How to Start a Bakery Out of a Home in Michigan

In the state of Michigan as of 2010, you can start a bakery out of your home under its Cottage Food Law. If you're new to the food business or you are a farmer who wants to sell baked goods at farmers markets, you can hit the ground running baking at home and selling at other venues. However, not all bakers are eligible for the cottage food route, so ascertain whether you fit those requirements before using your home kitchen as "home base" for your business.

Business Requirements and Structure

Check with the Michigan Department of Treasury about taxes you must pay. In Michigan, sales tax is not collected on prepackaged food that is not for immediate consumption, but you might have to pay other taxes.

As the Michigan Department of Agriculture and Rural Development notes, being a cottage food operator exempts you only from licensing and inspections required by the commercial Michigan Food Law; you must check with your local government authority for any additional regulations that affect your business. Check with local government agencies about zoning regulations that can affect your homeowner's and/or business liability insurance policies. For example, if you sell at a farmer's market, you may be required to obtain liability insurance for that venue.

Cottage food resource Forrager notes that cottage food operations operate well as sole proprietorships, although an LLC structure can limit personal liability.

Permitted Bakery Products

Michigan's Cottage Food Law allows only non-potentially hazardous foods that do not require time- and/or temperature-controls for safety to be made in your home kitchen. Allowed baked goods include:

  • Bagels
  • Brownies
  • Muffins
  • Breads and sweet breads, with the exception of focaccia with vegetable or cheese toppings
  • Cakes and cupcakes, but no frosting that requires refrigeration
  • Toffee, caramel and hard candy
  • Chocolate
  • Chocolate-covered snacks and fruit
  • Fudge
  • Brittles
  • Marshmallows

Tips

  • Certain products need special handling or licensing to be sold from a home kitchen:

    • Nut butters must be lab-tested for pH and water activity.
    • Vanilla extract and baked goods containing alcohol require you to obtain a license from the Michigan Liquor Control Commission.

Some foods are forbidden to be sold from a home bakery. These include:

Tips

  • While most non-potentially hazardous food products that do not require refrigeration are allowed, some NPH foods are not. When in doubt about a product's allowability, contact the Michigan Department of Agriculture and Rural Development.

Allowable Venues

You can sell your baked products only at prescribed outlets:

  • Home
  • Farmers and farm markets
  • Roadside stands
  • Events

You cannot sell at or through these venues:

  • Retailers or wholesalers
  • Brokers or other food distributors
  • Restaurants
  • Online (promoting online is permitted)
  • By mail-order

Furthermore, there is a cap on how much you can make as a home bakery operation. As of 2015, you can only sell up to a maximum of $20,000 annually.

Watch Food Training Video

While you don't have to apply for a license to open your business, the state recommends that you watch a 15-minute food-safety training video.

Check Water Wells and Septic Systems

Where applicable, any on-site water wells should be checked annually, and any on-site septic systems should be checked to handle additional wastewater.

Get Equipped and Kitchen-Ready

Obtain professional-level equipment equipped to handle large capacities. Critical tools for a commercial baker include countertop mixers, silicone baking mats, pastry bags and pastry cutting devices. Whether you work alone or with employees, note that pets and children may not be present, nor may you cook domestically at the same time.

Label Appropriately

The state of Michigan requires that your cottage food products be labeled with the following information:

  • Name and physical address of the cottage food operation.
  • Name of the product.
  • Ingredients contained by the product, in descending order by weight, inclusive of sub-ingredients for prepared items.
  • Net weight or volume, and its metric equivalent.
  • Allergen labeling based on federal rules for food labeling.
  • Disclaimer stating the following: Made in a home kitchen that has not been inspected by the Michigan Department of Agriculture & Rural Development, in a minimum font size of 11 point, with clear color contrast. All-capitals or all-lowercase and handwritten wording is allowed. 

References

About the Author

Timothea Xi has been writing business and finance articles since 2013. She has worked as an alternative investment adviser in Miami, specializing in managed futures. Xi has also worked as a stockbroker in New York City.