a closed restaurant in the middle of the night.
And watch the advice for running your expenses for your illegal business through your legal business. If you get caught, that is IRS FRAUD. As times are tough, watch out for someone turning you in. All it takes is one person losing a sale to you and that person decides "that's enough".
I see that I was quoted upthread. However, I actually have never said what was attributed to me. What I've said about KY is that "it's tricky." And you absolutely do not have to have commercial equipment. I know restaurants that do not have commercial equipment. It's preferred but not required.
Florida here... yes it is illegal. I had to get licensed, take the food safety class and rent a commercial kitchen. I pay monthly even if I dont use it monthly to keep my lease up. Like everything else in the world there is a cost to do business. If you want to run it as a business, there are costs. If it is for a hobby , dont complain about the costs, or dont do it. I was too paranoid about having a lawsuit filed without being legal. People today are sue happy and anything can happen. The risk is on your shoulders.
Whoever gave you the advice that a corporation will protect your home and personal assets is WRONG. (Hopefully it wasn't an attorney, if so, they should be disbarred) Speaking as an attorney with over 30 years experience and now a cake designer, don't do it unless you go the legal route. It is easy to pierce the corporate veil and go after your personal assets, especially if it can be shown that you are operating illegally.
There are several of us licensed bakers on CC who had to earn the money, build the portfolio, and build a following in order to get that license. We worked without a license for a while.
Mostly for friends and family... and sometimes we had to stretch out to friends of friends and friends of family. It actually helped me when I did get my license because I had already built that reputation.
In my opinion... everyone has to learn. You have to start somewhere. I don't think anyone should "be in business" without a license. But if you are doing a favor for a friend or family and you are receiving some sort of compensation or "thank you" for your time, materials, and effort for helping them out, in my opinion.... that's two people treating each other right.
No doubt this is a heated topic. I don't consider unlicensed occasional bakers who are doing something for a friend or family member a threat to my business. Really... if they went to a friend, they don't likely have the budget to come to me anyway... they just took business from Walmart or the local mass production bakery. But not a specialty cake artist with a minimum order that far exceeds the cost spent on materials.
Also... the bulk of the people that ordered from me during that time were people who had never even CONSIDERED a specialty cake until they saw me (someone they know) producing them. AND I can honestly say that all but 1 person that ordered from me during that phase of my life, no longer orders from me unless I'm doing them a favor because they can't afford me. I can pretty easily surmise that I wasn't stealing business from the local cake artists...
My point is that people are going on and on about how people can offer the cake "FOR LESS" and these custom shops can't compete with those prices and it's causing them to "lose" business.
If the price of the bakery/walmart/friend is the same... then that argument is void. And if that's their budget, they never would have called a custom shop anyway.
Bakeries, Walmart, Sam's Club all know about each other and aren't all up in arms because the other guy stole their customer. Heaven forbid one of them have a sale!!!!!
Anna, I simply never said that and this is an irritation. Those three states allow baking from home. I was misquoted and this home kitchen versus commercial kitchen is a different discussion. Legally baking from home is allowed in Kentucky and you have to abide by other rules as well. Got it. Don't quote me but I think you have to follow certain continuing rules in the other states too.
Enjoy your cakery.
edited once for a typo & clarity
The point is the illegal baker takes from someone. It could be any legal baker at all price levels...Walmart, local bakery, me, you... you were basically sayng that as long as the baker is not at your price point, it's ok. My point is that the bakeries in town have just as much right to fair trade as the artist. And even the chains have heavily paid to do business in the community. Obviously due to their volume, they don't care. But a struggling bakery cares.
I see that I was quoted upthread. However, I actually have never said what was attributed to me. What I've said about KY is that "it's tricky." And you absolutely do not have to have commercial equipment. I know restaurants that do not have commercial equipment. It's preferred but not required.
Leah, you have to have a separate kitchen though, right? Like a basement kitchen? You can't do it from your "home kitchen". Right now I'm renting commercial space, but if I could do it from my home kitchen...I'd jump through whatever hoops necessary!
No doubt. The business is being taken from someone and no one should operate on a permanent or long term basis without the proper legal steps being taken.
I guess this argument wears on me. It just feel's very dramatic, presumptuous, and self righteous for anyone to say that someone who is trying desperately hard to break into the business and is taking a small amount of compensation for their hard work is "stealing" business from them. It's assumed that the one being "stolen" from had a shot at that person's business to begin with and likely... they never did.
Of course... if they took no compensation at all and just did it as a gift. There would be an even bigger issue. How does anyone compete with FREE?!
Ok, so I have read this subject in several threads and would like to put some thoughts out there...
