Alabama Cottage Food law: Making your food business grow from home!

Posted by Damian Roberti on May 7, 2019

If you are in Alabama and you were looking to start a cottage food business from home, well then this video will help you understand the basics of how to get up and running. So we're going to get started right now.

This is Damien from marketing food online and I hope you are having an amazing day today. So what I wanted to cover in this video as an explanation of what it is allowed to be sold in Alabama, the great state of Alabama has a fantastic cottage food law on the books and it allows you to create food products from home that are of non potentially hazardous ingredients and preparation. And that is actually going to open up the door though too. A lot of different food products that can be made with huge profit margins and you're allowed to make up to ,000 a year. So as a part time side business from home, this is a great opportunity for food entrepreneurs who want to get into the cottage food business in, in a sample of what it'll take to run a food business and then grow that into a commercial facility.

Or you even utilize in a commercial kitchen and then be online or get your products in retail stores. There's so much opportunity, especially today with the Internet and selling products online, that getting started from home is a no brainer and a great idea. So you're probably thinking, all right, sounds great. What can I make? And then what are some of the rules? What are some of the regulations? Let me know. So to get started with really quick, if you're not a subscriber to marketing food online, hit that subscription button, that red button down in the bottom corner, and make sure you hit the notification bell because we have tons of videos every week and even podcast, you can check our podcast out and we've got tons of great resources to help you along the way. So let's get started. So the great thing about Alabama's law is, uh, the fact that you're allowed up to $20,000 in sales a year, which is fantastic.

Like I mentioned before, it may not sound like a lot, but to tell you the truth, when you're starting something on the side and you're, and you want to do it part time and maybe on the weekends you're hitting fairs, festivals, flea markets are far farmer's markets and local venues and such. It is a good way to make additional money. Plus you get an, you get a taste for what it really is like to run a food business from home. Now we're going to start off with the types of food products that are allowed. Now you need to understand something. It is not something like a restaurant. When you talk about a cottage food business from, uh, from home and the state of Alabama, that is not exactly what, what you want to, um, look towards making a, if you want to start with like restaurant food, that's something that's normally considered potentially hazardous because those types of foods, uh, pastas, like you're making a dish or if you're making a meat or seafood or if you're looking to make food that is considered to be restaurant style food that is a totally type of business that's not a what's allowed through the cottage food law.

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Traditionally it's going to be items that are non potentially hazardous as they're known, such as trail mixes and cookies and Bundt cakes and candies and those types of things. To be honest with you, it's actually quite a big list of products. And if you wanted to dabble in some of this first, like I said before, before you invest a lot of money

and time and effort into creating something in a commercial kitchen, it's great to, to do it from home. So, uh, things like cakes, brownies, doughnuts, roles and scones. Uh, when it comes to candy, you could do chocolates and fudge, you've got a Brittles for instance. Nut Birtles are hugely popular. Um, even cookies put cells and those types of things. Sweetbreads um, you can go through a variety of pastries as long as they're not a with cheeses or something like cottage cheese or cream cheeses where it has to be kept at a certain temperature. Remember, it can't be something that has to be time or temperature sensitive where you can't make that.

Now there is a few guidelines that the state, um, and remember, keep in mind also cottage food laws are set up by the state. Now when you're in a certain municipality, like a city or a county, they can actually write additional ordinances or other rules or regulations that will also be in addition to the state laws. Okay. So if you're in a certain city, you got to make sure that the city within the state of Alabama allows it and make sure that there's no zoning issues. You know, make sure there's nothing that's going to go against the laws or ordinances set up by the county because they could potentially actually a, um, not allow it and they could outlaw that are, uh, in a certain city limits. They don't allow it. So you want to check with your city

and you can actually contact them. I'm going to leave you a few links in the description a directly to Alabama's a cottage food law page online so you can inform yourself even more and you kind of learn a little bit more about it, uh, but do keep that in mind. So the state, county, and city, they all got there. Can I have their hands in the pot? And they can kind of create laws as they see fit. So now we've gotten through some of the foods that are allowed. You can also do herbs and, and, and pies. A spices and seasonings are a big one. Uh, specifically I say that because they're really easy to make. They're very inexpensive to get in bulk. And the margins on spices and seasonings are just amazing. So if you're looking to start a spice business and you want to learn how to do that, I'm definitely doing it from home is a great way to get started.

So another thing that you were allowed to do is the nuts and seeds, granola popcorn, kettle corn, which is huge during the fall and winter seasons with a lot of uh, holiday events and such. Every state has those. Of course, those are huge money makers because the profit margin is gigantic and the investment to do that is very, very low. Now, some of the prohibited foods, things that are of a certain Ph level, it was acidic foods, pickles, um, Carrie, Mel corns, sauces and juices like beef, jerkies, those types of things. Um, as you mentioned, salsa is even those are, some of that's prohibitive because the Ph on those is very tricky to get right and get correct and they want to make sure that those things are done in the right car, like a commercial kitchen with the right licensing and the right training because they can become very dangerous for certain people when they are not prepared properly. If your a veteran you can also apply for small business loans.

Okay.

All right. So I want to get into some of the other limitations, uh, that are set up by the, uh, California, I'm sorry, the Alabama cottage food laws and some of the restrictions are as follows and now these would actually pertained to her basically the production of the food product. Um, and that would be like in the area that's dedicated to do this. Children are restricted so you don't want to have children running around or in the vicinity when you're operating this, if you're making batches of products in your home kitchen, um, children are restricted during that time period of doing that. And you also, what I would highly recommend you do as well,

and I recommend this on all my videos about cottage food businesses specifically I'm now we're talking about Alabama's, is that you want to dedicate a certain group of, of, of equipment within your kitchen solely for the purpose of creating food product. So I personally would, I would even invest if you could invest in a set of utensils, pots and pans, whatever the product is, whatever type of equipment it would call for it to make. Yet. I would dedicate that to a reason why is you don't want to be kind of cross using a kitchens, pots and pans. This is only my opinion and it actually in some states it's, it's, it's required, but specifically just want to set aside those types of equipment and use it specifically for your business. Now, commercial equipment is prohibited, so in your, in your home kitchen you can't bring in gigantic commercial bread mixers or dough mixer for instance, a commercial ovens, those types of things. Nothing commercial and that size is allowed in your kitchen and that's really for safety reasons. Those types of equipment actually requires certain types of electrical outlets and you normally don't have those in your home kitchen.

