Launch A Food Business From HomeFeb 27, 2023 ● By Lisa Kivirist and John D. Ivanko
Photo credit John D. Ivanko Photography
Turn muffins, decorated cookies, decorated cakes or homemade jams and jellies into cash. The time couldn’t be better to start a food business from a home kitchen. While these “cottage food” businesses in Illinois have been able to legally operate since 2012, the expanded cottage food law passed in 2021, called the Home-to-Market Act, adds opportunities for home-based food entrepreneurs to grow and reach new customers in the state.
State-specific cottage food laws, as they’re commonly known nationally, refer to cottage food operators that are allowed to sell, direct to the customer, certain “non-hazardous” food products made in their home kitchen. Food products may either be low-moisture-like breads and cookies or high-acid canned items like jars of pickles. Many cottage food laws across the nation now allow potentially hazardous foods as well, including Illinois, where certain time/temperature control for safety (TCS) foods like vegan pasta salads and vegan burgers are allowed if certain storage and transportation refrigeration requirements are maintained. All TCS foods must be stored, transported and sold at or below 41° Fahrenheit.
Anyone can be part of a growing movement of people starting small food businesses from their homes. Little to no start-up capital is needed; just good recipes, enthusiasm and commitment, plus enough know-how to turn ingredients into treats for the local community. Everything required is probably already in their home kitchen.
In Illinois, each county health department handles the cottage food operator registration and the collection of a nominal fee. There are some requirements to be followed in order for the business to operate, including that the owner receive a Certified Food Protection Manager certificate, specific labeling requirements for each food product category and other food safety testing that may need to be completed, depending on the products sold. While no home inspection is required, every consideration should be made to produce the cottage food product as safely as possible. To assist operators, the local health department will provide a Cottage Food Operation Home Self-Certification checklist as a part of the registration process.
“Now is a great time to start a cottage food operation in Illinois. Thanks to legislation that our members and partners worked hard to pass, now cottage food producers can sell their products beyond farmers markets. This includes selling from their home, at fairs and festivals, at pick-up and drop-off locations and even shipping across the state,” says Molly Pickering, deputy director of the Illinois Stewardship Alliance.
Unlike other states with restrictive gross sales caps for cottage food products sold, operators in Illinois can sell as much as they want. When marketing, however, owners must make it clear to their customers that their products were produced in a home kitchen that may also process common food allergens and are not inspected by a health department. The Home-to-Market Act further clarified fermented and acidified products and established rules to allow buttercream frosting.
“The new law gives cottage food entrepreneurs many more opportunities to reach new customers and grow their businesses. Cottage food entrepreneurs interested in getting started should check out the Cottage Food Guide available on our website at IlStewards.org, which will walk you through all the steps of setting up your cottage food business from registering with your health department to finding business insurance,” advises Pickering.
Cottage food operators can take full advantage of the benefits of operating a business as opposed to having a hobby by deducting allowable expenses, and if operating at a loss, reflecting this on their tax return to reduce taxable income. Deducting business miles for making deliveries with their personal vehicle or receiving rent paid for a home office for storing packing items and to do the bookkeeping may both be legitimate business expenses. If the business has a net profit of more than $400 in a given year, then there will be some taxes due.
Fledgling food entrepreneurs no longer need to invest more than $50,000 into a commercial kitchen or pay $50 an hour to rent a licensed facility to turn a great-tasting biscotti recipe into a money-making dream business. They now have the freedom to earn with very little by way of startup costs or burdensome regulations.
Lisa Kivirist and John Ivanko are the authors of Farmstead Chef, Homemade for Sale, ECOpreneuring, and Soil Sisters. They run the completely solar-powered Inn Serendipity Farm, in Wisconsin.
For more information on Homemade for Sale, visit HomemadeForSale.com.
The Home-based Food Entrepreneur Virtual National Conference, from April 10 through 13, brings hundreds of aspiring and successful cottage food operators together to help each other succeed.
Learn more and register at Tinyurl.com/FoodEntrepreneurConference.
Win a copy of the updated and expanded Second Edition of Homemade for Sale, by Lisa Kivirist & John Ivanko.
Enter by April 15 at NAChicago.com/2023-HomemadeForSale