If you want to do cakes as a business, being legal is the way to go. First, it is the law. Second, it protects YOU. Third, it will get in venues that otherwise you could not get in.
When I started a year ago, I did free cakes for family and friends. Yes, it cost money, lots of it, pans, supplies, etc. I considered the money I spend education money, like, if I was going to school and had to pay tuition. Same thing, did not matter that I was teatching myself.
Now I m legal, I work out of a friends commercial kitchen where I pay a nominal amount (this will end by next year, she is moving out of state so I will have some decisions to make then). I charge just as much as any other custom bakery in my area. I could charge a lot less but I want to build a clientele that can afford me at a ghler price because I know my expenses will be higher then.
With that said, I have a question...most of the complains from legit business is that the illegal home bakers undercut them in price and therefore steals their sale. I would not like that either. But, would you fell just as upset if a legit business, with less overhead, chose to charge a lot less and was busier for that?
Some bakers out ther have fancy store fronts that cost a lot in overhead ( I would love to have one of those) and others work out of a small commercial kithchen, off the beaten path, with much lower overhead. If they are charging a lot less for their cakes and getting lots of sale because of that, are they stealing business from others or just being wiser in their decision of staying less fancy to cut costs.
Again, my question is not about illegal bakers, but legal ones undercutting your prices and stealing your business. 
Some businesses require a license and expensive requirements. Give the cakes away and earn money to save for your business some other way. The law is the law. If you don't agree with it, move. I did not get a break by selling cakes. Not everyone starts illegally. I believe in the law. My area is one of the most expensive I have seen on this site for starting a baking related business, but I still complied. Every requirement has a purpose, whether environmental or for public safety.
There are too many people on this site all over the world who have legal bakeries. With the right business plan, it is possible anywhere. If someone cannot figure out how to do it legally, they don't have a business. There are many enterprising bakers on this site with successful businesses who started in unorthodox ways because of cash constraints.
SCP, I like and agree with what you said and how you said it.
What makes your area more expensive?
CakeDiva101, I have an accounting/ economics degree. Free enterprise is one of my strongest beliefs. Competition and market placement are some of the most exciting parts of a business. But legal businesses are on a level playing field. An illegal business cuts corners such as IRS/state tax (the big ones), expenses required to comply with the law for the license (equipment, construction), insurance, planning commission approval, engineering permits, yearly license fees, and plenty more. The law provides that level playing field and it is up to the entrepreneur to maximize profits and minimize expenses. It's how you play that game that determines your income. I have no problem with any legitimate business. I know enough to know that if my business fails, it is my fault... not properly positioning my business in the market, or not controlling expenses/profits. Awareness of illegal businesses is important also. I don't compete with any of these illegal bakers, but it is a irritant because they think it is ok for me to spend the money, but the law doesn't apply to them.
K8, a separate kitchen is allowed, but I filled out the same aplication as Applebee's would submit. The requirements are so steep that this area automatically qualifies for FDA approval. I have a finished above ground basement and my bakery uses about 800 squre feet of that space. I had to have three different pumping stations, a 500 gallon grease trap in the yard that either feeds into a separate drain field, or ties into my existing one. My required three basin sink is 9 feet long... big enough to immerse a half sheet pan 2/3 in water and drains on both sides, self-closing hinges on the doors, a venting system that pushes the air a certain speed, floor drains, hand sink, mop sink, and a pest control contract. I had to run separate electric and the plumbing requirements were expensive. My husband is a builder/developer as a second occupation and our construction costs were about $20,000. The estimates we got were much higher, so we did it ourselves.This is a full commercial kichen with no restrictions, but that was the only option. I privately saved for most of this and then surprised my husband with the money when I told him my plan. He is so supportive and loves my business as much as I do.
In addition to everything scp11 said -
Illegal businesses not only lowers the local asking price of products/services, at times it also lowers the quality of said items. What good does it do to buy a cake from someone who bakes illegally out of their home, only to end up with something that should be published on cakewrecks?
I am in no way saying that all illegal bakers suck. But there are a lot of them out there that do.
Theresa 
Anna, I have no problem with your kind of "illegal". Everyone does business with friends and family. People like to say, "I know my baker personally", and they may have only thought of a custom cake because they know you or know of you. I agree, when people step out of their circle and solicit strangers, that's crossng the line.
In addition to everything scp11 said -
Illegal businesses not only lowers the local asking price of products/services, at times it also lowers the quality of said items. What good does it do to buy a cake from someone who bakes illegally out of their home, only to end up with something that should be published on cakewrecks?
I am in no way saying that all illegal bakers suck. But there are a lot of them out there that do.
