Every US state has a cottage food law that lets you sell baked goods from your home kitchen — no commercial space required. Here's the step-by-step path from "I bake" to "I run a real home bakery business" without breaking the law or losing money on every order.
Every US state allows some form of home-baked sales, but the rules vary wildly. Before you bake a single order, find your state's sales cap, allowed foods, label requirements, and whether you need a permit or inspection.
Look up the exact statute (search '[your state] cottage food law')
Note the annual sales cap — most are $20K-$75K, a few are unlimited
Check the excluded foods list: cheesecake, custard, anything refrigerated is usually out
Confirm whether online sales and shipping across state lines are allowed
Step 2
Pick a focused product line
New home bakers fail by offering everything. Pick 3-5 products you can bake consistently in your home kitchen, source ingredients for in bulk, and price for real margin. You can expand later.
Choose one hero product (the thing you're known for)
Add 2-4 supporting items that share ingredients to cut waste
Avoid anything that needs refrigeration unless your state allows it
Test each recipe at order-size batches, not just family-size
Step 3
Price every recipe for profit
The single biggest mistake new home bakers make: pricing by what feels fair. Industry standard is a 60% gross margin. Less than that and you're paying customers to eat your cookies. Cost every ingredient, every box, every minute of labor.
Cost ingredients by purchase unit, then per gram used
Add packaging — boxes, liners, ribbon, labels all eat margin
Pay yourself an hourly rate (start at $25/hr, raise it as you scale)
Use the formula: (ingredients + packaging + labor) / (1 - margin)
Step 4
Build compliant labels
Cottage food labels are legally required and they're how customers learn to trust you. Every state requires producer info, ingredients in descending order, allergen statement, net weight, and a home-kitchen disclaimer.
Producer name and home address (or city + state in some states)
Product name and net weight in ounces or grams
Full ingredient list, descending by weight
'Contains:' line for the FDA's 9 major allergens
State-mandated disclaimer ('Made in a home kitchen...')
Step 5
Set up ordering and payments
DM-based ordering breaks down fast. A simple booking page with a real menu, lead times, pickup windows, and a deposit policy will save you 10 hours a week and stop people from ghosting you.
Publish a public booking link with your products and prices
Require a 50% deposit on custom orders to lock the date
Set clear lead times (most home bakers do 5-7 days minimum)
Use Stripe or Square for cards — never Venmo for business
Step 6
Get your first 10 orders
Your first 10 orders come from people who already know you. Don't run ads. Don't worry about Instagram yet. Tell every person in your network what you sell, what it costs, and how to order.
Post your menu and link in your personal Instagram + Facebook
Text your top 20 friends with a photo and ordering link
Set up a Google Business Profile for local search
Sign up for one farmers' market or pop-up to meet your neighborhood
Step 7
Track the sales cap and the money
Cross your state's sales cap and you're operating illegally — fines and shutdowns happen. Track gross sales monthly, watch your margin, and know when it's time to graduate to a commercial kitchen.
Log every sale with date, amount, and item
Check year-to-date gross against your state cap monthly
Track ingredient + packaging cost per order to protect margin
Plan the jump to a commercial kitchen 3-6 months before you hit the cap
It depends on your state. Most US states let you sell baked goods from home under a cottage food law without a full commercial license, but many require a food handler's certificate, a home-kitchen inspection, or a registration form. Check your state's specifics on the cottage food laws page.
How much can a home bakery make?
Cottage food laws cap annual gross sales — commonly $20,000 to $75,000, with some states uncapped. To stay profitable inside that cap, most home bakers price for a 60-70% gross margin and focus on high-ticket items like custom cakes and weekly subscription boxes.
What baked goods can I sell from home?
Non-potentially-hazardous foods: breads, cookies, brownies, muffins, scones, dry mixes, candies, jams, and most cakes without dairy or cream fillings. Cheesecakes, custard pies, and anything requiring refrigeration are usually excluded unless your state explicitly allows them.
Do I need an LLC for a home bakery?
Not legally required to start, but recommended once you're past your first few thousand dollars in sales. An LLC separates your personal assets from the business and makes opening a business bank account and getting product liability insurance much cleaner.
How do I price baked goods?
Use a recipe-cost formula: ingredient cost + packaging + (hourly rate × hours) divided by (1 - target margin). Industry standard is a 60% gross margin. If your gut price is below that, you're paying customers to eat your cookies. Try the cake pricing calculator to see your real number.
Informational only — not legal advice. Cottage food laws change. Verify the current rules with your state's Department of Agriculture or Health before selling.
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