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Jan 06

Simple Steps to Starting

 

by Dandy Delights

Cookies by Dandy Delights

Starting a business may SOUND intimidating, but it’s not. Just like a recipe, it’s a matter of following the steps in sequence. Cottage Food Sandie is here to help!  We’ve put together the resources you need to get your business off the ground.  Follow these simple steps to get a cottage food business started in San Diego…

 

1.  Check that your foods are on the CA CFO foods listThen check out the Flow Chart to see if you qualify as a CFO.

 

2.  Check with your local planning office to determine if you need a business license first, or if you should get your Cottage Food Permit approved first.  The San Diego Health Department has a convenient ZONING publication with contact information to help you decide which to do first.

 

3.  Create a label for your product in line with San Diego Dept. of Environmental Health, Food and Housing Division requirements.  Include sample labels for all flavors and products with your application. Adding them later will be expensive. But, in your first year, keep it simple. Focus on a few products or flavors that you know are well liked.   If you have more products and flavors than can be reviewed in an hour, it could cost you an additional $142. See our post on “Labels:  Do Say Don’t Say“.

 

4.  Apply for a business permit (sometimes called a tax certificate or other term)  If you live in an unincorporated area of the county, you do not need a business license.  If you live within a city or town, you can find a link to the appropriate office HERENote: some towns also require a Home Occupation Permit as part of the license or tax certificate.
     AND, remember you will probably need to file for a fictitious business name. Unless your business name is your name and describes what you do (e.g.  John Smith’s Bakery), you will need to file for a fictitious business name.  You can search the index online here.

5.  Fill out the San Diego CFO Registration Form and either the Self-Inspection Checklist for a Class A permit OR the Public Health Permit Application-San Diego. for a Class B permit. Take both forms, a copy of your label(s), and cash, check, debit/creidt card, or money order made payable to San Diego Environmental Health for the appropriate amount ($142 for Class A permits or $284 for Class B permits) into the San Diego office (5500 OVERLAND AVE # 100, SAN DIEGO, CA 92123) between 8:30 am-4:30 pm.  (Sorry North County, for now the San Marcos office is referring cottage food permits to the San Diego office.)

6.  Will you need a Federal Employer Identification Number (FEIN or EIN)?

If your business is a sole-proprietorship, you do not need an EIN unless you hire someone.  For banking and tax purposes, your Social Security Number will be your EIN.  You can request one, but do not have to have an EIN for a sole-proprietorship with no employees other than yourself.
     However, if you have a partnership, LLC, or other business type, or if you hire an employee, you will need to request an EIN from the federal government.  It is free to do online with the IRS and you can get the number immediately.

 

7.  Will you need a Seller’s Permit?

The California Board of Equalization only requires you to have a seller’s permit IF your products are taxable. In general, food is exempt from sales tax in California.  There are some exceptions (e.g. food that is heated and consumed on premise, food sold in a place charging admission, etc.).  If you are uncertain, call the Board of Equalization in San Diego (858-385-4700) for more information.  Seller’s Permits are free but sales must be reported quarterly, even if no sales were made.

 

8.  (Optional) Liability Insurance
It is not required, but liability insurance to protect you from a lawsuit in case someone is harmed by your product is a good idea. If your operate a sole proprietorship, you are the business. That means if someone gets ill, you could be responsible for the medical bills.  It is unlikely that your renter’s or homeowner’s insurance will cover your personal assets in such a case.  Get some quotes for business liability insurance to evaluate the risk and benefits. See our post on insurance.

 

Got questions?  Email us at info@sdcottagefoods.com and we will try to help.  Or visit our Facebook page and ask the community!

58 comments

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  1. Adam

    Hi, my wife and I have been wanting to run a food cart. The costs seemed like it would be a long journey for us. This food from home idea sounds like a step in the right direction. Do the products made from home have to be sold in a certain location? Do you have a pamphlet of book available? Thank you very much.

    1. Cottagefoods

      With a Class A permit, you can sell food directly to the customer wherever that’s allowed. Some localities restrict selling from your home, other community events like Farmer’s Markets will require an additional Temporary Food Facility permit from Environmental Health. And, there may be restrictions or permits required at other locations. With a Class B permit, you also will be allowed to sell to restaurants, markets, coffee shops, etc. and they can resell to the public. The law was designed to help and encourage startup entrepreneurs like yourselves.