Theresa
I have one (that sucks) on my local Craigslist right now. You see her about 15 times if you search "cake". There is even a link to her website with a horrible picture of what is probably an attractive woman. Her cakes have crumbs mixed in the icing, her Wilton icing is crusted then had a spatula dragged through it. She says that "custom cakes have custom prices", which I like! But here's what she says about weddings:
"Wedding cake pricing starts at $1.50 per serving for a basic white buttercream icing and minimal decoration. Fondant covered cakes start at $2.50 per serving."
That is a full $1 less per serving of the next lowest priced "competitor" in the area. The next lowest legal bakery has buttercream starting at $3 a serving.
But what REALLY chaps my @$$ is that she has a website, and is advertising!! I do illegal cakes every chance I get, so I'm not going to complain about that, but I have to rely on word-of-mouth advertising and phone calls to get my prices out there. I am working on a website and price lists and the sha-bang, but it will not "go-live" until I am legal.
She gets business galore, apparently by her photo gallery, and it is crap! It really is. Mine are 100 times better, I even cover my naked cake boards, something she has never heard of.
It is Cincinnati Craigslist and her ad says it is in NKY.
After visiting the site, I can see where you are coming from. Also the obscene amount of copyrighted infringements she is doing. 
If she just lived across the river, it would be a whole different story since Ohio is one of the easiest states to have a home-based bakery. There are a couple in my area that do not even follow this, which is even more irritating since Ohio has a cottage food industry and very easy to be legal. They also sell their products practically free (one for $1/serving). I am pretty average for my area and a little lower than the storefront businesses, but about the same for home businesses, but there is no way can I go to $1.00 per serving.
That is just crazy! How can somebody make any money only charging $1.00 a serving? Even illegal! Make you wonder what kind of product they are putting out!
That is just crazy! How can somebody make any money only charging $1.00 a serving? Even illegal! Make you wonder what kind of product they are putting out!
I know! When I was "starting out" with my first pay cake, I was given that because I had no clue, and I was 16, so it was an honor to do the cake. (It was a diabetic wedding cake, 2 tiers. I made my own powdered glucose in the blender!) It was also in the mid 90's so cakes were a little cheaper then!
I figure my costs (shopping at Walmart for ingredients, and going to Sugar cr@ft in Hamilton once a month supplies, and emergency trips to Micheal's or Hobby Lobby) are about .45 a serving. .55 cents a serving profit is about $2.50 an hour, depending on the cake! It could be much less, or a little more. I suppose it is better than nothing, but I would be bitter and not enjoy it for 1 second.
I think alot of you guys have alot of unrealistic views, I am a "illegal baker" and I have a reg 40 hr well paid job. With that being said I have kids and bills. I do not have the time or money to waste on giving away free cakes. So until I can make enough money to own a bakery this is what it is. Is it wrong? Opinions may vary, but the reality is it supports me and my family. Also for generations there were women who made cakes out of their home like your grandmother or aunt. Let's not forget that's were some of yall got started. So with that being said I hope you "Legal bakers" keep in mind not everyone has the same allowance to get started as you...
Everybody breaks the law, whether you speed, bake and sell cakes under the radar, etc. We all do it. Does it make it right? Of course, not, but we all have at one time.
With that said, should you break the law that is there to protect the consumer and you? It's not like the law is there just because they want to make it hard on you. It's there to protect people.
So if you decide to sell illegally because you've justified it in your head that everyone has done it so it makes it okay for you to do it, then fine. It doesn't make it right and you are opening yourself up to hurt when people come at you complaining about the cake, cancelling checks, not paying, etc. because you can't take them to court since you're illegally selling. Don't expect to be respected by other bakeries in the area that you are competing with because you are breaking the law and they very well never did.
It always annoys me over these topics that you have one half that justifies breaking the law because everyone does it and the other half condemns the law-breakers as if they've never broken a law before in their life. It's so silly.
I see that I was quoted upthread. However, I actually have never said what was attributed to me. What I've said about KY is that "it's tricky." And you absolutely do not have to have commercial equipment. I know restaurants that do not have commercial equipment. It's preferred but not required.
PostPosted: Thu Jul 08, 2010 3:04 pm Reply with quoteBack to top
KY is verrrrrry tricky. Basically you need a separate kitchen, three compartment sink or commercial dish machine, separate bathroom with self closing door, separate handwashing sink, yada, yada. It can vary by county a bit, not in the code but how each county interprets things. As I said, verrrry tricky.
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Yes, you did say it was tricky!
If a "separate kitchen, three compartment sink or commercial dish machine"
is not commercial equipment, what is?
