How to Start a Home Bakery

Two nights ago, I made chocolate-chip banana bread with some overripe bananas. Last night, I whipped up some delicious currant scones.

Baking is a hobby for me, but I’ve often thought it could be something more.

Maybe you’ve thought about turning your passion for baking into running a bakery from home.

If you’re wondering how to start a home-based bakery business, this article will help provide tips you might need to begin. 

Plan Your Bakery

How to Start a Home Bakery — Your Step-by-Step Guide

The good news is that you don’t need a storefront to sell your baked goods — you can start baking treats and selling them from your kitchen. Starting a baking business from home is an excellent option for bakers who want to start small.

Here are popular items for home bakeries:

• Custom sugar cookies: High demand for birthdays and events.
• Artisan bread: Sourdough and focaccia are trending favorites.
• Allergy-friendly treats: Gluten-free, nut-free, or vegan options often have less local competition.
• Cupcakes and cake pops: Perfect for parties and weddings.
• Pet treats: A growing market for dog owners who want natural ingredients.

That’s right — dog biscuits. I know a caterer who turned a failed waffle recipe into a thriving dog biscuit business. Inspiration happens in a flash, so you never know when a brilliant idea will reveal itself.

Understand Cottage Food Laws

Before you buy ingredients, you must confirm that a home bakery would be permitted in your area. Most states have Cottage Food Laws that may allow you to sell homemade foods that are not considered potentially hazardous.

What to check:

• Permitted foods: Verify what you are allowed to bake and sell. Most creams and custards are likely prohibited.
• Sales limits: Some states cap how much revenue you can earn annually as a home business.
• Labeling requirements: You usually need to list all ingredients and include a disclaimer that the food was made in a home kitchen. Be sure to check the specific state and federal requirements that are applicable to your business.

Visit your state’s Department of Health website or the Forrager website to find specific regulatory guidance for your location.

Set Up Your Business

If you’re often asked to bring a dessert to a dinner party or to supply the cupcakes for an annual event, your baked goods are likely tasty — if not downright irresistible.

But running a home-based bakery business takes much more than baking skills alone. It requires planning, marketing, and more.

Before you turn on the oven, follow these steps to learn how to start a home bakery:

1. Create a Simple Business Plan

You don’t need a 50-page document, but you do need a roadmap. Answer these questions:

• What is your niche? (e.g., Organic gluten-free muffins)
• Who is your customer? (e.g., Local coffee shops or Busy moms)
• How will you price your items? Ensure you cover ingredients, packaging, and your time.

Use our free business plan template to get started 

2. Choose Your Name and Structure

Pick a name that is easy to spell and remember. Once you have a name, check if it is available and register it.

After you decide on a name, check that another bakery doesn’t already own it. If your business name is available, be sure to register it and consider obtaining a Federal Tax Identification Number.

Next, decide on your business structure.

• Sole Proprietorship: Easiest to set up but typically offers no personal liability protection.
• Limited Liability Company (LLC): Separates your personal assets from your business assets. This is often recommended for food businesses to help protect your personal savings in case of a lawsuit.

Licenses and permits — It’s time to find out if you need a license to run your at home bakery business. Some states require both a business license and a food license ⁠— and possibly a permit — to sell baked goods from your home, while other states may not require a license or permit.

Your state’s cottage food laws will tell you if any licenses or permits are required. Be sure to check with your local governments — city and county — to learn if they have licensing requirements..

3. Prepare your kitchen.

Before you start frosting those cupcakes, you’ll need to know that your home kitchen is in tip-top shape.

To avoid trouble down the road, keep these in mind:

Health requirements — Since you’re selling a consumable product, you’ll need to comply with local health codes and regulations for your home bakery kitchen. Some states won’t allow you to use your residential kitchen for commercial food production, so be sure you understand any restrictions.

Call your local Department of Public Health to inquire about the laws and regulations regarding the foodservice business. You may be required to take a state-approved course to obtain a food safety certification.

Even if your state doesn’t require it, you may want to take a food safety course to learn more about proper food handling, storage, and preparation techniques. It’s helpful information to have, especially if your state requires you to pass a health inspection.

While a home kitchen inspection sounds intimidating, it typically isn’t as rigorous as a commercial kitchen inspection. Still, you’ll want to be prepared.

