It's not okay in PA, unless you are giving the cake away. I just went into business the end of 2012. I started talking with the PA Dept. of Agriculture in June. Also, I started my facebook page which clearly stated that this was a hobby, and NOT a business, but a showcase for my cakes. I also stated that it was my hope to someday be a cake business, but I wasn't yet. I wanted to get some "likes", so that when the news came out that the business was started, I might have some prospective customers.
One day I was going to an appliance store (looking for appliances for the new commercial kitchen), and decided to stop in at the bakery next door to compliment them on their cake display in the front window. I also told them that I liked the cakes on their website, and showed the girl a couple cakes that I had done (pictures on my cell phone). She mentioned that they were looking for a decorator, and I said, "Thanks, but I am building a commercial kitchen to go into the cake business". I was not looking for a job. She asked where I was from, and I told her the name of my town. Apparently, this bakery decided to go online to see who is making cakes, and found a few of us in the area with hobby pages (mine would have been recognizable from the cakes I showed to the girl), and decided to report us all as running illegal bakeries from our homes. There are some people that even state what they charge, etc... I suppose those folks did not make out as well as I did. The woman from the bakery could have just sent me a message asking me to make them a cake, and when I turned them down, she would have had their answer, and saved our tax-payer money by not contacting the Dept. of Agriculture, but the next thing you know, I got a phone call from the PA Dept. of Agriculture saying I had been accused of running an illegal bakery from my home. The fellow who came out to investigate was the same man I had already been in contact with, so I knew him. He wrote up the report, that there was no illegal bakery being run, and that I was already in the process of building the kitchen, etc., but I still had to fill out papers and sign them, saying that I would NOT sell any cakes. He made it very clear that if I charged ANYTHING (even just ingredients), that if caught, I could face hefty fines... like $10,000 or $15,000 (I forget which, without pulling out the papers). So, Hobby Bakers in PA, you can GIVE that cake away, but you can't even charge for ingredients.