Whether you are selling your famous oatmeal cookies or artisan sourdough bread, at some point, after the millionth question you’ve received about ingredients, calories, or volume, you’ll want a label whether it’s required or not.
Laws in every state have been written to help companies referred to as; home-based kitchens, cottage food businesses, or homestead businesses to comply with food health and safety while allowing commercial operations in domestic locations.
We’ll dive into the ins and outs and food labels and the reasons that this information is always good to have on hand, whether it is mandated by state law or not.
In this guide to Cottage Food Business labeling, we’ll explore the following:
Who Requires Labels
Examples of Home-Based Food Production Labels
Why You Should Have a Label, Whether It Is Required Or Not
Resources To Help Create A Label
Each State’s Cottage Food Law For Labeling
Who Requires A Label
Most states require some version of labeling for home-based food products. However, the actual contents can range from essential to complex depending on the stipulations of Cottage Food Laws in your state.
Suppose you decide to partner with, for example, a local coffee shop to sell your baked goods, a farmer’s market, or a retail outlet. In that case, they may also have their own standards to ensure safety regulations are met and to minimize liability.
Some states have exemptions for:
Hot, ready-to-eat foods
Simple Items with low nutritional value; coffee, tea, etc
Spices
In all cases, you should check our guide below for what each state’s Cottage Food Laws mandate. Below we indicate typical information asked to be included on home-based food labeling.
Typical information found on food labels includes:
(1) The name of the food product located on the primary panel.
(2) The name, city, and zip code of the Cottage Food Operation (CFO) that produced the food product. (A contact phone number or email address is optional but may be helpful for contact in case a consumer wishes to contact you.)
(3) You must indicate it was prepared in a home kitchen by one of these statements, depending on state regulation, in 12-point type on the principal display panel:
“Made in a Home Kitchen”
“Repackaged in a Home Kitchen”
“This food is made in a home kitchen and is not inspected by the Department of State Health Services or a local health department.”
(4) The registration or permit number of the CFO who produced the cottage food product (if applicable).
(5) The ingredients of the cottage food product, in descending order of weight, if the product contains two or more ingredients.
(6) The net quantity (count, weight, or volume) of the food product, stated in both (pound) units and metric units (grams).
(7) A declaration on the label in plain language if the food contains any of the major food allergens such as milk, eggs, fish, shellfish, tree nuts, wheat, peanuts, and soybeans.
Regarding allergens, there are two approved methods prescribed by federal law for declaring the food sources of allergens in packaged foods: a) in a separate summary statement immediately following or adjacent to the ingredient list or b) within the ingredient list.
Examples Of Cottage Food Labels
If you’d like to know what it looks like to create a label for your products, many states provide mockups for what meets regulations.
South Carolina’s Department of Health and Environmental Control released this example under their amended October 2022 Home Based Food Production Law Guide.
South Carolina Cottage Food Label Specification
Why You Should Have a Label On Hand No Matter What
You may be a part-time home-based food producer who only sells on the weekends at the farmer’s market or to friends and think, I don’t need labels!
If no one requires you to have a label, why should you bother investing effort, time, and money out of pocket? There are a few benefits to having this information on hand that goes beyond meeting regulations. Even if you don’t put it on the physical product, keeping information on hand about nutritional values, ingredients, and sourcing can come in handy when you least expect it. Here are five solid reasons to make creating labels a priority.
1. Streamline Questions From Customers
People will ask all the questions. What are the ingredients? Do you know the caloric content? Is it gluten-free? Does it meet an allergen requirement you may have never heard of?
Consumers have a right to know all of the above, and even if they are satisfied with your answer, you may not want to answer the question several times over. You also might not be available if you end up hiring staff to answer every question, and a label can help your staff point the customer in the right direction.
2. Free Marketing
So you make the best BBQ sauce this side of the county? What better advertisement is there than a label on your product while it goes to a family get together or event? Never miss a free marketing opportunity by having your product do the talking when you aren’t around. Adding your social media and contact information is also a great way to get leads and gain momentum in your customer base.
3. Levels Your Business Up
Intuitively customers trust a brand that looks polished and professional. Your product might be made in a home kitchen, but if you put effort into making it, you should communicate that passion in the packaging. When you make social posts, a sleek labeled product will help separate you from the pack.