Here’s what your health inspector will likely be assessing:

• Do you have a clean, fully functioning kitchen space?
• Can you demonstrate how to sanitize your area and equipment?
• Are you storing your perishables at the proper temperature?
• Are your dry ingredients in sealed containers at least 6 inches off the floor?
• Do you separate your business baking ingredients and equipment from ingredients intended for personal use?

The health inspector’s job is to ensure that your kitchen — and ultimately your baked goods — are as safe as possible. With some preparation, you should be able to pass your inspection without any issues.

Kitchen equipment — If you’ve been baking for years, you may already have a well-equipped kitchen. The question is whether it’s sufficient to start a home baking business.

Depending on your kitchen’s current layout, you may need to add equipment or make adjustments such as these:

• Adding shelves or creating a pantry to separate your bakery food and equipment from your personal items.
• Adding or updating a sink, convection oven, or refrigerator.
• Upgrading your ventilation system or oven hood.
• Purchasing more equipment such as a heavy-duty commercial mixer or a proofing cabinet.

Ingredients — Starting a home bakery requires a mind shift, including how you purchase certain items.

When you think about how much you’ll charge for a cake, you should factor in the time, ingredients, and supplies it requires. For a home baker, time is money. You don’t want to waste time running around shopping for ingredients.

Instead of spending time and money at grocery stores, you can buy quality bulk baking ingredients from online bakery wholesale retailers.

Be sure to label your baked goods clearly. In addition to listing ingredients, you should identify which products are gluten-free, nut-free, and/or vegan.

4. Market your business.

Whether you’re selling fancy macarons or kitschy cupcakes, you need to let your customers know you’re open for business.

Here are some ways to get the word out:

Social media — One of the easiest ways to attract customers is via social media. Create a Facebook account. Set up an enticing Instagram page.

Post photos of your treats, and find ways to interact with your customers online. Your social media presence is a great way to highlight your offerings and gain attention.

Website — A website is an essential tool for your business. It’s where you can tell your brand’s story, share photos of your treats, or blog about your baking tips.

Your website should be simple, but be sure to include a menu,  ingredients, pricing, and information about ordering.

Your community — Engaging in your local community is a great way to build relationships with customers and other small businesses. When you participate in local events, people will be able to see and taste your treats so that the name of your bakery will be on everyone’s lips.

Check out these helpful guides for more on marketing your home bakery business:

What are the Do’s and Don’ts of a Small Business Website?

Creating Consistent Facebook Content For Your Business Page

Word of Mouth Marketing: How to Grow Your Business

Protect Your Business With Bakery Insurance

As a baker, you know that one missing ingredient can cause a cake to collapse. That’s why, for a home bakery, business insurance is vital. Without it, your business could suffer devastating consequences.

1. Don’t rely only on a homeowners policy.

If you’re operating a home-based bakery, you may think your existing homeowner’s policy will offer you the protection you need. Think again.

Your homeowner’s policy likely has a business exclusion, which means it won’t cover a claim related to your baking business. So if your equipment breaks or your customer comes to pick up her cake and slips and falls in the kitchen, that could mean serious financial repercussions for you and your business.

2. Understand your risks.

When it comes to small businesses, accidents happen, and they can be costly. There are many risks you need to think about when running a home-based bakery:

• Your burned cookies could start a small fire in the kitchen.
• A customer could slip and fall when picking up an order.
• Someone could have an allergic reaction to your baked goods.

Cases like these could result in significant property damage or a potential lawsuit. Without home bakery business insurance, the costs relating to those incidents would come out of your pocket.

3. Get home bakery business insurance.

Unexpected events happen. But for a home bakery, business insurance can provide financial protection for you, your bakery business, and your equipment.

The most common insurance for home-based bakers is general liability insurance coverage. It provides coverage against costs associated with certain third-party accidents, third party property damage, and bodily injury (up to your policy limits).

Here are some examples of what home bakery general liability coverage can cover:

• Third-party bodily injury 
• Third-party property damage that occurs during the normal operation of your business
• Personal and advertising injury
• Medical expenses

Getting general liability coverage for home bakers is fast and easy. It usually takes just 10 minutes to get a free business insurance quote with our online quote comparison tool. Want to learn more about different business insurance options and see what they cost? See our Median Cost of Business Insurance Guide for some of the common coverage options our small business owners typically consider and their median costs.

Ready, Set, Bake!

When learning how to start a bakery business from home, there’s a lot to consider. Don’t let that stop you from following your dream of becoming a successful home baker. Now let’s get baking.