New Yorkers have an entrepreneurial spirit, and they start numerous businesses every year. Some of those businesses have to do with food. In recent years, the food industry has seen a rise in home-based food businesses. Platforms like Shopify have made it easier for people to sell food online.
However, because of public health and related concerns, there are restrictions on selling homemade food. Starting a home-based food business is legal, but it has to be done carefully and within certain limits. A knowledgeable New York business law attorney can advise you on how to start a food business from home.
Home Food Business Laws in New York
If you live in New York, there are state laws that govern food preparation and selling food from home. Depending on where you live in the state, there could be local rules as well. This is especially true if you live in major urban areas like New York City.
Ask an attorney for guidance on the specific cottage food laws where you live and wish to start a home food business. Make sure you understand the local zoning laws and food laws. Basic legal issues surrounding a home-based food business involve the following matters, among others:
- The type of food you can prepare
- The type of business structure you should choose
- Permits and licenses you will need
- Basic food safety
We will discuss all of these below.
Which Foods Can You Prepare and Sell From Home?
There are specific food products that you can make – and cannot make – in your own home to sell. For example, you can make baked goods that don’t require refrigeration. Examples are bread, rolls, and cookies. You can also make fruit preserves and certain snacks like popcorn.
But there are many food items the law does not allow you to produce at home for commercial purposes. These include fluid dairy products, products with raw nuts, and chocolate candy. The website for the New York Department of Agriculture and Markets maintains a list of foods you can and cannot make.
Licenses and Permits for Selling Food From Home
Research the licenses and permits your specific home food business will need. This may include a home kitchen permit, a food handler’s permit, or other licenses required by your local health department.
Generally, food manufacturers and sellers must have a license to operate in New York. But you can request an exemption from the New York Department of Agriculture and Markets. Your kitchen will be subject to inspection, and your water (if on a private system) must be tested for potability.
There are restrictions on what you can do with a license exemption. And as always, more rules may apply in your local city or town. A New York business lawyer can discuss which permits, licenses, and exemptions you will need to start a food business from home.
Food Safety Requirements for Your Home Business
There are a number of processing and handling rules you must follow to ensure the food you sell is safe. The state has a set of detailed rules that cover such matters as:
- Safe and sanitary storage containers for food
- Proper food labeling so customers know what’s in the food
- Avoiding adulteration and misbranding of food
- How glass containers are to be covered
A lawyer can discuss these with you. Remember, the safety of your food is essential if you are to stay in business and avoid a lawsuit. There are also best practice standards for different types of food that you should know about.
How Will Your Business Will Be Structured?
Many individuals who produce food for sale at home do so as sole proprietors. However, it’s important to keep in mind that home-based food businesses come with potential liabilities.
As a sole proprietor, you are personally responsible for everything your business does. That means paying taxes, paying debts, and, if you are ever sued, paying court judgments. If your food causes illness or injury to someone, that individual could come after you personally.
To protect your assets in such an event, you may wish to adopt a more formal business structure. This could include a limited liability company (LLC) or a corporation. Every business entity has pros and cons, so ask an experienced New York business lawyer which is best for you.
Insurance for Your Home-Based Food Business
Running a home-based food business in New York can be a rewarding venture, but it also comes with its share of risks. Ensuring that your business is adequately insured is crucial for protecting your investment, livelihood, and personal assets.
General liability insurance is fundamental for any business, including home-based food businesses. It covers third-party claims of bodily injury, property damage, and personal injury. For example, if a customer becomes ill after consuming your product or if a delivery person slips and falls on your property, this type of insurance can cover the legal and medical expenses.
Creating a Business Plan
Starting a home-based food business in New York is an exciting venture that combines your passion for cooking with the opportunity to serve your community. Before you grab a family recipe and start selling food from home, you need a well-structured business plan.
Business Overview
Begin with a concise overview. Describe your vision, mission, and the unique value your homemade food business will bring to the market. Highlight the key points of your business model, such as the types of food items you will offer, the target market, and your competitive advantage.
Market Research
Conduct thorough research on the food industry in New York. Analyze current food trends to identify popular items and find your niche market. Evaluate your competitors, their strengths, and weaknesses, and identify opportunities for your own food business.
Refine Your Business Model
Outline your business model and how you will make money selling food from home. Will you offer local delivery? Will you sell food online? What food items will you offer? How will you source ingredients for your home-based food business? Will you need to buy any commercial kitchen appliances like a large freezer?
Plan for Costs
Analyze the costs associated with starting and running a food business from home. Include expenses such as ingredients, kitchen equipment, packaging, marketing costs, and delivery. Keep in mind the shelf life for ingredients as well as utility bills when budgeting. Make sure you have funds for any necessary renovations to meet local laws.
Create a budget and financial projections to understand your break-even point for making a reasonable profit. Consider fixed and variable costs and plan for unexpected expenses. Home-based food businesses generally have lower overhead costs than traditional restaurants, since they don’t need to rent commercial space and pay lots of staff.
Funding Requirements
If you require funding to start your business, outline your funding needs and how you plan to use the capital. Specify whether you will seek loans, grants, or investors. Provide a clear plan for how the initial investment will contribute to the growth and sustainability of your business.
Marketing Efforts
Develop a robust marketing strategy to promote your home food business. Identify your target audience and tailor your marketing efforts to reach them effectively. Utilize social media platforms like Instagram and Facebook to share images of your cooked food and attract customers.
A professional website is critical for success. Your website should be mobile-responsive, visually appealing, and feature customer testimonials.
Other smart marketing tactics include creating a loyalty program with discounts and partnering with local food influencers and farmers’ markets.
Starting a Home-Based Food Business? Get Legal Counsel for Your Business Needs!
Of course, there are other rules you need to be aware of besides those above. Some of them are fairly detailed, and failure to follow them could result in fines. Worse, someone who gets sick or injured may pursue a lawsuit against you. But an attorney can steer you clear of any legal minefields so you can make and sell what you love.
Ready to start your home food business? Need help defending you and your business from a lawsuit? Give Rosenbaum & Taylor a call.
