Tuesday, March 5, 2013

Cottage Food Law in Georgia

Last week I got my bi-annual inspection from the Department of Agriculture.   She was about three months late and that has never happened, so I was curious as to why.  My inspector, Beth, said it was because Georgia has passed the cottage food law and they are very busy inspecting all the new businesses.  Since the "shop" is in people's home, they are required to have two inspectors go together.

Just for background of where I'm coming from, here is a little about my situation.  I started my baking career by working in a commercial kitchen that made beautiful goodies.   Long, days but I learned so very much that helps me to this day.  When we were ready to start our business we didn't do a business plan or apply for a business loan because the first thing banks want you to do is "gamble on yourself".  We took a leap and got a second mortgage, knowing that was now my company's overhead and responsibility (I haven't missed a payment yet....).  We took out $51,000 and used $12,000 on concreting the driveway and pathways.  $35,000 was paid to the contractor that built on our 440 sq kitchen addition.  It includes a bathroom with a "mop sink" (a shower with a very small lip), a pantry, a 50 gallon water heater, lots of extra plumbing and outlets and a huge 1,000 gallon grease trap with an extra 200 feet of field line(an extra $4,000).  I made the floor plan and sat down with the Health Department BEFORE we started.  We were going to be making cakes and doing catering, so we went with the stricter health department.  There are rules as to which you have to go with, but we'll save that for another day.  We had a "issue" with the zoning department, but once she got her head on straight, we were fine.   About three years ago, I stopped all catering and went to cakes only, then to only wedding cakes.  I also wanted two crystal chandeliers that the Health Department said "no" to, so I switched to Department of Agriculture.  They are not as strict, but butter is not as hazardous as raw chicken, so there you go!   I have a beautiful pink kitchen that I love very much and it's legal, inspected, and a great tax write off.  I also have my normal house kitchen for all the non fun stuff. 

The Georgia Cottage Food Law is for people that want to make certain types of non hazardous food in their home kitchen.  I'm no expert, but I'll give you the run down in simplified terms. 
  1. Make sure zoning will allow it.  In our area, if you live in the city, you won't get approved.   I'm in the "country".  According to zoning, even my kitchen is not allowed to have employees that do not live in the home. 
  2. You have to show that your water supply and sewage can handle the extra output.  If you have well water you have to do some testing and if you are on public utilities, you have to check with them.
  3. Food Safety training such as ServSafe.
  4. You then apply and have to pay an annual fee of $100 (I pay the same)
  5. Inspection.  You get a pre-operational inspection to ensure you can meet the requirements and regulations.  This is a big list, but it's food safety, labeling, proper washing, animals and kids aren't present when you are dealing with food.
***COTTAGE LAW OPERATIONS DO NOT GET ANY INSPECTIONS AFTER THE FIRST AND ONLY ONE.  If you get complaints or cause a food borne illness outbreak, you will get reinspected.

All items that are packaged must be labeled "MADE IN A COTTAGE FOOD OPERATION THAT IS NOT SUBJECT TO STATE FOOD SAFETY INSPECTIONS"  as well as the general stuff.   Many venues where we deliver wedding cakes require a "food license" and some require business insurance.  I don't know if they will accept a cake from a cottage food house.  If I owned a ballroom and there was a guest that got sick, it would be hard to say that the cake was legal but "not subject to inspections".  It leaves them open for a lawsuit to some degree.

Some of the "non hazardous" foods are breads, cakes, pastries, cookies, candies, jams (not fruit butters), dry herbs, cereals, nuts, vinegars, popcorn, and cotton candy. 

Here is just a little more... "Operators can sell their products at non-profit events, for-profit events, and may also conduct Internet sales.  The cottage food operator is not able to distribute or wholesale their product, nor can they ship across state lines."  Really, Internet sales, but only in-state?  That will be so easy to police -  NOT!  "Cannot be distributed to retail stores, restaurants or institutions".   That means no making cakes for a local restuarant for them to sell or selling wrapped brownies at your husband's workplace.

Well, that's what I know about all of that.  Beth asked if I was "mad" because now it's so much easier to make cakes legally and they don't have to spend $35,000 in construction.  I am not upset at all!  Mostly because I only make wedding cakes and I could NOT make them in my home kitchen.  If I had a cake in my home fridge right now, it would absorb odors and taste like the red onion that we cut yesterday.  I would worry about cat hairs that float around.  My customers wouldn't know how seriously I take this job and their cake.  I have separate insurance for my commercial kitchen.  I also have set up an "LLC" so that if I poison someone, I'm protected personally. 

I think the new Cottage food law is good for people that are doing food as a side business or as a start up.  Maybe it's a good idea while you are figuring out your recipes, costs, time and what your overhead will be.  Since you can't have employees, you will see all these things as well as how many hours of your week it's going to take to make a profit.  It's a good first step.  People jump into a retail space way too soon without working out all of the details or having enough capital. 

I can "write off" a lot of my kitchen because the space is totally dedicated to the business.  A cottage food kitchen would not qualify for the same exemptions.  Since my kitchen is 40% of my home, I get to write 40% off of a lot of things like home improvements and some utilities.  My commercial kitchen is good for me because I AM NOT going to grow my business.  I don't want a retail space with walk in business.  We are going to stay small and focus on making, and learning to make, the very best product in the area.  We aren't small, we are "exclusive"!

5 comments:

  1. Thank you for the information. I love you work and enjoy your blog,thanks again.

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  2. Oh my goodness. This was so informative. I always wondered about laws and stuff when it comes to people baking and selling out of their homes. I wonder what the law is in TN. I may have to look that up. Thanks for all the info!!! Hope you guys are well!

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    Replies
    1. Hey Shannon! I know TN does have a Cottage Food Law, but I am not sure of the particulars. Hope you're doing well!! :)

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  3. Wow, this is so interesting! It's definitely an inside-look into the cake business...that's great you take so much pride in your cakes. It shows!

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  4. Thanks for sharing this with us! Following all of this helped in serving your community with delicious baked goodies. The thing is, people do want to get into business, but they're unsure of what to do. Or worse, they have big problems to deal with, even before they open up. Setting up an insurance also helps if push comes to shove. You'd never know what the future will bring, so it's better to be safe than sorry. Take care!

    Steven Keltsch @ Allied Insurance Managers

    ReplyDelete

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