  2. Elaine

    Do you have any recommendations of where to get Business Liability Insurance or approximately how much a month is reasonable? One quote I got seemed high at 160.00 a month. – Thanks, Elaine

    1. Cottagefoods

      Schuyler (pronounced Sky-ler) Merit at Access Avenue Insurance Services (phone 949-540-1440) quoted a great $1M liability Hartford policy with all the extended business coverages for ~42/month ($500 total). You can call him for comparisons. Their agency is an independent broker so they can look at multiple providers.

      1. Elaine

        Thank you so much. That is a great price and recommendation. You are awesome!

        1. Cottagefoods

          Kind words always appreciated 🙂 Please keep me posted here or on Facebook if you get other quotes or updates! Hopefully more companies will be getting the message and offer specific insurance for cottage food producers around the country.

  3. Michelle

    Just wanted to tell you that when I called City of Oceanside today to inquire about a business license, they referred me to your web site for more info!! Good job!

    1. Cottagefoods

      Oh, that is GREAT to hear! Thanks for the news 🙂

  4. deborah berry

    Thank you so very much for the wealth of info. that you have provided for those wanting to start their business. It is greatly appreciated.

    I had planned on doing construction at my shop to sale my cookies and coffee, but considering cost and headache that is required have decided to go the cottage route. I think that it will be much easier this way. Will I need both an A and B license for this? I will make coffee at shop and cookies at home to be sold from shop….

    Thanks again for all you do!!

    1. Cottagefoods

      Good Question! Your shop will have to be approved by the health department for food and beverage sales. Cottage food products can be sold to a second party (market, store, coffee shop, etc.) for resale, but that group must be approved for food/beverage sales. You could probably sell your own cookies, made under your own CFO A or B permit, without a problem since you are selling them directly to customers, but the coffee is a separate issue. To sell directly to customers, you only need an A permit. If you want someone else to be able to sell your cookies, you’d need a B permit. The B covers both direct and indirect sales.

  5. Lety

    Hi,

    I am interested in selling fondant cup cake toppers and figurines. I will not sell any baked items. I am required the Cottage Food license ? Thank you

    1. Cottagefoods

      To sell any food for human consumption you will need a license or permit of some sort. The (relatively inexpensive) Cottage Food permit would be cheaper and easier than renting a commercial kitchen. Let us know if you need help with that!

  6. Danielle

    I spoke with Oceanside business license office today. She told me I needed to show a receipt for CFO permit when I turn in my business license application. Is that right? By reading this website it sounds like I need the business license first in order to start my CFO permit. Do you know which one I do first?

    1. Cottagefoods

      Good Question! Which to do first now depends on where you live. The SD Dept Environmental Health will either require a copy of your business license first, or allow you to get your Cottage Foods Permit prior to the business license if you live in Encinitas, Escondido, Imperial Beach, Lemon Grove, National City, Oceanside, San Marcos, or Vista. This ensures that you get approved for a CFO permit before having to pay for a business license. For further information see the Dept. Enviornmental Health ZONING REQUIREMENTS publication and contact information

  7. Walid

    Kindly, advise me:
    I’d like to start my food business from my home. what is the first step I have to do?

    1. Cottagefoods

      We want to make it simple! On our Home page click on Starting a CFO or go directly to the RESOURCES page and follow the steps outlined. Email us if you have specific questions!

  8. Walid

    Kindly, advise me:

    I’d like to start my food business food from my home.
    What is the first step I should do?

    Thanks

  9. Michelle

    Hello!

    I’m about to submit my product labels for review, but I just wanted to ask it’s required to have my address on the labels as well? I’m a little weary of having my address on all of the product labels, but will if i must! lol thanks in advance!

    1. Cottagefoods

      Here’s the official answer from the CA Dept of Public Health re. CFO labels: “The name, city, and zip code of the CFO operation which produced the cottage food
      product. If the CFO is not listed in a current telephone directory, then a street address must also be included on the label. (A contact phone number or email address is optional but may be helpful for contact in case a consumer wishes to contact you.)” Cottage Foods Sandie says, include a web address if you have one!

  10. Jen

    I’m looking at making macaron cookies from home to sell to consumers. The macaron cookies follow the cottage food act requirements to make from home but if I wanted to make a buttercream filling which has butter and is not covered under the cottage food act could I rent out a commercial kitchen to make the buttercream filling and then bring the macaron cookies to the commercial kitchen to assemble and sell?

    1. Cottagefoods

      If the buttercream filling meets the new allowances for buttercream frosting/filling, one would be able to make it all at home under a CFO permit. (Thanks Jen for the note!)

