Sugarplum Studio is a licensed and insured Cottage Food Operation (CFO), proudly holding Permit #18.
So…… what exactly does that mean?
Until August 2021, New Jersey was the ONLY state in the US that prohibited the sale of food prepared in a residential kitchen. After a long fought campaign by the New Jersey Home Baker’s Association, the Cottage Food Law was finally passed, allowing residential kitchens to become licensed for the production and sale of certain food items.
Unlike commercial kitchens, Cottage Food Kitchens are not subject to inspection by the Department Health, placing the responsibility of safe food practices, as well as ethical and legal business practices, directly on the operator.
There are many misconceptions about the Cottage Food Law. It is NOT blanket permission to bake and sell food from your home. It is a regulated process with restrictions and requirements. Since I’m often asked about what it entails, here is some info that may be helpful if you are deciding whether or not to use a CFO bakery next time you’re in the market for cake or desserts.
How is a CFO Permit Obtained?
In order to qualify for a Cottage Food Operator’s Permit, a candidate must:
• Successfully complete a Certified Food Manager’s program from an accredited organization such as ServSafe. This is typically renewed every 5 years.
• Register with the NJ Department of Labor
• Complete an application that provides a complete and detailed list of the products intended for sale, including all ingredients and potential allergens
• Provide proof of a municipal water source to the residence or complete water testing through a private lab
• Pay an application fee of $100
While business incorporation and liability insurance is not required, it is encouraged.
Sugarplum Studio has been registered as an LLC since 2015 and is fully insured under the FLIP Food Liability Insurance Program.
I have held a ServSafe Food Manager certificate continuously since 1998.
Once issued, the CFO permit is good for two years before requiring renewal.
Sugarplum Studio holds permit #18, first issued in 11/21, renewed in 10/23, and currently valid though 10/25.
What can a CFO Permit Holder sell under the Cottage Food Law?
A CFO permit only allows the sale of Non-TCS Foods.
TCS stand for Time/Temperature Controlled for Safety.
A Non-TCS food, on the other hand, is safe at room temperature and does not require heating or refrigeration for consumption safety.
A TCS food is anything that requires refrigeration in order to prohibit the growth of bacteria or toxins.
There is, of course, an assumption that the non-TCS Food will be consumed within a reasonable amount of time after handing it to the customer. All of my cakes come with the advice to consume within 48 hours, then discard any remaining leftovers after that time.
A CFO Permit lists the exact products you as a operator are permitted to sell, as listed on your permit application. Sugarplum Studio’s permit lists:
•Brownies
•Cakes
•Cookies
•Cupcakes
If there comes a time when I decide that I’d like to start selling… say, cinnamon rolls or fresh bread, I’d have to file for an addition to my permit to include yeast doughs.
Examples of TCS Foods that are NOT permitted under the Cottage Food Law are:
• cheesecake
• mousse
• custard and custard based items (such as pumpkin or coconut custard pies, eggnog, coquito)
• whipped cream
• fresh fruit (including chocolate covered fresh fruits like strawberries and apples)
• butter or cream based cake icings and fillings (such as meringue buttercream or cream cheese icing)
• charcuterie
Sadly, there are many CFO home bakeries that offer items that fall into the category of TCS foods.
Sugarplum Studio is not one of them.
I’m being completely honest, being a rule follower does cause me to lose out on a sale from time to time. There is always an argument that it’s not a big deal, that it’s just a cake, who’s going to know, let the buyer beware, etc., but for me personally, the bigger argument is that laws exist for a reason.
The benefits of following the law far outweigh the financial benefit of offering a product that’s not permitted. By violating the law, a permit holder is risking not only a fine, but the loss of permit if caught, not to mention a potential illness to your customer if the product was not handled, stored, or served correctly.
Local social media neighborhood groups are filled with posts by home bakers advertising many things they are not allowed under the current law, and by bakers who are not actually licensed as CFOs. The average consumer probably doesn’t even know what is permitted and what is not. When the Cottage Food Law was passed in 2021, it was made abundantly clear by the state that it would be reconsidered in the future should it be determined that the regulations of the law were not being followed. In other words, the people not following the rules will ruin it for the people who are, just like back in middle school, when everyone got in trouble because of that one kid. Booo!
