How do I sell food I make at home?

🍱	Set up your business Business plan Business structure Register your business California Secretary of State California Economic Development Department Income tax Apply for an Employer Identification Number (EIN) Register with the California Franchise Tax Board
✅	State Requirements Research your food options Food Handler's license Labeling requirements Principal Display Panel Information Panel Gross annual sales limit Seller's permit Resale certificate Fictitious business name (FBN) / doing business as (DBA) statement Workers' compensation insurance
☑️	Local Requirements Determine your zoning authority Home Operations permit Cottage Food Operation permit Class A Class B Temporary Food Facility permit

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📍 Set up your business

📝 Business plan

Your business plan communicates what your business does, your vision for the future, and the steps you will take to reach those objectives. Generally, the business plan should include:

1. An executive summary
2. A marketing plan
3. An operations plan
4. The proposed organizational structure
5. Financial projections

🚧 Business structure

You have probably heard the terms sole proprietorship, general partnership, limited partnership, and type C or S corporation. The determination to form a company under a particular structure has much to do with the business activity, location, and organization.

Cottage Food operations are generally either a sole proprietorship or a limited liability company (LLC). If you do nothing, your business will be considered a sole proprietorship. The University of California recommends obtaining an LLC because your business deals with food. If someone sued you over your product, they would sue the LLC rather than you directly. 

✍️ Register your business

Register your business correctly with the California Secretary of State (SOS). This should be done after you determine the most appropriate operating structure for your business and have determined its name. Sole proprietors do not need to register, but corporations, limited liability company, and partnerships must file with the SOS. 

You may also need to register with the Employment Development Department (EDD). An employer is required to file a Registration Form within 15 days after paying more than $100 wages to one or more employees

💸 Income taxes

As a business owner, you are required to pay state and federal taxes on your business every year. For state taxes, you will need file with the California State Tax Franchise Board. 

For federal taxes, you may need to apply for an Employer Identification Number (EIN) if you plan on employing someone. 

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✅ State Requirements

🔍 Research food options

The California Department of Public Health sets the policy on what foods are allowed to be sold from your home kitchen. As of 2024, there are 10 categories of approved cottage foods:

• Baked goods without cream, custard, or meat fillings
• Candy and confections
• Extracts containing at least 70 proof or 35% food-grade for human consumption ethanol/alcohol
• Dried, dehydrated, and freeze-dried foods
• Frostings, icings, fondants, and gum pastes that do not contain eggs, cream, or cream cheese
• Honey and sorghum syrups
• Fruit butters, jams, jellies that comply with Part 150 of Title 21 of the Code of Federal Regulations (CFR)
• Nuts, nut mixes, and nut butters
• Powdered drink mixes made from manufactured ingredients
• Vinegars and mustards

🎖️ Food Handler's license

You will need a Food Handler's certificate within 30 days of opening your doors. In order to receive your certificate, you must pass a test.

If you employ someone, you will need to ensure they have a Food Handler's license. If they do not have a Food Handler's license, then it is the responsibility of the employer to ensure they receive proper training and obtain a license.

💵 Gross annual sales limit

Your operation cannot collect more than $50,000 in sales during the calendar year (January 1 - December 31).

🏷️ Labeling requirements

Cottage food products are required to be labeled in accordance with state and federal labeling regulations. Your food packaging must include two distinct labels:

1. Principal Display Panel/Primary Display Panel
2. Information Panel

The Primary Display Panel must include:

• The name of the CFO food product
• The name, city, and zip code of the CFO operation of production
• The words "Made in a Home Kitchen" or "Repackaged in a Home Kitchen" in 12-point font
  • If labeled as "Repackaged in a Home Kitchen,"  then a description of any purchased ready-to-eat products not used as an ingredient must also be included on the label
• Your registration/permit number and the issuing authority (Sonoma County)
• Ingredients in descending order of predominance by weight
• The net quantity (count, weight, or volume) of the food product, stated in pounds and grams (metric)
• A declaration on the label in plain language if the food contains any of the major food allergens
  • Milk, eggs, fish, shellfish, tree nuts, wheat, peanuts, and soybeans

Not all CFO products are required to have an Information Panel. If your food packaging contains any of the following nutrient claims, you will need a nutrition label: free, low, reduced, fewer, high, less, more, lean, extra lean, good source, and light. Your Nutrition Facts panel must include:

• Calories
• Total fat
• Saturated fat
• Trans fat
• Cholesterol
• Sodium
• Total carbohydrate
• Dietary fiber
• Sugar
• Protein
• Vitamin A
• Vitamin C
• Calcium
• Iron

💸 Seller's permit

California requires that you obtain a seller's permit if you are selling tangible, taxable goods (like food and clothing). You can apply for a Seller's permit through the California Department of Tax and Fee Administration (CDTFA). 