Okay.

No direct sales. This is super important. Direct sales only. What exactly does that mean? So when you produce your food product, you have to transact that with your customer.

You would need to sell that directly to the customer if it's at a farmer's market and so on. You can't be selling it to like a restaurant who would turn around and resell it or retail store. Who then takes it, puts it on their shelf and sells it to a customer. You have to be the one that sells direct only. That is the only way that you can do it when you're first starting. Um, the other thing that's prohibited is pets. Of course, this is kind of a no brainer, but when you're preparing food products for other people to consume, you don't want pets in your home kitchen. That's just kind of a no brainer there. Um, employees. Now the trick you, the challenge to running a home based business is you have to be the one doing it. You're actually not allowed in the state of Alabama's cottage food law. You cannot have employees in the kitchen or hire them to help you do it.

Yeah.

You also need to utilize your primary residence. So if you have a neighbor down the street who said, hey, you can use my kitchen the weekends, and you say, Gee, sounds great. I want to do it under the cottage food law. That's something that you have to be using utilizing your primary residency. You need to be doing it from there. Okay. The other thing would be the sales limit as I mentioned before, but it's still at $20,000 a year in sales. And again, a great opportunity to get started and to get your feet wet in the business of creating a food product. Now sampling is not, is prohibited. So this is kind of a challenge when you go to farmer's markets or you go to a local venue and people want to try a product sampling technically is not allowed to happen under the Alabama cottage food law. So normally also the packaging of the product has to be done prior to when you bring it to the event. So they don't want to basically don't want any open aired a products that's going to be under a different type of business. If you're wanting to uh, get a concessions booth or get a trailer, you know where you're going to create something that you're going to drive there. That was a different licensing. That's a totally different thing than cottage food. So you can't necessarily be sampling products that have venues when it comes to that.

So,

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and what not. Again, when I'll have down below is a handful of great links that are going to give you much more information than what I'll cover here. I just want to cover some of the basics and give you a great outline to get started with. The other thing that you're going to have to do that the state requires is a food safety course. Uh, traditionally those types of courses, they're going to run probably be anywhere from 20 to $50 depending on the state, but normally nothing more than that. And they're great actually because if they're going to educate you as to how to handle food, uh, temperatures, um, taking products from, uh, your place over to your, from your kitchen over to like a venue, uh, what exactly is involved with that? Uh, so they're going to, it's a great outline. It's a great educational course. It's going to help you out. Now after you take the food safety course, she must also submit a form that's going to give you a sample label.

Okay.

A it with a sample label of your food product. Basically the information that'll be required to have on your food. And then you'll get a course certification. Now the other thing you want to keep in mind is you have to collect sales tax too. So this is going to be a legitimate business. And like I said, this is not a kind of a hobby thing. It's going to be a business where if you transact, you need to collect sales tax and then submit that to the state on behalf of those taxes. So you've got the city, county, and state. Um, and those they'll determine how much tax specifically in your area that you would need to charge.

Yeah.

Next up we're going to talk about really quick and I'll wrap it up and I'm going to give you all these resources. Down below is going to be the labeling. And this is super, super simple. That's one thing about Alabama's cottage food law compared to other states that they're labeling requirements are relatively simple and basic to be honest with you. So the one thing you've got to have is the business address. So if your business is obviously operating from home, you have to have that address on there. Now a lot of people don't like to put their home address, but it can't be a po box. It really has to be the place where the food product is made. And there's a reason, and I'm gonna explain why most of the reasoning behind that is that if someone were to get sick or if there was a complaint or if there's an issue with the food product, they need to have a traceability it aspect known as traceability, where they can trace it back to where it, the origin of the product, where was it created, where was it made, and it would made in your home and they have to check it to make sure there's no bacteria or somebody got sick, whatever that complaint that could potentially come up is they want to know where it's made.

So that's where the real reason everyone wants to keep everybody safe and that's the reason why they put the address on there. Now your business name also needs to be on the label. So if you come up with a really great name, um, if it's Sarah's chocolate chip cookie factory or something that needs to be on there as well and the product name. So if it happens to be a bag of Granola, um, if it's a, as a certain type of product name that you've come up with, I granny's Granola or something like that that needs to be on there. So the name of the product that you've created and needs to be on there as well. Now the other thing, and this is the most important aspect, is basically a disclaimer statement as its known stating that the product was made in an uninspected kitchen.

Okay. So the, this is something that happens at a lot of states and you've got to have that on the label. So most states have a specific statement that they want you to use, um, and that can be found on the sample label. And that that information is also on the website. And I'll put some links down below and you can take a look into them. But the information needs to just basically that people know they're buying a product that's made in a home kitchen. It's not inspected by the state. So some states do do inspections and some states do not. I'm also do not make it mandatory to have those inspections as well. So, so with that being said, I want to wrap it up really quick. I just want him to give you a basic outline of what you can do, how much you can sell, and all these good, good tidbits of information for the state of Alabama. So I'll put some links in the description, take a look at it for yourself, and if you've got questions on the information that I present it tonight in this video, please do let me know. Ask me some questions down below and I will see you guys on the next video. Take care.

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