Start a Bakery: Costs & Steps (2026)

Cottage Food Laws by State

Cottage food laws allow bakers to produce and sell certain low-risk foods from a home kitchen without a commercial kitchen. Rules vary significantly by state — some are very permissive, others very restrictive.

• •Allowed products: Generally shelf-stable baked goods: breads, cookies, cakes, brownies, pastries. Cream-filled or refrigerated items usually excluded.
• •Sales limits: Most states cap annual cottage food sales at $20,000–$75,000; California allows up to $75,000/year (2023 law)
• •Sales channels: Some states restrict to direct-to-consumer (farmer's markets, home delivery) and prohibit wholesale or grocery store sales
• •Permissive states: California, Texas, Michigan, Wyoming have broad cottage food laws with high or no sales caps
• •Restrictive states: New Jersey, Maryland, and Rhode Island have limited cottage food laws or require commercial kitchen even for home bakers
• •Source: Cottage Food Laws database — cottagefoods.co tracks current laws by state

Commercial Kitchen vs. Home Kitchen

Once you exceed cottage food sales limits — or want to sell wholesale, to restaurants, or through retail channels — you need a licensed commercial kitchen.

Food Safety Permits & Certifications

Commercial bakeries require food handler certifications and a retail food establishment permit from the local health department. Cottage food bakers may also need a food handler card depending on the state.

• •Food handler card: $10–$30; required in most states before handling food commercially
• •Food manager certification: ServSafe or equivalent; $100–$200; required for commercial bakeries with staff
• •Retail food establishment permit: Required for bakeries open to the public; $200–$1,000/year from local health dept.

Food Labeling Requirements

If you sell packaged baked goods (retail bags, boxes, online shipping), federal and state labeling laws apply. Direct service at a counter or farmers market is generally exempt from full nutrition labeling.

• •Cottage food labels (required in most states): Product name, list of ingredients, net weight, producer name and address, and a disclaimer: "Made in a home kitchen not inspected by [state] Department of Agriculture"
• •Commercial packaged goods: FDA-compliant nutrition facts panel required for annual sales >$10,000; small business exemption for under $50,000 revenue
• •Allergen disclosure: Federal law (FALCPA) requires labeling the Top 9 allergens: milk, eggs, fish, shellfish, tree nuts, peanuts, wheat, soybeans, and sesame
• •Nutrition label cost: $100–$500 per product for lab testing; software tools like Genesis R&D or ReciPal can calculate nutrition facts from recipes for $25–$100/month

Allergen Disclosure & Cross-Contamination

Bakeries are high-risk environments for allergen cross-contamination. Beyond legal labeling requirements, your operational procedures need to protect customers with food allergies.

• •Posted allergen warnings: Many states require visible allergen information at the point of sale (counter signage)
• •"May contain" statements: If your facility processes tree nuts and wheat, all products may require a "made in facility that processes X" advisory
• •Dedicated gluten-free equipment: If marketing GF products, use separate equipment and document cleaning procedures; FDA GF claims require <20ppm gluten