Starting a food business is an exciting and rewarding idea—creating and serving food to the public can be both profitable and fulfilling. However, even if you have years of cooking or baking experience, it’s critical to understand the state and city-specific regulations before launching. The food industry is heavily regulated, and compliance is key to long-term success.
To help you get started, here’s a complete guide to running a home-based food business (cottage food business) in California.
Where You Can Cook or Bake: Home Kitchens in California
California allows certain food businesses to operate from home kitchens under the Cottage Food Law. These businesses can prepare and sell approved non-potentially hazardous foods.
Approved Foods You Can Make at Home
Some of the most commonly approved foods include:
1. Baked goods without cream, custard, or meat (breads, cookies, pastries, tortillas)
2. Dry baking mixes
3. Candy such as toffee and nut brittle
4. Dried fruits
5. Chocolate-covered nonperishable foods
6. Fruit pies, empanadas, and fruit tamales
7. Granola, cereal, and trail mixes
8. Herb blends and dried mole paste
9. Honey and sweet sorghum syrup
10. Jams, jellies, preserves, and fruit butter (FDA compliant)
11. Nut mixes and nut butters
12. Dried pasta
13. Popcorn
14. Vinegar and mustard
15. Roasted coffee and dried tea
16. Waffle cones and pizelles
These are the most popular food items allowed, but the full approved list can be found on the California Department of Public Health website.
Choosing the Right Business Structure
Most home-based food businesses are small by design. California limits cottage food businesses to one owner and one full-time employee, and annual revenue is capped.
Sole Proprietorship
A sole proprietorship is often the most affordable option for small operations. However, this structure offers no personal liability protection, meaning you are personally responsible for taxes, lawsuits, or food-related claims. Liability insurance is strongly recommended.
LLC or Corporation
If your budget allows, forming an LLC or corporation can protect your personal assets. These structures ensure the business—not you personally—is responsible if a customer becomes ill or injured from your products.
Required Licenses and Permits
To legally operate a home-based food business in California, you must obtain a permit from your county health department.
Class A Permit (Direct Sales)
A Class A permit allows you to sell directly to consumers within California, including:
1. Farmers’ markets
2. Festivals
3. Home pickup
4. Direct online orders
This permit requires a self-certification checklist and no physical kitchen inspection.
Class B Permit (Indirect Sales)
A Class B permit is required if you plan to sell through retailers, restaurants, or other businesses. This permit requires an annual kitchen inspection and typically limits sales to your home county unless otherwise approved.
Information Required for Permit Applications
You’ll need to provide:
1. Product ingredients and recipes
2. Ingredient suppliers
3. Product labels
4. Packaging descriptions
5. Kitchen floor plan
6. Equipment and utensil list
7. Proof of completing a California-approved food processor course
You’ll also need a local business license and, if applicable, a fictitious business name (DBA) registration.
Food Safety Requirements
Within three months of receiving your permit, you must complete a California Department of Public Health food safety course.
Additional health requirements include:
1. No domestic activities during food preparation
2. No children, infants, or pets in the kitchen
3. Clean and sanitize equipment before each use
4. Pest-free food prep areas
5. No smoking during food preparation
6. No sick individuals are involved in food handling
7. Proper handwashing and potable water usage
Strict compliance is mandatory.
Insurance for Food Businesses
Food businesses face unique risks, including foodborne illness, contamination, and customer injury. Homeowners or renters insurance typically does not cover business activities.
You should consult an insurance agent experienced in food businesses and secure:
1. General commercial liability insurance
2. Product liability coverage
3. Vehicle insurance (if delivering products)
This protects both your business and personal assets.
Hiring Employees
California allows you to hire one full-time employee, in addition to household or immediate family members. If hiring, be aware of employment laws related to taxes, workers’ compensation, and anti-discrimination requirements.
Funding Your Food Business
Financial limitations stop many aspiring entrepreneurs—but options exist. If you have a solid business plan and decent credit, Small Business Loans, No-Doc Loans, and EIN Funding may be available.
Our mission is to help you access the capital you need to turn your food business dream into reality.
Applying for a Business Loan Using an EIN
An Employer Identification Number (EIN) can be used to apply for business loans and credit, but only through a legitimate business entity. Using an EIN in place of a Social Security number on a personal application is illegal.
When applying, you’ll need:
1. EIN
2. Business formation documents
3. Business license
4. Company details (industry, start date)
Some lenders may still require the owner’s SSN.
Business credit cards can also be obtained using an EIN, often starting with office supply, gas, or retail store cards.
Unsecured Finances has over 10 years of experience in business funding and consulting. We specialize in:
1. Unsecured Business Loans
2. Unsecured Start-Up Business Loans
3. No Documentation (No-Doc Stated Income) Loans
4. Business Lines of Credit
Funding ranges from $10,000 to $500,000, with no assets or collateral required.
Apply on our website to find out if you qualify, or call today for a free consultation: 1-888-294-2584
