Do you need a permit to sell food from your home?

Posted by Damian Roberti on

Do you need a permit to sell food from your home?

 

 

So, how do you legally sell food from your home, and what foods can you sell from your home? in this video, we are going to cover the 10 myths behind selling food from home. Many of you might be believing a lot of the stuff that you're hearing from your friends, but most of that information might be incorrect. So I'm going to run down 10 things that are a huge myth when you start to sell food from home as a business. Under cottage food laws, we're going to start doing that right now. All right, so welcome back to "Marketing Food Online." So, as I mentioned in the introduction, we are going to cover 10 crazy myths about selling food from home. Many of you may or may not have heard some of these things that I'm going to cover in this video, but I want to kind of dispel some of the misinformation that's out there and to help you get in the right direction and start your food business. But, as always, hit the subscribe button, and give us a big thumbs up if you find this video informative and educational, because that tells YouTube that you enjoy our video, and they'll definitely show you additional videos from our library. And, of course, remember to check out down below this video, there is a join button. It's a blue button there that says join, and that's for our brand new membership program.

 

Do you need a permit to sell food from your home?

There are actually three different tiers. There's a short video that'll explain how it actually works, but if you definitely love our video, we would definitely want you to join our membership, because you get a lot of additional perks. You also get additional information and resources only available to members only. So now that's said and done, let's dive right into it. We're going to go from number 10 down to number one. So number 10, I can sell anything that is listed or not listed on my state's cottage food website. Well, yes and no. You need to make sure that you follow each state's specific list dedicated to what can be and what cannot be sold because you definitely don't want to get into trouble if you attend a farmer's market or local event, and there happens to be someone from the health department walking around and checking on everybody. And you're selling a product that is not technically allowed or legally through the list that is in your state's cottage food laws. If you're not sure what your state has, definitely check out here on our channel, "Marketing Food Online," and we just created a brand new channel, "Cottage Food Laws," which is dedicated solely to the entire industry of cottage food businesses.

Do you need a permit to sell food from your home?

 

So it is all about cottage food resources to help you get your business up and running. Every single state we're gon na have on that channel, so you definitely want to subscribe to that channel as well, because we're gon na have a ton of other resources to help you scale and grow your homemade food business. But yes, that is a myth. You can't actually just make what you want. Even if you see your friends selling it or doing it, it doesn't necessarily mean that it's legal, and you could potentially get into some serious trouble. So you want to stick within the realm of the list of what you can sell and what you can't sell. So the idea that you can sell anything that's either listed or even not listed is not a good idea. Normally, what states have is what's known as potentially hazardous food products. These are particularly items that are cooked that have to be kept at a certain temperature, or even at a certain time, and they have to be consumed or sold at that point. Here's a great example: like food trucks, restaurants, and cafes, they create meals, pizzas, tacos, hamburgers, whatever that might be, but those are items that have to be consumed immediately, or they have to be kept at a certain temperature.

Do you need a permit to sell food from your home?

 

So cottage food laws would be things like baked goods, snacks, popcorn, things that are not considered potentially hazardous. So don't steer off of the list of what they allow you to do because you could get into some trouble. Number nine, I can sell as much as I want. Well, yes and no. Some states actually have a sales limit. Every state actually has a sales limit pre-set for you based upon your state as well. And the amount of money that you can actually sell annually every 12 months is actually already set up for you. Now some states do have a "no sales limit." That is something that, yes, you can sell as much as you want if your state allows it. I've actually seen some states that are as low as five and $10,000, which is kind of a little weird because it's literally next to nothing. You can sell that much in a month, but five to $10,000 in sales of a certain product, or whatever you're making through the cottage food law. So, can I sell pretty much anything as much as I want? Nah, not necessarily. The other thing that you want to keep in mind is that you want to make sure you log everything, and you want to handle this as a business.

Do you need a permit to sell food from your home?

