Do I need a buisness license to open a bakery?
ComplianceAugust 08, 2022|UpdatedAugust 08, 2023

Bakery business license requirements

If you’re thinking of opening a bakery business, like any company that sells food to the public, you must be licensed by your state, county, or city.

In fact, in most jurisdictions, bakeries are treated as food establishments and must obtain a permit from the health department.

Licensing requirements to open a bakery vary by state, county, and city. Other considerations include the scale of your operations and whether you operate a storefront bakery or a home-based bakery business.

If you’re asking, “what licenses do I need to open a bakery?”, read on.

License requirements for traditional brick-and-mortar bakery businesses

Brick-and-mortar bakery businesses are subject to several licensing, permit, and tax registration requirements. Below is a list of the most common licensing requirements for a bakery business with a storefront:

1. Food licenses, permits, and certifications

These are generally issued by your local health department. You may need more than one license depending on the business activity you conduct. For example, New York City issues permits for food service establishments and a separate one for food processing and/or food preparation.

Some jurisdictions also require all employees involved in the preparation, storage, or service of baked goods in a food facility to obtain a food handler permit.

The application process for food service licenses and permits can be lengthy and must include building plans and inspections. Check with your city’s small business department to find out licensing and application requirements to open a bakery.

2. General business-related licenses, permits, and registrations

In addition to a food service license or permit, you may need the following:

• Business operating license: This license is issued by your county or city and grants you legal permission to operate a bakery in your city or state. If you plan to open several locations, you might need a license in each city where you operate. However, some states do offer state-wide licensing, such as Washington, which cover state and local licensing needs. Check your state government website for application guidelines and remember to renew your license annually.

  • Federal tax ID (EIN) number: Issued by the IRS, an EIN (also called a tax identification number or employer identification number) is required for almost all types of businesses.
  • State tax ID number: Issued by your state’s department of revenue or taxation, the state tax ID number is also called a tax registration number.
  • DBA/fictitious business name registration: The doing business as (DBA) or fictitious business name registration happens with the appropriate state or local jurisdiction.
  • Zoning and land use permits: Local governments’ zoning laws may prohibit certain business activity in designated areas.
  • Building permit: If you plan on remodeling or building a commercial space, you'll need to get a building permit.
  • Sign permit: Before you put up a sign outside your business, you’ll need a sign permit from your city.
  • Building health permit: This is overseen by your state or county health department and ensures that your premises meets safety regulations.
  • Dumpster license: This allows your bakery to place a state dumpster near your business for the proper disposal of food waste. Check with your city to see if you need one.
  • Sales tax license/sellers permit/resellers permit: This license/permit has many names, and those names vary by state, but it is required for the selling of almost all products and services. You may also need to obtain a Certificate of Occupancy or amend the existing one.
  • Workers’ comp insurance: In most states, workers' compensation coverage is mandatory if you have at least one employee.

Food licensing requirements for at-home bakeries

Because a home bakery business (as well as an online business) operates with the goal of generating revenue by selling goods or services to the public, most of the rules designed to safeguard the public and collect tax revenue apply. Below is a list of requirements for your home-bakery.

1. Any food prepared and processed must be low risk

It’s important to know that at-home bakeries are considered a cottage industry and are limited to producing only certain “low-risk” foods. The U.S. Food and Drug Administration (FDA) has developed definitions of low-risk and high-risk foods, but generally foods that can’t be stored safely at room temperature or that spoil easily are considered high-risk.

Furthermore, each state issues guidance on approved and prohibited home-prepared foods.

2. Regulations vary by state

Cottage industry laws differ from state to state. For example, Iowa divides homemade food laws into Iowa Cottage Food businesses and Iowa Home Food Processing Establishments. At-home bakery businesses fall under the latter and require the appropriate licensing and inspections.

In New York, businesses can apply for a home processing exemption that typically applies to food manufacturers. This allows them to produce approved food products at home. Any bakery goods sold in New York state must be pre-packaged at home and properly labeled.

3. General business licensing and registrations for home-based bakeries

Home-based bakery businesses must obtain the same general business licenses, permits, and registrations as traditional businesses. However, certain licensing rules are triggered when a business operates from home or in a residential area. These include:

  • Home occupation permit: Many city or county governments require home-based businesses to have a “Home Occupation Permit”.
  • Signage: If your business is in a residential area, you are likely to face very strict limits on the size, number, and placement of signs on your property.
  • Zoning: If you plan to operate a bakery business in an area that is zoned “residential,” you need to become familiar with the zoning ordinances. Certain business activities are prohibited in residential areas.

What do I need to start a bakery business?

In addition to applying for the appropriate bakery license and general licenses or permits, here are some of the things you may need when starting a bakery business.

  • Business plan: A well thought-out plan can guide your strategy, identify risks, and help you secure funding to expand and grow your bakery business.
  • Business structure: Your choice of business structure – whether it’s a limited liability company (LLC), corporation, or partnership – will impact your daily operations, taxes, and the amount of risk you’re willing to take with your personal assets.
  • Business name: When selecting a name, try to make the name short, easy to remember, descriptive of the business, and capable of drawing attention. Depending on the business form you choose, you may have to register and/or receive approval from the local or state government where your business is formed.
  • Federal and state tax IDs
  • Business bank account and credit card: A business bank account and credit card keep your personal and business transactions separate
  • Insurance: You may need general liability insurance and may be required to have Workers’ Compensation insurance if you have employees.
  • Website and marketing plan: In addition to helping you market your new bakery business, a marketing plan can help keep you on track budget-wise and convince lenders that you have a plan to succeed in this crowded market.

CT can help

Outsourcing business registration and license research, applications, management, and renewals can help you take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of business licenses you can free up your staff to focus on starting and growing your bakery business while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us.

The CT Corporation staff is comprised of experts offering global, regional, and local expertise on registered agent, incorporation, and legal entity compliance.

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