And the separate kitchen is what I was talking about. I view "home kitchen" as the one without the special stuff, the one that you cook for your family in. (That you cannot bake commercially in) I view the separate kitchen, whether it is in your home, or in a retail location, or on the moon, as a commercial kitchen. (The one you CAN bake commercially in.)
Therefore, usin the logic above, you cannot bake from your "home kitchen". If people want to split hairs and call the separate kitchen in the garage with all the requirements a home kitchen because it is located at your home, then I guess I may have to join the club. Maybe I'll go outside and stand under one of my home trees, next to my home pool, in the home snow, that is all over my home grass, and just think about it for a while (and maybe start smoking again after all this drama). But for now, I'm going to my "original" home kitchen and bake a cake, vacuum my home floor, then clean my home bathroom, do some home laundry, clean my home boys' home room (Are we still home? I thought that was at school?) and get ready for my husband to come home home. (And by home boys' I mean my kids, not a rap group, or all my thug friends. I'll clean their room on Monday.) 
It always annoys me over these topics that you have one half that justifies breaking the law because everyone does it and the other half condemns the law-breakers as if they've never broken a law before in their life. It's so silly.
ok you got us! of course everyone has sped. 
but this is a cake forum, so let's compare apples to apples here and stick with the subject.
for all you illegal bakers out there...if you want to bake illegally and continue to do so even though you know it's wrong, that's up to you. but don't come on here looking for justification, and for those who did it the legal way to say "oh, it's okay...do what you need to do." b/c most likely it's not going to happen.
some of you talk about how caking helps provide for your family...well what happens when you get one bad customer who wants to make your life a living hell? they can sue you over anything...we live in a litigous society. it can be from getting someone sick, to delivering on the wrong day, to having the wrong shade of blue on the cake...it does happen! and although the case may get thrown out, you will still have to spend money defending it/paying them out of court, whatever!
and for me, with the whole "you can do cakes for family and friends and accept some money" debaters, i still say "no." and here's why...where do you draw the line? i come from a huge family and i've lived in the same town for 25 years and know a lot of people. and of course, everyone's your friend when you do cakes if i totaled up all of the money i would have charged these people when i was doing free cakes for "family and friends" for two years, i would have made $10,000+. that's ten grand i'm taking away from other bakeries in the area.
at some point, you have to say, i either choose to do things the right way, or i choose not to. it's up to you.
It always annoys me over these topics that you have one half that justifies breaking the law because everyone does it and the other half condemns the law-breakers as if they've never broken a law before in their life. It's so silly.
ok you got us! of course everyone has sped.
but this is a cake forum, so let's compare apples to apples here and stick with the subject.
seriously? you can't even have a fun debate and look at things from a larger perspective just because you think only apples and apples should be compared? sometimes to get a point across, you can't stick to one subject. that's why great debators, are, well, great!
if i totaled up all of the money i would have charged these people when i was doing free cakes for "family and friends" for two years, i would have made $10,000+. that's ten grand i'm taking away from other bakeries in the area.
In the fun spirit of great debate
If they hadn't gotten a free cake from you, would they have gotten one from somewhere where they would have had to pay? If so, then it is still "taking from other bakeries in the area"
But that is also like saying that I do my laundry at home, so I am taking money from the laundry mat. But I take my comforters to Coin Laundry, up the road, so I am taking money from Laundry Queen. Or the time DH dropped the kids off at my mom's with dirty clothes for the next day.(I was having a baby 3 weeks early) She washed them! I guess she took the money from the laundry mat, or from walmart, because she used her own detergent from Big Lots, and if I had used my own from walmart, then I would have to buy more.
Most successful cake artists, especially those who started maybe 20-25 years ago, started at home, unlicensed. Period. I did...people in this thread did....and I know for a fact many successful and well known cake artists did as well. I'm still not running a full time business here....2-3 cakes a week, max. My first responsibility is to my kids...and that's how it will stay. I was glad to finally be able to save up enough cake money to buy my license and insurance 3 years ago.
I think its a personal choice (yes, its law...yes...its a choice.). And I also do not feel threatened by the tons of unlicensed bakers we have in our area. I need to concentrate on making MY licensed business the BEST and highest quality it can be. That takes enough effort, and will keep my customers ordering...if I'm the best, I don't have to worry about people "stealing" my orders. They say if you are running a race, you should not look back to see where the competitors are...because it will slow you down. Just a thought.
The only thing that totally annoys me about this discussion is that we have newer cakers that get on...ask a question about a cake they did for their neighbor, and suddenly all the CC police come and say "Ummmm! You aren't allowed to do that!!! UMMMM!!!!" Its so wearing. Just answer the cake question...ya know? There are plenty of "licensed" threads on this board without turning 50% of the threads into that debate.
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