🍽️ Resale certificate

You may also be interested in getting a Resale certificate through the CDTFA. A California resale certificate lets you buy goods tax-free if you’re planning to resell them, rather than use them personally—just show it to your supplier at the time of purchase! This is limited to items you will not collect sales tax on, such as packaging or to-go boxes.

💬 Fictitious business name

If your new entity will conduct business under a name that does not contain the surname of any and all owners, or is a corporation that will do business under a different name than is registered with the State, you will need to file a Fictitious Business Name Statement with the County of Sonoma Clerk-Recorder-Assessor’s Office. This application must be filed within 40 days of the business start date.

🤕 Workers' compensation insurance

If you plan to employ someone to help with your cottage food operation, you will need to get worker's compensation insurance. Every employer in California is required to have workers' compensation insurance, even if you only have one employee. Workers' comp insurance provides medical care, disability benefits, supplemental job displacement benefits, and death benefits. Don't be afraid to shop around for an insurance carrier that best meets your needs. 

If an employee files a claim, the Division of Workers' Compensation can help all parties understand their rights and responsibilities. They provide a helpful fact sheet for employers to understand workers' comp.

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☑️Local Requirements 

🗺️ Determine your zoning authority

Your ability to sell food you make at home is ultimately decided by your local zoning authority. Some areas may not allow for home-based operations. To ensure that you can start your business, check in with your jurisdiction's zoning authority.

🏠 Home Operations permit

If you are located in an incorporated city, you may need to apply for a Home Operations permit. 

If you live in unincorporated Sonoma County, you do not need a Home Operations permit.

Cottage food businesses may see an increase in wastewater once operations are underway. Depending on what you are selling, you may also increase your disposal of sugars, fats, oils, and grease that can cause your septic system to fail. The septic tank requirements are as follows:

1. Provide a record showing the septic system type.
   1. Restrictions: cesspools are prohibited, nonstandard system systems must provide two monitoring and maintenance records and adhere to the terms of the operational permit for gallons per day.
2. Provide a site plan showing the location of the home, the septic system (tank and dispersal field), and the water well.
3. The septic system must be functioning and cannot have any obvious failures. 
   1. Obvious failures: wastewater surfacing, wastewater backing up into the home, or slow draining sinks, showers, or bathtubs.

You can file a public records request or check with the Well and Septic Division at Permit Sonoma to determine what type of septic tank you have and where it is located.

2550 Ventura Avenue

Santa Rosa, CA 95403

PermitSonoma-Records@sonoma-county.org or (707) 565-1900

✔️ Cottage Food Operations permit

There are two classes of Cottage Food Operations (CFO) permits:

• Class A: direct-to-consumer sales
• Class B: indirect sales (sales to third-party retailers for consumer resale) AND direct-to-consumer sales

Luckily, both permits use the same application! The a complete application packet includes:

• CFO Fee
• CFO Checklist
• Facility, floor, and equipment plan
• Water supply, sewage disposal, solid waste disposal, and zoning
• Sales plan
• Standardized fruit butters, jellies, preserves and related products form (if applicable)

✍️  Maintaining your CFO permit

Both Class A and Class B permits need to be reviewed annually, and inspections can occur on a complaint basis.

🎪 Temporary Food Facility permit

If you want to sell your food at community events, like farmer's markets or craft fairs, you will need to apply for a Temporary Food Facility (TFF) permit. There are many different kinds of TFF, and the most applicable permit for CFO is Prepackaged/No Food Preparation permit.

Operational requirements:

• Floors, Walls, and Ceiling
  • Floor: canvas, plywood, plastic, tarp, concrete, or asphalt
  • Walls: no side walls needed
  • Ceiling: canopy or roof structure 
• Signs and documentation
  • Facility name in letters at least 3 inches high
  • Operator name, city, state, and zip code in letters at least 1 inch high
  • Food permit posted in public view
  • Notice informing pubic that last inspection report is available for review
  • Temporary Food Facility Self-Inspection Checklist (completed and signed)
• Storage
  • All food stored 6 inches off the floor
  • Overnight food held in a permitted food facility (your home)
• Toilet facilities
  • Within 200 feet, with running water, soap, and paper towels