How to Operate a Cottage Industry Bakery

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A cottage bakery can be an exciting way to earn an income while operating from the comfort of your home. The demand for baked and pastry goods is growing due to changing lifestyles that leave little time for people to cook their own meals. A home bakery is an opportunity to offer your customers a home-baked alternative to mass-produced bread and pastries from big industries. However, to create a financially rewarding business, you must run your bakery professionally and abide by the cottage industry laws in your state.

Cottage Industry Laws

To operate a cottage industry bakery, you must comply with the rules and regulations that govern the industry. Depending on the state where you live, the department of health, department of agriculture, a zoning department or a combination of these will inspect your baking and packaging space. For example, in California, you register with the United States Food and Drug Administration and obtain a food-handler certificate from the California Department of Health Services. In addition, at least one person in your firm must pass a food-safety certification exam.

Licenses and Permits

To run your cottage bakery business legally, obtain any required federal, state and local permits and licenses. Register a business name with the county clerk’s office and register for a business permit. Obtain an Employer Identification Number from the Internal Revenue Service to enable the government to identify your business entity and collect taxes from your business. If you have any products, logos or packaging designs that are unique to your business, register them with the U.S. Patent and Trademark Office to grant you legal rights over them.


The success of your cottage bakery hinges largely on the quality of your products. Some states do not allow out-of-state sales or sales to wholesalers, cafes or hotels. Therefore, your marketing strategies should target consumers in your state. Keep the quality of your baked products consistently high to retain existing customers and increase the possibility of referrals. Hire a qualified baker or take time to polish your skills. Also, research your market and provide unique products. For example, your state may lack gluten-free or organic baked products; your business could fill that niche.


Unless you are well known as the best baker in your state, you need to advertise your products. Realize that every person you talk to is a potential client. Although online sales are restricted in many states, you can create a website to advertise your products. An attractive and informative website reaches people at a low cost and in a short period of time. Use only images of your products that are tastefully designed and make your site interactive. Introduce yourself to local offices and write a proposal to supply them with their break-room snacks. Develop networks with grandmas’ bridge clubs, moms’ clubs and participate in kids' activities. Offer to sponsor a church activity and gain a platform to advertise and sell your products.