One of the most frequent questions I get asked is “how can I set up a cake business from home?’ There are many people who bake as a hobby and sometimes that passion turns into a desire to become a business. It’s not difficult and it doesn’t take a lot of time to set up your home business and if you are serious about accepting money from people for your bakes there are some essential steps that you need to take.
1. Register with your Local Council – this is free and simple and only takes a few minutes as most local councils have an online registration form. It’s essential that you register with the council if you accept any money for your bakes, even if you have no intention of becoming a full time business or just bake as a hobby as it can result in a hefty fine and possible legal action. The council will send you a pack containing lots of information and they will eventually want to visit your home for an inspection to make sure you understand the hygiene regulations and that your kitchen is clean and meets their hygiene standards. (When you run your business from home, the council have to give you at least 24hrs notice before an inspection). Once you have been awarded your food hygiene rating, you will need to display your rating somewhere visible to your customers or risk a fine. It’s not as scary as it sounds and because it is primarily your home, the criteria is a little more lenient than if you were operating on a commercial/retail property.
2. Make sure you obtain your Level 2 Food Hygiene certificate. You can do this online quite cheaply, just shop around and see which companies offer the most competitive price. This is something the food hygiene inspector will ask to see when they visit your home and it is a mandatory requirement.
3. You will also have to obtain your Food Allergen certificate (this is a new but essential requirement) and this too can be obtained online. You will normally (or should) be asked to provide evidence of these certificates if you plan to sell bakes at any fetes or local events along with public liability insurance which I’ll discuss in the next point.
4. Get yourself some Public Liability Insurance! I know a lot of people who avoid this but it is essential that you protect yourself and your customers. Public Liability Insurance can be acquired very cheaply online, just shop around for the best deal. If a customer has an injury or accident on your property or falls ill after consuming one of your bakes and decides to make a claim, public liability insurance will protect you. You can also acquire product liability insurance if you want extra protection, but public liability insurance is normal adequate.
5. If you rent your property, you may need to ask your landlord for permission to operate a business from your home. The same applies for mortgages but as cake making/decorating are classed as low risk it probably won’t affect you but its best to double check and cover yourself.
6. Register with HMRC. This is probably one of the most important points. If you do not notify HMRC that you are operating as a business, even if it is only part time, it can have serious consequences and a substantial fine as well as a possible prison sentence may result. A lot of people with businesses use social media to promote themselves and it’s very easy for someone from HMRC to check and see how you are operating your business. It’s definitely not worth taking the risk!
7. Keep a record of all outgoings and incomings. Sometimes its easy to let this slide and your receipts and bills can quickly pile up. A simple spreadsheet or even logging incoming/outgoing information in a book once a week can help you keep on top of things. There are also apps you can purchase or if you feel it will help, an accountant might be the solution. It will just make your self assessment a little easier at the end of the financial year and you’ll be surprised about how many things you can claim money back for. (I’m not an expert but there’s plenty of information available on the internet these days!)
8. If you decide at any point, to move from a home business to a retail shop you may need to look into certain licenses before trading. Your local council should be able to help and once again, information can be found on the Internet!
I’ve tried to keep this as concise as possible but hopefully these points will help if you are just starting out on your cake business journey or whether you have been operating for a short time and have been unsure about what to do. As mentioned, your local council should be able to provide you with most of the essential information and it really is a quick and simple process. It’s better to be safe than sorry and protect yourself rather than risk any serious penalties.