For some, it’s a dream come true, for others, it’s something they fall into and love, but lots of people end up running food-prep businesses that they start from home. Some of these are catering businesses, many more are baking businesses where folks use their love of pastry and mad skills to bake, decorate and sell cakes and pastries, doing what they love and making a little cash on the side.
I have family members, friends and know of a number of online (blogger) acquaintances who are all either running or starting a home-based food business.
Unfortunately, they’re all really, really illegal.
Home Business Advocate Beverly Williams explains about food-prep businesses on her site:
You must call the Department of Health in your area FIRST to find out if you are allowed to prepare food for sale in your home kitchen. The answer will be NO! I have never found a jurisdiction that allowed food for sale to be prepared in a home kitchen. Some areas do allow you to have a separate commercial kitchen for this purpose but the cost may be prohibitive. In some areas, you may be able to find a commercial kitchen that is not being used all day that might be willing to rent their kitchen to you. Most jurisdictions will require you to have your own business license as well.
Enterprise Toronto offers some details on what is required to operate a food-making business from home – essentially a completely separate kitchen from the one in which family meals are prepared. But these generally also have specific requirements regarding prep surfaces, storage areas and sinks. In the City of Toronto, we have a number of food-based business incubators and start-up organizations such as FoodShare that rent out industrial kitchen space for people looking to start food-based businesses but with no capital to rent a permanent space.
Also, as of 2006, all food service operations in Toronto must have one person on site with a Food Handler’s Certificate, based on a course focusing on safety and sanitation in the food prep workplace.
People looking to do more work than just the occasional cake for friends will also need to acquire a provincial business registration and should be charging and remitting the appropriate PST. Believe me, if you’re selling something that should have retail sales tax applied to it (ie. prepared foods such as cake) the provincial government will want their slice (pun intended). PST registration will also benefit small businesses by allowing you to buy supplies, both wholesale and retail, exempt from paying provincial sales tax. Registering for GST, even if your business doesn’t make the minimum $30,000 a year can also be useful as it allows small businesses to recoup GST paid out on equipment and supplies.
If you’re operating your food prep business from a separate kitchen at home, you also have to register the business with the city so it can be inspected on a regular basis for health and safety issues.
Now I know that lots of people do a little cooking and baking for friends and acquaintances in exchange for money, and generally the powers that be turn a blind eye to that kind of stuff, but for anyone looking to start a full-fledged business, where they’ll be creating food on a larger scale and especially where – through a web site, business cards, flyers or word of mouth promotion – knowledge of their business eventually reaches strangers, I would strongly advise all the friends, family and online acquaintances to cover their asses by making sure they’re doing everything legally.
Turning a hobby into a small business can be a delightfully fun thing, but not if you find yourself in court because you didn’t follow the letter of the law or someone got sick from your products.