For what it’s worth, should a home baker sell a TCS food that is then claimed by the customer to have caused a food-borne illness or allergic reaction, no insurance will cover that claim, as the very nature of the sale is in violation of the law. That leaves the baker open to personal liability. I’m not willing to lose my home and everything I’ve worked for all because someone left a cheesecake out too long and got food poisoning.
Labeling Requirements
Every single item made and sold from a CFO permitted home kitchen must include the following information:
•The common name of the product (e.g. Vanilla Cake, Brownie, Chocolate Chip Cookie, etc.)
•List of ingredients listed in descending order of predominance by weight
•Allergen disclosure: “Contains/May Contain”, followed by a list of all major food allergens
•Cottage Food Operator’s Name, or Business name
•Cottage Food Operator’s Permit Number
•City and State
•Disclosure Statement: “This food is prepared pursuant to N.J.A.C. 8:24-11 in a home kitchen that has not been inspected by the Department of Health.
Sales Requirements
•All advertising must contain the CFO’s permit number prominently with the business or operator’s name. This includes websites, social media, business cards, etc. If you are not sure whether or not a home baker is licensed, the NJ Deportment of Health has a public access database of all current permits issued to to date on their website. There is nothing wrong with asking a baker for their permit number. It is public information. The overwhelming majority of us are very proud of our CFO numbers, so if your local home cake baker doesn’t have one listed with their contact info, there’s a good chance that they don’t, in fact, have one at all.
•The Cottage Food Law requires the hand-off of the product from baker to customer, whether via pick up or delivery, occur within the state of NJ.
•Shipping is NOT permitted, no matter the nature of the product, even within state lines. That means no Etsy or Facebook Marketplace sales with shipping.
•Wholesale to a retailer for resale to the consumer is not permitted. On other words, CFO permit holders cannot sell baked goods wholesale to a coffee shop who will then offer them for retail sale in-store.
•There is a $50,000 gross annual sales maximum. If you’re reaching this sales amount as a CFO, it’s crossing over into a commercial industry and it’s honestly time to consider a store front.
•Attendance at Farmer’s/Maker’s Markets are permitted pursuant to any additional permitting required by the municipality for a temporary food vendor permit, issued at their discretion. A privately run farmer’s market or community event may and can decide that they do not allow Cottage Food Operators.
•All sales, whether contained via cash, electronic transfer ( Venmo, Cash App, etc.), or merchant service ( debit/credit card processors) must be reported as income. Now this is where it might get tempting for some. The state is making the assumption that the CFO will report all sales as income to the IRS. The diligent and honest reporting of cash sales is in my opinion, a moral and ethical one, and I do report ALL sales. Yes, it would be very easy to put that $250 cash I was paid for a cake in my pocket and not record it, but the IRS is not dumb. If a CFO is incorporated, it is therefore able to expense ingredients and packaging as “cost of goods sold”. This reduces taxable income, but if one is not reporting cash sales, the deposits won’t match the expenses being claimed. An IRS audit can happen to anyone, at any time, so it pays to keep the cooking strictly to the cakes, and keep it away from the books.
So, why does any of this matter?
I cannot count the number of times I see and hear things like-
“I only sell a a cake here and there”
“But cheesecake is my number one seller!”
“It’s just a little side thing. I don’t need a permit”
“It’s just a little cash in my pocket”
“I only sell to friends”
“I’m just starting out and trying to build my business.”
Here’s the thing- If you accept money in exchange for goods or services, it is legally a business transaction. You have a business. You do need a permit. You must follow the law. You must report that income. Period.
It comes down to this: Do the right thing. Follow the law. Otherwise, it’s not fair to the rest of us who do.
How Can I Become a CFO?
Do you wish to become a Cottage Food Operator but are overwhelmed and find the process daunting? I’m here to help!
I have been a supporter of this law since the bill was first introduced way back around 2008. I firmly believe in community over competition. There is enough business for all of us, but the playing field has to be level. Since the Cottage Food Law was enacted, I have assisted 12 home bakers in obtaining their permits. I do not charge any fee for this assistance. If you are interested in obtaining a Cottage Food Permit and need some direction, please feel free to Contact Me