4. Shows You Are An Authority On Your Product
Adding nutrition, allergen, and health benefits information shows that you’ve put thought into your products. While you may not need all categories of information (check your state’s regulations in our guide below), adding it demonstrates that you know your product intimately and have done the research.
5. Opens The Doors
Building on all of the above, a labeled product infers that you are ready for partnerships with retailers, events, and expansion. A polished label will open the door to opportunity in a way that an unlabeled and “green” looking product may not.
Resources To Create Your Own Food Label
The good news is, you don’t need to be a graphic designer to put together your own labels. There are plenty of easy-to-use tools online that will help you put together the needed information, design, and print them with ease.
Nutrient / Nutrition Labeling and Analysis
You don’t need a lab to do your ingredient analysis and create a professional-looking nutritional label. Each of these online generators has free options. All you need is a set recipe with defined measurements, and the generator will do the rest. You can save the nutritional information box generated and pop it into one of the design programs below.
In addition, these platforms are a great way to experiment with recipes, especially if you have a health target like a “low calorie” product. Adjusting ingredients will help you envision where the recipe needs to go to achieve the goal.
You don’t need to have knowledge in complicated design programs to throw together your first label. If you feel intimidated, reach out to design friends or try freelance sites like Upwork, Envato, or Fiverr to hire someone. Freelance designers can range in price depending on experience, but it’s not difficult to find an economical option.
Here are several sites to design labels on your own.
Forming a relationship with a local printer is always helpful for a number of reasons. You can work together in real-time on location to get your label locked in perfectly. In addition, there is also generally faster turnaround and lower minimum order quantities if you explain that you are a new business and want to grow with them. Plus, it’s always great to support a local business.
However, this isn’t always an option. You could opt to print your labels at home. Conversely, as you scale your business, the pricing may be better with larger online companies, albeit less personal. Here are a few options for online printing services.
Below we have curated a list of resources for Cottage Food Laws in each state. When possible we listed the government link for the Cottage Food Law in that state. The regulations, labels requirements, and exemptions vary from state to state and are essential to understand before launching your food business.
Are you thinking of taking your culinary creations into edible commerce? But perhaps think that starting a food business is for “other people”? A home-based food business is a perfect way to start your journey and comes with tremendous benefits. Starting small can help you decide if being a foodpreneur is something you want to chase and turn into your legacy.
Setting up a commercial food business in your home may seem a daunting task at first. However, you may be surprised by just how easy state Cottage Food Business Acts have made getting into the commercial food industry without the full-scale start-up responsibilities restaurants require.
Below we will break down the best perks of realizing your culinary dreams from home.
The Advantages of Starting A Cottage Food Business
Low Barrier To Entry
Every home-based food business must comply with their state’s cottage food laws. This includes licensing, permitting, and hygiene regulations. These are generally straightforward and can be less rigorous for a home-based business depending on the area. Fewer start-up costs and legal requirements make a cottage food business an equal opportunity starting point for most foodpreneurs.
Less Capital Intensive
Setting up a full-scale restaurant requires a tremendous amount of start-up capital and potentially the involvement of investors. Instead, using space you already have can help save precious funds that can be reinvested into your growth instead of a landlord.
Additionally, you’ll be spending less on utilities, maintenance, and staffing required to run a brick-and-mortar operation. Items like utensils and cooking equipment can also be cross purposed.
Lower Liability
A home-based food operation allows you to operate with much less stress than a traditional commercial kitchen. For example, you likely won’t need to worry about employee insurance, costly maintenance, or risk an unexpected closure tanking your profits for the month.
Since your investment remains comparatively low, the risk quotient decreases compared to a stand-alone commercial food business. If something unexpected happens and you decide to take a break, you won’t have employees to lay off or a landlord banging at your door either.
Low Overhead and Operating Costs
Compared to the stand-alone commercial kitchen, the day-to-day operational costs of a home-based kitchen are appreciably lower. From utilities to rent, you’ll have less overhead to cover, and more profit can be made. Not only is the overhead reduced, but you also won’t have operating costs like POS systems, employee management software, or the wages of admin staff (like accountants and human resources) to cover.
You Can Scale As You Grow
As far as pressure goes, the ability to scale as you grow in a home-based food business is possibly one of the best advantages of running your commercial kitchen in-house. While starting a full-scale restaurant will mean that you need to be more or less fully stocked on opening day, a home-based kitchen means that you can scale as you grow.