  11. Danny

    my wife and i are planning to sell cakes from home in chula vista. i see the information you have here and it is very helpful and easy to understand.
    my question is the taxes, how does it work wen doing this type of business.

    1. Cottagefoods

      Most businesses are sole proprietorships, partnerships, or limited liability corporations (LLC). Your tax deductions and responsibilities vary depending on the type of business you choose. We suggest looking into the different structures and consulting with a knowledgeable tax professional.

  12. Martha

    I am so interested in selling bread. But I would like to sell zucchini bread and banana bread. I’m not sure if its acceptable. please advice. thank you

    1. Cottagefoods

      Baked breads are generally approved, including zucchini and banana breads. Good luck! 🙂

  13. Martha

    thank you for answering my questions. I love this site and it has been very helpful.
    I have 2questions
    1) empanadas with yam filling are allowed, yes or no?
    2) I have well water on my property but for cooking I use gallon drinking water. will I still need to get the water tested?

    thanks in advanced

    1. Cottagefoods

      1. Empanadas with fruit filling are allowed. We will check on whether or not vegetable fillings (i.e., yam filling) is OK. Good question!
      2. Because the well water is the main source of water for your home, San Diego County Health Dept. says you will still need to provide water testing as part of their CFO submission packet. They cannot recognize bottled water as an approved source of water for your home. Contact us if you need info on getting your well water tested!

    2. Cottagefoods

      Sorry…only fruit filled empanadas are allowed at this time. You can petition to have your yam filling added to the Acceptable Foods List. See our post on Amending the Approved Food List

  14. Anjali

    Awesome information! Thank you.

    Can you operate a CFO only as a sole proprietor? Can we start with a friend as a partner?

    Please let me know.

    Thanks you,
    -Anjali

  15. Nick

    Is purée cooked fruit and vegetables under cottage law?

  16. Nick

    Is purée (fruit and vegetable) food under cottage law?

    1. Cottagefoods

      No, not as puree because the water content is too high. You can find a link to the current list of CA approved cottage foods on our Resources page.

      1. Nick

        Is puree food under preserved food than? If not is their a categorie that that it fits under?

  17. Lezlie Gomez

    I filed for a Fictitious Business Name and it is currently running in UT-San Diego. Do I have to wait for the affidavit to be filed with the County Clerk’s office before I can file my business tax application? (My business is in the incorporated city of San Diego).

    1. Cottagefoods

      Actually, you should have gotten your business license sometimes called tax application)first before filing for your fictitious business name. If , for any reason, you don’t get the business license, the money for the fictitious business name would be wasted.

  18. Katie

    I have applied for a business tax certificate. Do I have to wait the four weeks for it to come in the mail before I can register my cottage food operation? I live in the city of San Diego.

    1. Cottagefoods

      A business tax certificate (issued by Board of Equalization)is usually not required for CFOs as food is generally nontaxable in CA. Some rare exceptions exist.
      Your business license is different and is issued by your town unless you are in an unincorporated area of the county. DEH will tell you if you need to get it before, or can get it after, you submit your CFO application.
      If you use a fictitious business name, it will need to be advertised in a local paper for 4 weeks.

  19. Katie

    I just called the SD Cottage Food Office and they said all allergen information must be on the front label, not the secondary label with the ingredients as is stated on this blog.

    1. Cottagefoods

      Thank you for the updated information. We will check!

    2. Cottagefoods

      Clarification re. labels and allergens. State law says the only information you should have on a secondary label is the ingredients. That means the allergen declaration needs to be on the primary label. However, the state also indicates that a second option for identifying the allergens is to BOLD them out in the ingredients list to identify them easily to the consumer. In this case, the health department says if you want to bold the allergens in the ingredient list, you do not have to declare them on the primary label.

  20. Lori

    I want to make and sell fudge in order to make amenities bags for the homeless. What I was wondering is: if I say the fudge is a prize for giving a donation for the homeless, do I need a business license and be registered as a cottage food? I was going to pay the taxes on the income but, in wanting to keep my project legal, want to know if I need to get the license and be registered.

    1. Cottagefoods

      If you can work with a nonprofit (which includes churches) you can do “bakesale” type fundraisers which would include your fudge without the expense and trouble of getting a Cottage Food Operator permit. The permits are really for those who intend to develop consistent sales of products.

  21. amber

    Do i need a business license and a permit if I live in San Diego? Whats the difference? How much are each?
    Thanks for all the great info! It’s so helpful!