 

You want to keep track of your sales, keep track of your expenses, because at the end of the year, if you do create a profit, it is taxable income. It is literally a business income, so you want to make sure that you tell your accountant about that every single year when you do your taxes. So no, you can't necessarily just sell as much as you want. You've got to stay within the guidelines. Now, if you exceed that, and you have an opportunity to grow your business into a commercial kitchen, or something bigger, then you're not going to fall under cottage food laws; you're going to be doing the actual commercial food processor, food distributor, or food manufacturer, and that's going to be a different type of license. Number eight, I don't need an LLC, I'm just going to run this business as a sole proprietorship. Yeah, that's not a good idea. Here's the reason why, if you don't understand the legal structure of a sole proprietorship, I'm going to break it down for you in a very simplistic way. Number one, you, as a sole proprietorship, are going to take every bit of responsibility on your own shoulders. So if Damian happened to, let's say, start a business from home selling food, and I'm not going to get a legal status like an LLC or an S-Corp or C-Corp, or any type of incorporation to separate my business from my own personal life, and I give someone a food item and they actually get sick, they get to the hospital, they have a ton of bills, and they turn around and sue me. Well, guess what? I personally am liable. They can take my house. They could take my car. They can take this shirt off my back. You are literally the sole proprietor. You are responsible for everything that takes place, whether it's positive or negative in your business. So do yourself a favor. Even though cottage food laws don't require, in almost every state, believe it or not, they don't require you to actually create an LLC. Do it because an LLC, a limited liability corporation, will give you the legal protection that you would need in order for you to kind of bypass, having to absorb personally, any legalities or legal ramifications that come from your food business. When you deal with food, don't be a sole proprietor. If you're selling laptops or you're selling books, that's different. Nobody's eating books and they can get sick, and nobody eats a laptop, obviously. So you'll want to make sure you protect yourself. So you create an LLC, which is a legal limited liability corporation, but it's a legal entity that will give you that protection. Number seven, this is one that is a huge myth. I don't need insurance for my cottage food business; I have a homeowner's insurance policy. Yeah, that doesn't work either, because homeowner's insurance policies don't cover the majority of the time, even businesses in general.

Do you need a permit to sell food from your home?

 

That has nothing to do with your food business, and manufacturing, making, or producing a product that's going to be edible for people to eat. So yes, you should get yourself a food liability insurance policy. Now I'm not an insurance agent. I'm not going to sell you a policy or explain it to you, but I can tell you a couple things that I know. From my own experience, it doesn't cost very much to get. Every year, annually, the insurance policies are between a few hundred dollars and, at the most, maybe a thousand, but that's kind of unusual. You'd be about 600 to maybe $700 a year, but you need to have one. My state doesn't require one Damian, so why do I need to buy it? Well, you're right, most states actually don't require any type of food business insurance policy under cottage food laws, but that doesn't give you legal protection. If something happens, the state's not going to say, "eh, it's no big deal, Damian's just making some cookies at home." You're sick. Don't worry about it. You know, you can't sue him. There's no reason to have any insurance. " Wrong. That is a myth. You need to definitely protect yourself legally, and then you need to protect yourself with insurance. Number six, I'm not comfortable with putting my home address on my label. I know my state requires it, but yeah, I'm not going to do that. Well, that's going to be a problem as well, because if there's no contact information and somebody gets sick with a product that you produce, there's no traceability, as it's known in the food industry, and the fact that they have the address on there, someone can trace it back and double check because maybe, potentially, you've got somebody sick with salmonella, or maybe you prepared a product in your kitchen, and you had some chicken on the counter, or something got cross-contaminated.

Do you need a permit to sell food from your home?

You need to follow the guidelines and if your state, which most of them do almost 99% of the time, requires your home address because that's your base of operation and where you're making your product. You need to make sure you follow that. So in case someone has an issue with it, they can come back and say, "Hey, Damian, somebody got sick. We just want to make sure. We're going to come and do an inspection. We're gon na find out what's going on." If your state requires it, make sure you follow the guidelines. Number five, my state allows online sales, so I can ship my product over state lines. Wrong again, because I know this is a little odd, and being an e-commerce guy for 12 years, I know how e-commerce works. If you've got a website and you're in Texas, and somebody in California visits your website and buys a product, guess what? You can't technically ship it over state lines.

