In Pennsylvania, you can open two different types of fresh bakery businesses -- a home bakery or a retail establishment. Both are licensed by the Pennsylvania Department of Agriculture and both must follow state laws regarding the safe preparation and handling of foods for public sale, but there are some differences. Home bakeries do not require a commercial kitchen and so can be opened with little start-up capital, while retail bakeries are not as limited in the types of bakery items they can produce. Additionally, although the start-up process for each type of fresh bakery is similar, it is recommended you review the laws and advantages and disadvantages associated with each before beginning.
Write a business plan that addresses the types of baked goods you will produce, your recipes and production methods, where you will obtain your ingredients from, how and where you will store both ingredients and finished products, who your target market is or where you will sell your baked goods and how you will transport your bakery items, if applicable. You should also outline your accounting methods, advertising strategies and ideas for obtaining the funds and equipment you will need to begin.
Choose a location for your bakery. You can operate from your home, purchase or lease an existing bakery building or construct a new building. Carefully consider the costs associated with each option, including remodeling/construction and equipment costs. Additionally, consider your sales options with both retail and home bakeries, as you will need to find outlets such as farmers' markets, fairs, website ordering, etc., to sell your home bakery goods in Pennsylvania.
Contact the local zoning authorities for your area of Pennsylvania to be sure you can operate a food business in the desired location and to apply for any permits you may be required to hold. If your fresh bakery business will be located anywhere other than your home kitchen, hire an architect or construction professional to create plan drawings for the modifications or construction needed to ensure compliance with commercial kitchen requirements. Do not begin any remodeling or construction at this point.
Register a fictitious name with the Pennsylvania Department of State, unless your bakery is a sole proprietorship AND will use your last name in the business name. Apply for a business license with your local county and city government using your fictitious business name. Note that your business license may receive only conditional approval until the appropriate Department of Agriculture licenses are obtained.
Obtain a Federal Employer Identification Number (FEIN) from the IRS and use this number to register with the Pennsylvania Department of Revenue for the appropriate tax accounts. Since food sold for consumption outside bakery premises is a tax-exempt item, you do not need a sales/use tax permit, but you must file for an exemption certificate. Additionally, if you will have employees you are subject to Pennsylvania laws regarding employer withholding, unemployment insurance and workers' compensation insurance.
Complete and submit either a Home Food Processor Plan Review and Application or a Retail Food Facility Plan Review and Application to the Pennsylvania Department of Agriculture, depending on the type of fresh bakery you will open. Include with your application a drawing of your kitchen facility, a list of all of your baking equipment, the business plan you wrote previously and copies of your zoning permits, tax certificates and local licenses.
Prepare your bakery for inspection by a regional food sanitarian or supervisor from the Department of Agriculture. The official will visually inspect your kitchen facilities to ensure compliance with food safety regulations, will interview you regarding safe food handling and preparation procedures and may request lab testing of certain items on your menu. Once the inspection is completed, you will be requested to pay the licensing fee and issued a license, or notified in writing of license denial along with information regarding fixing deficiencies and reapplying.
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