You can level up your kitchen equipment and staffing needs as profits allow rather than spending money upfront. In addition, you won’t have to front the expenses of large volumes of packaging and ingredients until your customer base grows. It is a perfect solution for those with a food dream but without a millionaire’s bank account.
Tax Advantages
While you should consult your accountant, it is logical that you can claim many of your home-based business expenses on your taxes. For example, if your in-house commercial kitchen takes up 20% of your house, you should be able to make a write-off on your income taxes.
You can also receive tax deductions for expenses related to licensure and permitting. The same goes for marketing materials, website hosting, online courses, and vehicle expenses.
Flexibility In Concept
One of the best advantages of starting your foodpreneur journey with a home-based kitchen is that you can test the waters and modify your offerings with feedback. Instead, a stand-alone restaurant has a very slim margin of versatility as menus need to be printed with set offerings and ingredients need to be purchased ahead in large quantities. In addition, staff are trained to make specific recipes. Throwing new products into the mix will cause inconsistency, increased costs, and instability.
In a cottage food business, you have the benefit of testing products and friends, family, and even the local farmer’s market before you commit to a menu or product. Take advantage of this flexibility by hosting tasting events in your neighborhood or popping up at festivals to try out creations.
Finding a balance between your business and family can be easier in a cottage food business model.
Flexible Hours, Flexible Life
Finally, one of the most difficult tasks as a foodpreneur is establishing a work-life balance. Establishing a routine inside the comfort of your home and doing so early in the process will help you stay happy, passionate, and motivated.
Too often, entrepreneurs get sucked into the hustle. A busy week can turn into months that can turn into years where you’ve missed important life events and holidays to stay open as a brick-and-mortar business. Because, hey, the landlord, employees, and vendors still need to get paid.
A home-based commercial kitchen offers a somewhat more flexible routine with less impact if you need to take a day off. You can set your own hours, take feedback and make adjustments to offerings relatively easily, and every day is casual Friday. You also won’t lose precious time driving to the restaurant each day when you can just roll up to your in-house kitchen instead.
Conclusion
While there are also disadvantages to running a home-based business (you are essentially never able to leave your workplace after all!), we believe the pros outweigh the cons. Starting your foodpreneur journey in your home allows for a massive amount of flexibility and a faster approach to begin.
If you are still unsure if taking on a home-based food business is the right choice, consider touching base with fellow home-based food business entrepreneurs. Additionally, community forums are helpful to learn from those who have gone before you. If you want to make sure you are on the right path you can also connect with a consultant who specializes in helping home-based food businesses get licensed and comply with regulations.
The Top Five Questions About Starting a Home Based Food Business
Home Based Food Businesses Can Thrive If You Know The Secrets To Succeed
Suppose you’ve gotten countless compliments on your potluck specialty, been asked to make every kid’s birthday cake in the neighborhood, or everyone consistently votes to have dinner at your house. In that case, a home-based food business might be the vehicle to take your talent and passion to the next level.
While it is, by nature, a less start-up intensive business, a home-based or cottage food business still requires careful research and planning. While preparing your custom BBQ sauce for friends or catering an event on occasion can feel casual, running your food business out of your home involve the leveling up of your organization and operations.
Once you get your foundation in place, a home-based food business has many advantages and benefits. Check out more at The Perks Of a Home-Based Food Business.
Researching the laws and operating standards surrounding cottage food businesses can be time-consuming. So we’ve rounded up the top five questions commonly asked about home-based food businesses below so you can get to the fun part faster.
Do I need a business license or permit for a home-based food business?
Whether you need a business license for your cottage business depends on the requirements of your state. As you scale up, you’ll likely want one to formalize your operations. Most states require a business license or home-based business certificate, or both.
Here are just two examples of the differing requirements in California and South Carolina.
California
In California, you must also obtain the licenses and permits required of all businesses, such as a local business license as well as a food handlers permit.
You will need a permit from the county health department. A home-based food business can choose from two types of permits, depending on whether you want to sell products directly to customers or through other local businesses like shops or restaurants.
Class A permit. You can get a Class A permit in California if you want to sell only directly to customers within the state of California. For example, with a Class A permit, you can sell at farmers’ markets, festivals, from your home, or in other ways that allow individuals to purchase products directly from you. To get a Class A permit, you must complete a self-certification checklist, but there will be no physical inspection of your kitchen.