    1. Cottagefoods

      Your local town, city, or municipality issues business licenses. Unless you are in an unincorporated area of San Diego county, you will need a business license (and possibly Home Occupant addendum). Check with your town. Costs vary.
      If you want to sell Cottage Food products to people, you will need an A or B Cottage food permit. Prices are changing so check with the county for current fees.
      If you want to sell at a farmer’s market and will be selling only your packaged, properly labeled products, you do not need an additional (TFF) permit. If you wish to provide samples of your products, you will need a TFF vendor permit and proper hand wash set up at the event. Costs for TFFs are increasing July 1, 2017. Check with the county for current fee.

  22. Lupita

    Hi!! I have some questions. Before I submit my information for the class A permit, do I have to make first the labels with the ingredients?
    Can I sell food from an apartment?
    And in the application ask for a assessor’s parcel number, what does that mean?

    1. Cottagefoods

      You must submit your complete product labels for each product you intend to sell with your application. Be sure that (1) your products are all non potentially hazardous, CA cottage food approved items, and (2) All the information required is on each label, including ingredients. (Note, ingredients can be listed separately on a secondary label with allergens listed in BOLD in the list.)
      You can sell food from an apartment but MAY have to show landlord’s permission.
      The assessor number is the unique property identification number used for tax purposes. You can often find the number by going to the county tax assessor site, and using the Pay Tax Bill to input the property address. The assessor number will show there. (You don’t have to pay. Just use it to get the number.) See our earlier post on filling out the application, or email info@sdcottagefoods.com for more information.

  23. Mel

    Hi,
    Im planning to sell purple yam cupcakes to friends and family. I ove to bake ans usually when i post something i bake people are asking me if they could try it. if i bake exclusively for family and friends only, and they would pay me for baking it for them do i still need a cfo license?

    1. Cottagefoods

      If you are only baking for friends and family who want to pay you for time and ingredients, it is more of a hobby than a business. If you want to advertise and sell to more people, you would need a permit.

  24. Melanie

    Do you have a link for tax information for those who are first time CFOs? Thank you

    1. Cottagefoods

      In general, there is no sales tax on food in CA. There are exceptions–if you heat a prepared food for people to eat, for example. Genera categories of tax esempt food is here http://www.boe.ca.gov/lawguides/business/current/btlg/vol1/sutr/sales-and-use-tax-regulations-art8-all.html#1602 but you should contact the Board of Equalization if you are uncertain and want to be sure you do not need a Seller’s Permit.
      Re. personal/business tax issues, you should consult a tax professional as certain deductions may be allowed since part of your home will also be part of your business and certain expenses are tax-deductible.

  25. Mel

    Another question, if for now Im selling only to friends and family who are willing to pay me for my baked goods, do I need a cfo license right away?

    1. Cottagefoods

      LEGALLY, if you make and sell any food, you need to be permitted or licensed. If you are just making a few items for friends and family and they want to compensate you for your time and effort, that’s more of a hobby rather than a business. Technically, you still need a permit but it’s unlikely anyone is going to report you unless they get ill (which is very unlikely with properly prepared non potentially hazardous foods on the Cottage Food list). However, if you want to expand and sell more often, more products, more places, you should consider at least getting an A level CFO registration. Prices for both A and B CFO permits are expected to rise after July 1, 2017 in San Diego so, if you do that, get your application in sooner rather than later!

  26. Mel

    Do I need to file a fictitious business name first before I submit my application? Since Dept. of Environmental Health is asking for this info on the application, I’m assuming I need to have a fictitious business name first. I’m not using my name on the business.

    1. Cottagefoods

      You will need to put the name of the business you intend to use on the CFO application. Whether or not you need to get a business license first is determined by where you live. (San Diego DEH provides a list in the application packet.) After you get your business license, you can file for a fictitious name. You CAN file your CFO application before filing for your fictitious business name. Just be sure that the business name on your business license and the business name on the CFO application match when you submit them to Dept. of Environmental Health.

  27. Martha

    Hello,
    I am looking for the proper course to take with ANSI to start the ball rolling with my homemade nutrition bars. Ive been on the ANSI accreditation page, but I feel overwhelmed because there are so many. I’m not sure where exactly to begin or which course would suffice for my CFO. Can you please specify what I course I need to take. They vary so much in cost and times. Thank you!
    Martha

    1. Cottagefoods

      We like http://www.cafoodhandlers.com/eFoodMain.aspx due to the low fee and ability to take the test as many times as necessary until you pass it for no additional charge 🙂 It’s online and can be done at your own pace. Remember, you have 3 months after your permit is issued to obtain your food handler’s certificate.

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