What Are the Rules on Selling Food From Home in California?

Can you legally sell food from home in California?

There are a few fundamental legal considerations to make before launching a food business out of your house in California. Among other things, you’ll need to familiarize yourself with food safety regulations, acquire insurance, select a legal framework for your business, apply for necessary licenses and permits, and understand what kinds of foods are permissible to cook in a home kitchen according to California’s cottage food law. You should also be familiar with the regulations around hiring employees.

Which Foods Can You Sell in California From Your Home?

You can legally sell the following foods made in your home kitchen in California:

• Baked goods like biscuits, breads, cookies, churros, tortillas, and pastries that don’t have custard, cream, or meat sauces
• Dry ingredients for baking
• Sweets, like nut brittle and toffee
• Fruit that has been dried
• Candy-coated, non-perishable items such as almonds and sliced fruit
• Fruit tamales, fruit pies, and fruit empanadas
• Trail mixes, cereals, and granola
• Dehydrated mole paste, herb mixtures
• Honey and syrup made from sweet sorghum
• Preserved foods, fruit butter, jams, and jellies that meet the criteria laid out in Title 21, Part 150 of the Federal Regulations
• Nut butters and nut mixtures
• Dry pasta
• Popcorn
• Mustard and vinegar
• Herbs, spices, and dry teas
• Pizzelles and waffle cones

This list, along with additional details regarding what can be lawfully prepared in a home kitchen, can be found on the website of the California Department of Public Health.

How to Form Your Home Food Business in California

It is common for home-based food businesses to have modest goals. According to California law, a cottage food business can only have one owner and no more than one employee working full-time. A home-based food business can only earn a certain amount every year, according to the state. The yearly gross revenue cap for Class A businesses is $75,000 in 2022, while the yearly gross revenue cap for Class B operations is $150,000.

If your company is really small, operating it as a sole proprietorship might be the only choice that is economically sustainable for you to continue doing business. But remember, when you’re a sole proprietor, you’re on the hook for everything that goes wrong with your company. That includes paying taxes and taking the hit in the event that your food goods hurt or sicken customers. It is important to safeguard your personal assets by purchasing liability insurance if you run your business as a sole proprietor.

If you’re able to do so, you should think about forming a limited liability company (LLC) or corporation in California to shield yourself from individual responsibility in any legal disputes that may arise from your company’s activities.  By establishing such a legal framework, you can rest assured that in the event that your food product causes illness or other harm, the culpability will lie with your food business and not with you personally.

Home-Based Food Businesses in California: Licenses and Permits

If you want to sell food out of your home in California, you’ll need permission from the local health department. Whether you want to sell your wares directly to consumers or to other local establishments like stores or cafes will determine which of two kinds of licenses you will need.

Class A permit: If your only target market is residents of California, you can obtain a Class A permit to sell directly to them. You can sell your wares directly to consumers at events like festivals and farmer’s markets, or even from the comfort of your own home if you have a Class A permit. Class A permits do not require a visual examination of the kitchen, but rather the completion of a self-certification checklist.

Class B permit: To offer your items indirectly to customers, such as through stores, restaurants, or other venues that will sell them on your behalf, you require a Class B permit. If you wish to sell cottage food products indirectly in California, you can’t do it outside of your home county unless that county has given their explicit permission. Your kitchen needs to pass a yearly physical examination in order to receive a Class B permit.

Important details: Class A and Class B permits require applicants to supply the following information:

• Formulas or components for each of your goods
• Information on where you get your ingredients
• Label copies for every item
• An explanation of the packaging you use
• Your kitchen’s layout
• A rundown of all the tools, cutlery, and surfaces that come into contact with food
• Proof of successful completion of a food processor training program recognized by the State of California’s Department of Public Health

All businesses need certain licenses and permits, so be sure to get the ones that your region requires. For example, if your company isn’t named after you, you’ll need to register a fictitious business name.

Learn How to Safely Handle Food in California

One of the requirements for running a food company out of one’s house in California is to finish a food processor course offered by the California Department of Public Health no later than three months after getting one’s cottage food permit. As evidence that you have successfully completed the training, you should save the food handler card or certificate that you received once you have finished the course.

Not to mention, there are a ton of health and safety regulations that your home-based business must adhere to before you may sell food:

• While you’re making cottage meals, you can’t do any of your regular household chores like cooking, cleaning, or entertaining visitors in the kitchen.
• When you’re making cottage meals, no one should be around, especially babies, toddlers, or pets.
• The cottage cook must ensure that all cooking tools and appliances are clean and in good working order.
• Prior to each use, make sure to wash, rinse, and disinfect any surfaces or equipment that come into touch with food.
• There must be zero tolerance for insects and rodents in any place where food is prepared or stored.
• When making cottage meals, it is absolutely forbidden to smoke in the kitchen.
• The making or storing of cottage foods is off-limits to anyone who is sick with a spreadable illness.
• Before handling or preparing food, make sure you wash your hands thoroughly.
• Cottage foods must be prepared using potable water. Included in this category is water that is either used as an ingredient or used for handwashing or cleaning equipment.

Insurance for the Home Food Industry in California

Unique dangers exist in the food industry, including the potential for food poisoning and the introduction of foreign materials like plastic or glass into edible products. These on top of the usual company dangers like fire, robbery, or a slip and fall by an employee are a real concern.

Just because you own a home or rent a property doesn’t mean your insurance will cover running a business out of your house. Before contacting a licensed insurance agent to acquire the supplemental coverage you require, it is imperative that you thoroughly assess your current plans.

Seek advice from other owners of food-related businesses to identify a reliable insurance agent. Be careful to get an agent that specializes in food business insurance and ask them to list all of the potential dangers. From a consumer who gets sick from eating your food to an employee who burns themselves with hot water, general commercial liability insurance should cover it all.

Make sure you have adequate insurance coverage for any vehicle you use for business-related trips, including deliveries.

Employing People to Work for Your Home Food Company in California

Anyone living in your home or within your immediate family can pitch in to help run your cottage food business in California. Legally, you are limited to employing a single full-time worker beyond that.

Before you bring on staff, familiarize yourself with the fundamentals of employment law in California, including regulations for hiring, protections against discrimination, and the ins and outs of managing finances, including state income taxes, workers’ compensation, and more.

Operational Guidelines for Homemade Foods

The Homemade Food Operations Act, enacted in 2018, codifies “microenterprise home kitchen operations” and builds upon the cottage food law in California. It permits, subject to certain limitations, the following:

• Strictly limited to a single employee (excluding immediate family members)
• The food must be made, cooked, and served all in one day
• No oysters or raw milk
• Not more than thirty meals daily
• Not exceeding $50,000 in total yearly revenue
• The only people you can sell to are individual customers; you cannot sell to wholesalers or retailers
• Maintaining proper hygiene and wellness is essential
• You’ll need to get yourself registered and inspected in the county kitchen

If you want to know if your county is a part of the program, you should contact the relevant government agencies in your county. Each county has the option to participate.

The Way Forward for Your Company

Particularly at the county level, regulations pertaining to home-based food enterprises are constantly changing. Before you sell your items to the public, make sure you verify the most recent rules. The licensing agencies in your city or county are usually the best places to get the information you need.

You may choose to open a more conventional, licensed restaurant as your company expands. Before you go ahead, make sure you know what the restaurant license and permitting requirements are.