Cottage Food Sales Tax

Are you looking to be more independent; to be your own boss and set your own terms on work and opportunities? If so, then entering into the cottage food business with a cottage food operation is one great path towards self-sufficiency and economic success. But before you get started, you will need to know some basics like what is cottage food and what cottage food business taxes you need to be aware of. 

What is defined as cottage food will vary by state and country, but in general these are foods that are produced in a home kitchen (or an otherwise unlicensed and informal kitchen). In general, however, cottage foods are anything that can be consumed, but certain states may regulate what can be sold and where it can be sold at. As such, it is important for individuals to check their local cottage food law before setting up a shop.

Additionally, it is important to consider local cottage food law taxes, in particular cottage food sales tax. Sales tax a tax that is added to the cost of a product when sold by the consumer. Where most cottage food law taxes are paid by the business itself or its owner, a cottage food sales tax would be one paid by the buyer. However, if the consumer doesn't pay that cottage food sales tax, then the government may hold the business responsible for the amount. 

The good news is that many states will not require a cottage food sales tax at all, at least not on consumable cottage foods. This is because most states don't have any sales tax on any grocery items. The following is a more in-depth look at which of the states in the United States require sales taxes on foods and which don't; and what cottage food sellers should be aware of in those communities that do. 

Always make sure to consult a licensed tax or financial professional when considering your business' tax needs.

Cottage Food License

Doing things legitimately, with the correct paperwork, can be frustrating and as such, there are some who will look for how to get around cottage food laws. Don't do this. You may be frustrated when you look at your local cottage food license application or see an extended time frame when asking for how long does it take to get a cottage food license, but in the end, having the right paperwork and being correctly licensed and permit will save you a lot of long-term hassle. 

So if you are asking yourself, do I need a cottage food license? The answer is yes. Your cottage food permit will enable you to properly market your business without fear of the government shutting you down and abruptly shutting off your stream of income. Having a cottage food license ready will also make it easy to become insured (which will further financially protect you) and apply to be part of things like farmers' markets where you will really see your cottage food sales take off. 

Cottage Food Laws By State

Again, whether you pay a cottage food sales tax and whether you need licensing or permitting will all depend on where you live. To help demystify some of the more popular state laws, consider the following run-down of cottage food laws by state:

• Washington. For the question of do I need a license to sell homemade food in Washington state, the answer is you will need a business license. Additionally, you will also need to apply for a Washington cottage food permit as part of a food license WA. The application for both the cottage food license Washington state and permit can be done at the same time and will require the submission of detailed business plans and recipes, a receipt showing you've passed a food safety course and the scheduling of a home inspection. Failure to do all the above can result in a fine for selling food without a permit Washington state as well as the closure of your operation. 
• New York. The cottage food laws NY can be pretty strict. First off, the cottage food law NY has two regulatory requirements that depend on what type of foods you make and how you plan to sell. Sellers of certain baked goods, trail mixes, and jellies can apply for a Home Processor exemption that will allow home kitchen preparation. However, those who can't get this permit exemption will need to use a separate kitchen. 
• Louisiana. Lousiana cottage food law 2020 and cottage law Louisiana 2021 have been a big boon to the state's cottage food businesses. These new laws have increased the number of foods that can be sold. However, in order to sell food from home Lousiana, there are some Louisiana cottage food law label requirements that must be followed. Businesses will also have to learn how to get a cottage food license in Louisiana and obtain a Louisiana retail food permit in order to sell at markets and stores. 
• Minnesota. All individuals who plan to make and sell food must register for a cottage food license MN, the exception being certain non-hazardous foods listed on the MN cottage food list. 
• Missouri. As of the most recent Missouri cottage food law 2020, individuals won't need to apply for any state licensure so long as they are following the state's law. However, there are several Missouri counties and cities that will require business licensure and permitting. 
• Texas. Texas is one of the friendliest states for entrepreneurs and small businesses and as of Texas cottage food law 2020, there are no permits, fees, or licenses required to start making and selling food. However, you will need to apply a cottage food sales tax to all food products sold as ready to eat. 
• California. The opposite of Texas, California has some hefty requirements for those wanting to start a cottage food business. The cottage food laws California require interested individuals to apply for cottage food license California. It's recommended all home-based chefs apply for a Class A cottage food permit California as soon as they can as this permit allows for selling at festivals, markets, as well as from a home kitchen. 
• Nevada. While you don't need a cottage food license Nevada, you do need to register with the health authority. In order to apply, you will need to include sample labels for your products and complete a Cottage Food Operation Registration Application.  
• Minnesota. Minnesota requires not only a license to sell cottage food but also regular MN cottage food license renewal. 
• Pennsylvania. Interestingly, PA cottage food laws used to be really lax, and it was once the only state that allowed meat jerky to be produced and sold from the home. Today, however, there are some key statutes applicants will have to follow. 
• Wisconsin. The Wisconsin cottage food law 2020 is pretty serious. For those who don't obtain the proper cottage food license Wisconsin and follow correct protocols, the punishment can include upwards of $1,000 in fines and/or six months in jail. However, Wisconsin offers a lot of flexibility and food freedom to those who set up their cottage food business the legal way.
• Massachusetts. Massachusetts has a statewide "residential kitchen" law that permits most foods from being made and sold at home. However, things get tricky when you're talking about the counties Massachusetts cottage food laws as a lot of areas use zoning laws to restrict individuals. 

Cottage Food Law Florida Sales Tax

As of the most recent cottage food laws Florida 2020 and Florida cottage food law 2021, the answer to do you need a license to sell food in Florida, at least in terms of selling homemade food, is no. So long as gross sales do not exceed $50,000 and so long as food is being sold directly to the consumer, either on-site or at a farmers market, roadside stand, or similar venue. Meet those stipulations, and you will be a part of the food operations that do not need permits Florida. 

Additionally, as long as you are not selling food to be consumed on-site, you won't need to add in cottage food law Florida sales tax. If you are having food consumed on-site, such as at a bed-and-breakfast, even if you made the foods yourself, you will need to apply a Florida sales tax. 

Furthermore, while no state licensing is required, those in more urban areas should check local ordinances first before making and selling foods. For example, there are more specific Orange County Florida cottage food law and Pinellas County cottage food law that must be adhered to in addition to state regulations. 

Ohio Cottage Food Taxes

Cottage food operations Ohio have grown significantly in recent years, and as such, it is important to regularly do a refresher on Ohio cottage food laws. 

The Ohio laws on selling baked goods from home are fairly lax, with residents capable of producing and selling most low-risk food products right from their home kitchen. This means the answer to can I sell food from home in Ohio is yes, and you can do it without an inspection or special licensing requirements in most areas. But this is only for foods that meet the Ohio Administrative Code Section 901:3-20-04.

In regard to Ohio cottage food taxes, as with most other states we have profiled here, so long as cottage food is being sold as a type of grocery, you will not need to apply a sales tax to it. However, if you are selling prepared food to be sold on-site, such as with a food truck if you have an established sitting area, then you will generally need to add a sales tax. Additionally, cottage food sold as pet food must be sold with a sales tax.

For more information about the sales taxes and other taxes for your area, be sure to check your county and state laws. 

Additional Resources

Cottage Food Law Michigan | Cottage Food Law Wisconsin | Cottage Food Laws Florida | Cottage Food License | Cottage Food Sales Tax | Cottage Industry Laws | Home Food Laws | Laws About Selling Homemade Food | Laws on Selling Food From Home | License to Cook and Sell Food From Home | Microenterprise Home Kitchen Operations | Permit to Sell Food From Home | Permit to Sell Food From Home California | Rules for Selling Food From Home