Start a cake business in Texas

Congratulations to the home bakers in Texas who, starting Sept 1, 2011 will be able to legally sell cakes from home. The 2011 Texas legislative session passed SB 81 — known as the Texas Baker’s Bill or Cottage Foods Bill. SB 81 allows Texans to make and sell low risk foods. This includes cakes and cupcakes. (It also includes jams, jellies, breads and pastries) directly from home. Here are the highlights:

  • gross annual sales must be below $50,000 (this means sales before any deductions, expenses)
  • No internet sales: You can (and should) have a website. you can not take payments online via a shopping cart, paypal etc.
  • No farmer’s market sales
  • You must label your product and include a statement that the food was made in a home kitchen that has not been inspected by a health department. (it doesn’t have to be attached to the cake)
  • Food handler’s training is not required, but it is encouraged.
  • No license is required.
  • No health inspection is required.
  • Pets are permitted in the home
  • Liability insurance is not required, but it is encouraged especially if you want to do wedding cakes. (many reception facilities require it)

The piece that seems most confusing to me is the transaction rules that I’ve seen circulating on the internet. Some say that the actual payment transaction must take place in the home. I am not seeing this in the law, though I’m not a lawyer.  It is only explicitly stated that no internet sales are permitted. If for example, you deliver a cake to a wedding reception, could you accept payment at the delivery location? Given that the letter of the law is: sells the foods produced under Paragraph (A) only directly to consumers, you are still selling directly to the consumer and not through the internet. Keep in mind no matter where the transaction takes place, you should still offer consumers the means to pay with a credit card. One inexpensive option is the new service from square. This service  requires you to have an iphone, ipad or Android phone.  Once I have more information about the selling rules, I will post an update. Keep in mind the spirit of the law is that you are interacting face to face with your customers — that’s the best way to do business anyway! Post any questions here and I will do my best to answer them. I will also be seeking an opinion from an attorney so check back soon.

3 thoughts on “Start a cake business in Texas”

  1. Regardless of the face to face interaction required (which I think it would be hard for anyone to know exactly how the interaction occured) I have heard that if you live in a city, where that specific cities laws are that “you may not sell a cake or similar product out of the home that “the city law over rides the STATE LAW anyway. I guess your best bet is to call “your city” and find out how it all works…..of course hoping that your getting the right info there!

    any comments ?? Please I would love to know more!

  2. Hi Leslie, thanks for posting. Again the letter of the law is: “only directly to consumers. ” This is intended to enable people to see and know the vendor they are dealing with, rather than an anonymous transaction over the internet.

    Local zoning laws do override this law. If operating a home business is not permitted due to zoning regulations, you can apply for a variance or conditional-use permit. Communicate with your local governing authorities. If you assure them that your cake business will not alter traffic patterns, that you are not opening a retail shop in your living room,that you are adhering to the new law and that you will not be hanging signage from your mailbox, etc. then you are likely to obtain a variance.

  3. I’m so glad I found this info. I’ve been wanting to start a bakery for a while now, but gave up on the idea when I knew that there was no way I could afford to start in a commercial kitchen.

    I’m curious as to whether you could do cash-on-delivery to be able to ship out-of-town orders. Do delivery companies even do COD anymore? I’ll have to look into that.

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