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Cottage Law Vs Home Processor Exemption - Page 2

post #16 of 29
Quote:
Originally Posted by jason_kraft

Regarding sales tax, I believe most cottage food sales (i.e. cakes that are not consumed on-premises) are exempt from NY sales tax anyway, so there would be no change there.

Legalizing direct cottage food sales would increase state income tax revenue though, and you might also suggest that the cottage food license come with a small annual fee relative to total income in order to defray the cost of implementing the law.



Yes, most baked goods are exempt from NY sales tax... I've heard that the (free) Home Processor permit may end due to budget constraints and lack of inspectors. Whenever I suggested the state impose a small annual fee to help offset costs, people became irate. "Who's side are you on?" I was asked. Uh, yours.

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post #17 of 29
Quote:
Originally Posted by MimiFix

Quote:
Originally Posted by jason_kraft

Regarding sales tax, I believe most cottage food sales (i.e. cakes that are not consumed on-premises) are exempt from NY sales tax anyway, so there would be no change there.

Legalizing direct cottage food sales would increase state income tax revenue though, and you might also suggest that the cottage food license come with a small annual fee relative to total income in order to defray the cost of implementing the law.



Yes, most baked goods are exempt from NY sales tax... I've heard that the (free) Home Processor permit may end due to budget constraints and lack of inspectors. Whenever I suggested the state impose a small annual fee to help offset costs, people became irate. "Who's side are you on?" I was asked. Uh, yours.




I don't disagree with a fee. It can't be more than what we'd have to pay per hour to do a random cake here and there if we were to rent a kitchen at $25/hr (incubator kitchen rate near me).

I imagine we'd also have to claim our income (obviously) from our cake baking to the IRS and possibly usage of space and utilities. We'd be paying taxes on that too? I'm not really that knowledgeable on that part.

I'm simply looking for a way to make ends meet and do what I love. I work full time at a unfulfilling job during the week so the cake business will give me hope for my family's future without having to dig into our already tight budget in order to get started. If I personally were to see my business growing to the point of "I NEED RETAIL SPACE" it would definitely be a great starting point to get something like this passed so I'll get there and get a space and sell to the public, etc, etc, yadda yadda yadda... you all know how that goes. icon_wink.gif

We have to start somewhere. I like my hobby but want it to be my career. =D

Thank you all so much for the insight and information. Will be drawing up a letter myself and rallying my local baking friends to do the same.

We can do this!!!
post #18 of 29
Quote:
Originally Posted by Atomikjen

I imagine we'd also have to claim our income (obviously) from our cake baking to the IRS and possibly usage of space and utilities. We'd be paying taxes on that too? I'm not really that knowledgeable on that part.


Even if you don't have a legal business you are still required to pay income taxes on the net profits from your business (revenue - expenses), penalties for tax evasion can be serious.

The increased revenue from income taxes at the state level (and the federal level) would come from people who did not report income before since they were operating under the radar.

Declaring your business income can even lead to a lower total income tax bill -- if your expenses and other deductions are greater than your revenue, that business loss can often be used to reduce taxable income from other sources unrelated to the business.
post #19 of 29
Thanks for posting this initial question - I just tried to look up if there was a cottage law in NYS YESTERDAY! I'm in Nassau County. I'll be looking into this more myself - thanks to all for the information posted and sample letter! That will give us all a little something to do while we wait for H Irene to pass by! Good luck to all in the path.
Theresa
post #20 of 29
Thanks kuya for all that information. I am in NY also and it is very frustrating that I, as a current stay at home mom who loves to bake, has this obstacle preventing me from making a living. I will be contacting my representatives and hopefully we will see the necessary changes in the near future so we can all continue to do what we love and make some money from it.

I understand the need to ensure the safety of food products. However, there shouldn't be laws preventing the public from purchasing non potentially hazardous items from sources that they are familiar and comfortable purchasing from. I can't tell you the countless times I have purchased items from local stores and supermarkets that were bad. I actually think it is harder for larger establishments to guarantee freshness because of the sheer volume they deal with.

In my eyes, there are few bakeries whose products taste as fresh or as good as what you get from a home baker. Everyone has to start somewhere and it's not right that we have to jump through these loopholes to see if there is even a demand for our product. I have heard of many people who started " under the table" before becoming "legit". It's not fair that there are these obstacles in my way preventing me from legally selling my product to someone when there is a demand for it. However, I know people do it, and I honestly don't blame them. Not all of us have the resources to do what the laws deem necessary for us to legally sell our products. This country was based on the premise of being free and making a living. I just hate to think of how many of us will be prevented from making a living if the laws don't change.

Anyway, sorry about the rant, but my frustration really surfaces around this time of the year when I think of all potential business that I have to pass up.

