Wondering about how to start a baking business from home? You’re at the beginning of an exciting journey – our 10-step guide will help you get going.
From getting to grips with baking from home regulations to actually selling your cakes from home, here’s what you need to know.
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When you’re starting your home baking business you need to tell HMRC you’re self-employed so that they know you need to pay tax through the Self Assessment system. You need to do this even if you’re going to be running your home baking business part-time or if you have another job.
To set up as a sole trader – the simplest business structure – telling HMRC is all you need to do to register your business. If you want to set up as a limited company instead, the process is a bit more complicated. See our step-by-step guide to setting up a limited company for more information.
Complying with the rules can seem scary initially but they’re quite simple to get to grips with.
First, you should think about getting a food hygiene certificate, namely taking a level 2 course if you’re new to working with food. This is a good way to understand the rules you need to follow.
As an overview, your kitchen and premises need to be clean and kept in good condition. You need to be following good food hygiene practices in your kitchen, including protection against contamination and pest control. However, your home baking business won’t be measured by the same standards as a big commercial premises like a restaurant.
The Food Standards Agency lists what regulations food preparation areas should follow:
Ideally you need a separate fridge for your personal food, but if this isn’t possible you should be clear about which foods are for your business and make sure there’s no cross-contamination.
Pets should be kept out of the kitchen and food preparation areas. Children shouldn’t be allowed in the kitchen while food is being prepared.
And finally, make sure you’re up to speed on food labelling regulations when it comes to giving allergen information.
Food.gov.uk has lots of resources that you can use for your home baking business, including the Safer food, better business pack, which is based on hazard analysis and critical control point (HACCP) principles.
We also have a guide to health and safety for restaurants, catering and hospitality businesses, which might be useful for your cake business (there's a section on managing coronavirus risk, too).
Another regulation when you’re starting your cake business is that you’re required to register your premises with the local authority’s environmental health service at least 28 days before you start trading. This doesn’t cost you anything and your registration can’t be refused. Someone will come to your home and check your food preparation area. To get contact details for your local authority, use the food business registration tool.
Keep in mind regulations we’ve listed in this article are a guide. It’s always best to get advice from your local environmental health authority if there’s anything you’re not sure about.
It’s important to think about business insurance when you’re setting up your baking business. Public liability insurance and product liability insurance (usually sold together) can cover you if you’re sued by a member of the public for injury or damage.
For example, you might have a claim made against you if someone falls ill after eating one of your cakes, or if you knock over an expensive vase when you’re delivering a cake to a customer’s home.
If your home is rented, you need to get permission from your landlord to run your business. However, the law says that your landlord can’t unreasonably withhold or delay their permission. If you own your home, you may need to get permission from your mortgage lender to run your home-based baking business.
There’s a large number of baking and cake making businesses out there, so you need to think about how you’re going to differentiate yourself. You could specialise in vegan or gluten-free bakes, for instance, or concentrate on children’s party cupcakes or wedding cakes.
Since cakes are difficult to transport, you need to have a good sense of your local market, as most of your customers need to be close enough for in-person delivery or collection.
You make a product that looks beautiful, so photographs are key.
Set up a simple website with important details like what you do, where you’re based, and how people can place an order, and add plenty of mouth-watering photos. There are tons of website builders to choose from, including WordPress, Squarespace and Wix.
Also set up a Twitter account, a Facebook page, and an Instagram account for your business, and keep them updated with posts and photographs. It’s important to interact with other people on social media, so spend a few minutes each day liking and commenting on other people’s posts, and following relevant accounts.
You could also publish your recipes as a cookbook and promote them on Instagram. This is a great way to establish yourself as a baking authority while also creating a new revenue channel for your business.
Although you’re setting up your baking business from home, it’s a good idea to get out and tell people about your business and develop a reputation locally. Consider applying for a stall at local events, including food markets and fetes. You can offer people free samples, sell cakes, and give out flyers and leaflets to promote your home baking business.
Since you’re running your own business, you need to keep track of your income and your business expenses so that you can enter this information when you complete your tax return.
Our guide to tax-deductible expenses should help you figure out which expenses you can subtract. Remember that you need to keep your receipts as HMRC may ask you to produce evidence of your expenditure.
There’s lots of small business accounting software available that can help you to manage your business finances.
You’ll also want to choose the best business bank account, so you can keep your personal finances separate.
People need to discover your wonderful cakes, so it’s important to think about marketing strategies. As well as going to local events with your cakes and using social media to reach potential customers, think of other ways.
If you’re specialising in wedding cakes, you may be able to put flyers in a wedding dress shop, or develop a relationship with a local wedding venue, for example. If you’re making vegan cakes, perhaps you can get permission to put flyers in a local vegetarian restaurant, or write a guest post for a popular vegan blog. You could also try Google Pay Per Click (PPC) ads or Facebook advertising, although remember to narrow the audience down to your local area so that the adverts are only appearing for people within your delivery zone.
If you’re not set on starting a cake business, there are plenty more creative business ideas you can start from home. Why not think about:
Have you got any more questions about setting up your home baking business? Ask them in the comments below.
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