Do you need a permit to sell food from your home?

 

Now there are very, very few states that will allow you to do this, but they'll also tell you that you'll need to follow federal guidelines in regards to your food production and shipping. This becomes very technical and a little bit involved, and it's kind of tricky, but the idea that you produce a product online in your state, let's say, if it's Florida, says, "Hey, you can definitely sell a product online, you can have an e-Commerce business and sell it," but you have to deliver it in person, not ship it over state lines. You can't ship it over state lines. You can do what you want, if you choose to do that, but I don't recommend you breaking the law, of course, and doing something you shouldn't be doing, so I highly recommend you follow that law as well. You can't necessarily ship it just because you have an online presence and you have a website. So number four, this is the classic, well, Damian, I see everyone else selling products, and they're making money, and nobody's, you know, saying anything about it, and well, if they're selling food and items, and conducting a business within a residency that they can't legally do, eventually that may come to light, and if it does, there are a lot of legal ramifications and potential lawsuits and even criminal prosecution for doing that. Yes, believe it or not, in some situations, if you're breaking the law and you're operating a restaurant without inspections and somebody, or a few people, or a handful of people get sick, you can be in some serious trouble with the state.

Do you need a permit to sell food from your home?

 

So because everyone else is doing it, doesn't necessarily mean or allow you the authority to go ahead and start selling tacos out of your house, because you can't sell tacos or those types of businesses out of your house. Don't do it. I highly recommend you just again, follow your state's guidelines, but just because everyone's doing it, doesn't mean it's actually legal. Number three, so I have to have my labels for my cottage food products professionally printed, and that's expensive. Why would I need to do that? Well, technically you don't actually. You do need to, in almost every state, have your product labeled, but you could actually make these labels yourself, and you can do them for pennies on the dollar. As a matter of fact, down below in this video description, I'll give you a couple links to some of the videos where I show you how to actually make your own labels, and even where to buy them cheaper than you can buy them at the store. So you can do them for literal pennies. I can tell you in our commercial kitchen, when we print our labels, our labels are about eight to 10 cents at the most. If you have a professional company make them for you, you're going to be looking at about 30 to 40 cents each, and that's very expensive. Next, number two, I don't need a license or permit to operate my food business from home.

Do you need a permit to sell food from your home?

 

That's what I heard from a friend. Well, yes and no. Now the majority of states will require some form of permit or even a license in order for you to do this type of business. But there are many states that actually have cottage food laws that don't require an inspection, even a business license. So keep that in mind and you want to make sure that if your state requires it, you need to have the right permit and license. Number one, I don't need an inspection on my cottage food. My friend told me so, I'm good to go and I'm going to make what I want. Ehhh, that's wrong as well. That is a myth because in many states, where you apply for the permit and license, you will have to have your kitchen inspected. There's even a handful of states, about four or five of them specifically, that you need to even map out and draw out how the kitchen's going to be configured, how everything's going to be made, an ingredient list, and it's pretty detailed. But as far as an inspection's concerned, that's a myth. The majority of states actually do require some form of inspection on your property, and you definitely can't start your business without having it. So these are 10 myths about operating a home-based food business that you really need to make sure that you follow. And if you need more resources, of course, check our channel out because we have over a thousand videos, we have several hundred actually, dedicated only to home food businesses, and remember that you definitely need to subscribe to our new channel "Cottage Foods and Laws" where we have a brand new setup for the home-made entrepreneur. So with that being said, I'll see you guys on our next video. Hopefully this was helpful. If it was, give us a big thumbs up, and of course, ask questions if you've got them down below in the comments. See you guys in our next video.

 

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Do you need a permit to sell food from your home?

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