Thanks for listening,
Jackie
post #21 of 29
Hi all, I'm new to Cake Central! (& LOVE it) I just saw this post and I'm in!! @ atomikjen can we get an update on the letter that you sent, please? I would love to know the outcome. I don't bake cakes, I do mostly cookies, cupcakes & candy. I rent a kitchen for $100 p/day. I can use it from 4:00 pm until 6:00 am the following day. But even if I need it for a couple of hours, I still have to pay $100. I've checked out several other kitchens & they were either too small or too Gross! But none of them are as clean as my own kitchen. Not to mention lugging all your stuff with you! One of them wanted $25 p/hour & didn't even have an oven!!! Just a large tabletop toaster oven!!! Really??
Nicole Greenberg owner or From Gifts to Gourmet
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Nicole Greenberg owner or From Gifts to Gourmet
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post #22 of 29
I live in Rochester and I literally JUST got off the phone with a gentleman from the Department of Agriculture and because I had said I wanted the Home Processor registration for cakes he almost wouldn't send anyone out to my house. He said that this registration is ONLY for people selling to a farmers market and if you plan to sell in any other way you have to go to the Department of Health and have a commercial kitchen. However, I then indicated to him that I wanted to sell at the farmers market this summer so he said he would have someone contact me for that, but I guess it's NOT an inspection. It's just a guy that comes and has you sign some papers and that's it. But from other forum threads and other sites I guess people use it for cakes anyway. I'm not sure how it works, but I will find out and report back.

And I am SOOO in for a push for a Cottage Law. Home cakes is such a grey zone for county and state regulations. There needs to be support for those of us who are just starting to build a business but can not possibly build or buy a commercial kitchen.

Renting is an idea I had not considered and might look into that until the regulations can be clarified for we New Yorkers. Anyone in Rochester know of a good place?
post #23 of 29
I don't know if this will help anyone, but it's been on my mind while reading this thread. My DH and I owned a restaurant near Hammondsport in Steuben County. I came in one day and found a couple of grape pies in the (pizza) oven. A friend of ours was making pies to take to the state fair and was told by her NYS rep that if she cooked at least one pie in a commercial kitchen then she was covered under the Home Processor regulations. Whether that's correct or not, I don't know. I do know that she made around 100 pies in her home kitchen and baked two in our oven and was told she was fine.

Maybe there's a loophole in there somewhere that applies. HTH
post #24 of 29
No loophole.

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post #25 of 29
Quote:
Originally Posted by jgifford

A friend of ours was making pies to take to the state fair and was told by her NYS rep that if she cooked at least one pie in a commercial kitchen then she was covered under the Home Processor regulations. Whether that's correct or not, I don't know. I do know that she made around 100 pies in her home kitchen and baked two in our oven and was told she was fine.


That doesn't sound right to me. Commercial kitchens are specifically excluded from the NY home processor regulations, and if she's trying to avoid the home processor restrictions (no potentially hazardous food, no retail sales) by baking a token pie in a commercial kitchen that would be covered under the fraud statute.
post #26 of 29
I honestly have no idea - - she was told that as long as at least one pie was baked in a commercial oven then she would be fine. At least that's what she told us. Since we were licensed, inspected, insured and all that stuff, we didn't have a problem letting her use one of our ovens. Maybe she was feeding us a line - - who knows?
post #27 of 29
Ugh. Doncha *love* NYS ; ) I am in Allegany Co, one county over from Steuben. We really have nothing here (which, really, should be a major selling point for tourism; if you want to get away to a place where this is *nothing*, come here...) The option of renting commercial kitchen space is impossible, since we are just so rural that nothing like it exists. We have a lot of mom and pop diners and restaraunts, but most of them don't want the headache of insurance issues, if they rent out kitchen space, which is truly understandable. I am no where near ready yet, to start my business (gotta get my skills better, first,) but it is really a goal for the future for me. I do have a second kitchen in my home, but its going to need major renovation. It just seems like so much headache, some days...
post #28 of 29
OK, so to update on my quest for a home processor's permit. The gentleman at the Department of Agriculture said I couldn't sell cakes with a home processor's license and that it didn't even involve a home kitchen inspection, but he would have someone from that department contact me anyway. The woman that called me said that not only would she need to inspect my kitchen for cleanliness and health standards (she couldn't legally send me a list but she mentioned gloves, single use paper towels, being seperated from any pet areas, etc), but that she also needed me to prepare sample labels for everything I would be selling showing ingredients and net weight of each product (it's going to take me a while to put that info together since I've never weighed ANY of my cakes LOL).

The limitations on the permit say that I still can't sell cakes to strangers or to anyone out of NYS, but I tend to make friends with most of my customers anyway. icon_smile.gif And this will be useful for when a "friend" wants me to make their wedding cake and the reception hall requires a license for any outside food to be brought it. It's still up to each individual reception hall as to whether a home processor permit would be sufficient for them, but at least I have a starting point. And for those that won't, I'm still looking into the idea of renting a commercial kitchen for a day.
post #29 of 29
Thank you for the update and info, Sara! It seems like a lot of hoops to jump through, but you sound like you are up to the challenge!
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