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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 list.
2. Check with your local planning office to make sure that zoning laws won’t prohibit a cottage food business at your residence. If you are unsure how to contact them, call the business license office for your town or city.
3. Create a label for your product in line with state and federal requirements.
4. 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, and cash, check, 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.)
5. 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 HERE. Note: 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.
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.
Got questions? Email us at info@sdcottagefoods.com and we will try to help. Or visit our Facebook page and ask the community!
6 comments
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Adam
January 12, 2013 at 5:40 pm (UTC -8) Link to this comment
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.
Cottagefoods
January 12, 2013 at 9:49 pm (UTC -8) Link to this comment
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.
Elaine
February 5, 2013 at 9:14 pm (UTC -8) Link to this comment
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
Cottagefoods
February 6, 2013 at 10:59 am (UTC -8) Link to this comment
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.
Elaine
February 6, 2013 at 11:58 am (UTC -8) Link to this comment
Thank you so much. That is a great price and recommendation. You are awesome!
Cottagefoods
February 6, 2013 at 12:57 pm (UTC -8) Link to this comment
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.