Class B permit. You need a Class B permit if you want to sell indirectly to customers – for example, through stores, restaurants, or other venues that will sell your products for you. In California, you may not sell indirectly outside of your own county unless the county where you want to sell has stated explicitly that they will allow indirect sales of cottage food products. To get a Class B permit, your kitchen must pass an annual physical inspection to get a Class B permit. (California Health and Safety Code § 113758 (2022).)
In addition, through the California Homemade Food Act, businesses ARE allowed to sell products online as long as they are picked up in person by the customer. Home-based food businesses ARE NOT allowed to ship food goods or cater.
South Carolina
Compared to California, South Carolina has a more flexible scenario for foodpreneurs. This state’s regulations do NOT require inspections, permits, licensing, registration, or a food handlers permit. However, a business license is recommended for taxation purposes.
Under South Carolina’s newly renovated 2022 Home Based Food Production Law, “home-based food production operations” can now sell items beyond shelf-stable baked goods and candy to include a wider variety or goods.
No retail food establishment permit is required as long as all production stays in the home space. Home-based food businesses are restricted to selling only to the end customer. New reform to the cottage food laws has opened up sales to restaurants and retail spaces, as well as farmer’s markets, roadside stands, events, and from home. (South Carolina Code § 44-1-143)
Additionally, you ARE allowed to ship and sell foods online in South Carolina as well as offer delivery and wholesale.
What information is needed to obtain a permit?
While this also differs from state to state and may or may not require an inspection, you will generally need to be prepared with these pieces of information. Even if not required, it is always better to be over-prepared for venue or retail-specific requirements.
ingredients and full recipes for all of your products
a complete list of sources for your ingredients
labels for each product
source information for your packaging
a floor plan of your kitchen work space
a list of your equipment, utensils, and food contact surfaces
a certificate showing you have completed a food handlers course
Do I need insurance?
Anyone turning their culinary passion into a profit-based model should ensure they are well protected against the risks associated with running a home food business. However, even though you are making food from your residence, this doesn’t mean that you are immune to the risks associated with working in the food industry.
Food Liability Insurance takes the prudent step to protect you from unforeseen accidents or events. Whether you run you are primarily selling at your local farmers’ market or sell your special recipe BBQ sauce out your back door, the cost of your food insurance policy is mainly driven by the size and scope of the food business you’re running. Food Liability Insurance typically costs between $300-$1300 annually, depending on differing variables from state to state.
Labelling requirements for cottage food businesses have reasonable exemptions through the FDA.
What kind of labeling do I need?
Thanks to the Small Business Nutritional Labeling Exemption, the FDA exempts “low-volume” products from needing to use barcodes or nutritional contents. To be considered exempt a home-based food business must:
Not have more than 100 employees
Sell fewer than 100,000 units annually
Have less than $50,000 in annual sales
File an exemption with the FDA annually
Online submissions for the exemption can be made here on an annual basis.
Keep in mind that each food app, venue, or retailer might have its own qualifications for labeling with higher standards.
Selling home baked goods to retailers is possible through Cottage Food Business Laws
What kinds of goods can I sell in my cottage food business?
Can you sell beef jerky, fermented foods, and hot food? The answer is a predictable one by now; it depends on the regulations of each state. Forrager has a great resource for all 50 states that cover the foods that are allowed, controlled, or strictly prohibited. Their directory also includes valuable information about where you can sell in each state, if and how you can deliver, and limitations for the cottage food industry.
For example, Colorado will allow the sale of some “potentially hazardous” foods, like fermented sauerkraut, while South Carolina allows only baked and confectionary goods. Baked goods are the sweet spot of the cottage food industry with every state allowing for the sale of some type of sweets.
However, while some states will allow the sale of artisan cookies, they may not allow banana bread due to moisture content and shelf stability. There are exceptions to these rules. Special permitting may satisfy separate home-based food laws. For example, in Ohio, you can apply for a special “Home Bakery License” that allows for potentially hazardous baked goods like cheesecake and dairy-based foods. Where there is a will, there is a way!
Here are several other resources to check your state’s cottage food allowances for different types of food.
Starting at home is a great way to build a proof of concept for the big market with less financial risk and time investment. Not that the cottage food business is an easy street, however, there is just an ease of entry into the foodpreneur market that doesn’t exist in brick-and-mortar situations.
Starting small will help build your audience and allow you to scale up organically as you find success. Check out our other articles in the Grow Your Food Business Series on where to start!
