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Ask The County Law Librarian – Starting a Home Based Bread Business

Q. I am a pretty good baker and I have been told that I should sell my homemade bread to restaurants and specialty food stores. I know that there are regulations and laws that govern producing and selling food items. I also heard that that there is pending legislation regarding homemade items that could help me. Can you tell me what permits etc I might need to get started?

Stanley W.

A. A first step to starting a new business is to write a business plan. A business plan also acts as a guide to map out the course of the business. It helps to assess your needs including what permits and licenses are required.

The Greater Sacramento Small Business Development Center has numerous classes and counselors that can assist with drafting a business plan: www.sbdc.net

Next you want to determine your legal business structure because it affects your income taxes and level of personal liability. If your business is established as a corporation, S Corporation, limited liability company, or partnership you must register with the Secretary of State:http://www.sos.ca.gov/business/be/forms.htm. The Sacramento County Public Law Library has a number of books outlining the advantages and drawbacks of each legal structure.

If you give the business a name other than your own, you must file a Fictitious Business Name Statement with the Sacramento County Department of Finance Business License Section. You can research the name online.  You do want to select a name that is unique and will not cause confusion in the market place or infringe on another business’ trademark. Here is the link to the form.

Once you have registered your fictitious name the next step is to obtain a business operations tax certificate from the City. Home-based businesses, self-employed persons and independent contractors are also required to have a business operations tax certificate. Contact the City’s Revenue division for the application and instructions.

There are additional permits/licenses with the CA Dept of Public Health such as the Processed Food Registration and perhaps the Organic Processed Product Registration.

Also since you are selling a tangible product you must apply for a Seller’s Permit/Resale Number by contacting the State Board of Equalization.

Unfortunately, this is just the tip of the proverbial iceberg. You will also need to obtain an Employee Identification Number from the IRS. and there may be other permits or licenses that apply to your specific business visit: http://www.calgold.ca.gov/

On a happier note, there is a bill AB 1616 "California Homemade Food Act" that would change the CA Health and Safety code to give small-scale producers a way to break in to the food production business. Currently, it is illegal to sell foods not produced in a certified commercial kitchen. This bill would enable individuals to sell homemade foods that do not require refrigeration such as your baked goods. Such Cottage Food Laws exist in 33 other states. The text of the bill is here. For more information about this pending legislation: http://www.theselc.org/cottage-food-laws

Best wishes in your new endeavor!

Do you have a question for the County Law Librarian? Just email sacpress@saclaw.org. If your question is selected your answer will appear in next Thursday’s column. Even if your question isn’t selected, though, I will still respond within two weeks.

Coral Henning, Director
@coralh & @saclawlibrarian
www.saclaw.org
 

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