From cottage food at home to full commercial bakery. Multiple paths to your baking business.
California offers more options for home bakers than almost any other state. Cottage Food (AB 1616) allows direct sales of shelf-stable baked goods from your home kitchen with minimal permits. MEHKOs (AB 626) allow selling certain prepared foods from home with health permits. Or go full commercial with a licensed kitchen. Revenue caps have increased—cottage food operations can now earn $75,000/year. This makes home-based baking a legitimate business, not just a hobby.
Only shelf-stable items qualify: no cream fillings, no cream cheese frostings, no custards, no cheesecakes. Items requiring refrigeration don't qualify. Violating product restrictions can result in permit revocation and health department action.
Cottage Food operations are limited to $75,000 gross revenue annually. Exceeding this requires commercial licensing. Track your sales carefully. This cap makes cottage food a stepping stone, not a final destination for growth-minded bakers.
Missing or incomplete labels can shut down your cottage food operation. Every product needs: 'Made in a Home Kitchen' statement, your name and address, complete ingredient list, and allergen warnings. No exceptions.
| Item | Low | High | Note |
|---|---|---|---|
| Cottage Food Registration County-dependent, Class A is free | $0 | $100 | County-dependent, Class A is free |
| MEHKO Permit (If Applicable) For non-shelf-stable items | $200 | $1,000 | For non-shelf-stable items |
| Home Kitchen Upgrades For MEHKO compliance | $0 | $3,000 | For MEHKO compliance |
| Commercial Kitchen Rental Monthly, if not using home | $500 | $2,000 | Monthly, if not using home |
| Commercial Lease + Buildout For retail bakery | $20,000 | $100,000 | For retail bakery |
| Equipment (Home) Mixer, pans, tools | $200 | $2,000 | Mixer, pans, tools |
| Equipment (Commercial) Commercial oven, mixer, etc. | $10,000 | $50,000 | Commercial oven, mixer, etc. |
| Initial Ingredients Flour, sugar, etc. | $200 | $1,000 | Flour, sugar, etc. |
| Packaging & Labels Required cottage food labels | $100 | $500 | Required cottage food labels |
| Business Registration CA LLC | $70 | $150 | CA LLC |
| Liability Insurance Annual | $300 | $1,500 | Annual |
| Food Handler Card Required | $15 | $25 | Required |
| Website/Marketing Initial investment | $100 | $1,000 | Initial investment |
| Total range | $31,685 | $162,275 |
For direct sales only (farmers markets, from home). Self-certification with your county. Shelf-stable goods only: cookies, breads, brownies, dry mixes. Revenue cap: $75,000/year.
Same as Class A but allows indirect sales (wholesale to stores, restaurants). Requires kitchen inspection. Revenue cap: $75,000/year.
Microenterprise Home Kitchen Operation permit. Allows selling non-shelf-stable foods from home (requires refrigeration, etc). Health department inspection, limited meals per day.
Required for all food workers in California. Online course and exam. Valid for 3 years.
Required for commercial bakery with retail or wholesale operations. Full health department inspection and ongoing compliance.
Local business license required. Home-based businesses may need separate home occupation permit.
Required label statement: 'Made in a Home Kitchen That Has Not Been Inspected by the Department of Public Health.' Plus: name, address, ingredients, allergens.
| # | City | Note |
|---|---|---|
| 01 | Los Angeles Massive market, diverse tastes. Strong farmers market presence. Competitive but endless demand. LA County has active cottage food and MEHKO programs. | Massive market, diverse tastes. Strong farmers market presence. Competitive but endless demand. LA County has active cottage food and MEHKO programs. |
| 02 | San Francisco Premium pricing, artisan-focused customers. Strong farmers market culture. High costs but high margins. SF permits cottage food and MEHKO. | Premium pricing, artisan-focused customers. Strong farmers market culture. High costs but high margins. SF permits cottage food and MEHKO. |
| 03 | San Diego Year-round farmers markets, beach community customers. Growing food entrepreneur scene. County supports home food businesses. | Year-round farmers markets, beach community customers. Growing food entrepreneur scene. County supports home food businesses. |
| 04 | Orange County Affluent customers, premium baked goods market. Strong gift and specialty food demand. Multiple farmers markets. | Affluent customers, premium baked goods market. Strong gift and specialty food demand. Multiple farmers markets. |
| 05 | Sacramento Growing foodie scene, farm-to-fork culture. Strong farmers market presence. Lower costs than coastal cities. | Growing foodie scene, farm-to-fork culture. Strong farmers market presence. Lower costs than coastal cities. |
| 06 | East Bay (Oakland/Berkeley) Strong artisan food culture. Diverse customer base. Good cottage food acceptance. Multiple farmers market opportunities. | Strong artisan food culture. Diverse customer base. Good cottage food acceptance. Multiple farmers market opportunities. |
California has excellent farmers market culture. These are your best direct sales channel. Apply to multiple markets. Regulars become loyal customers and word-of-mouth marketers.
Custom cakes and special orders command premium prices. Birthday cakes, wedding desserts, corporate orders. These require more from you but pay significantly better than market sales.
Gluten-free, vegan, keto baked goods have dedicated, underserved customers who pay premium. Less competition, loyal customer base.
Cottage food is a great start, but $75K cap limits growth. Plan how you'll transition: shared commercial kitchen, MEHKO expansion, or eventually your own bakery.
Cottage Food (Class A/B) for shelf-stable from home. MEHKO for more items from home. Commercial kitchen rental for flexibility. Full retail bakery for maximum scale. Most start cottage food to test market.
Cottage Food: shelf-stable only (cookies, breads, brownies, brittle, granola). MEHKO: expanded but limited daily meals. Know what you can sell under each permit type.
Cottage Food: self-certify with county (Class A) or apply for inspection (Class B). MEHKO: apply through county health department. Commercial: full health permit process.
Online course takes 2-4 hours. Required for any food business. Keep certificate current—expires every 3 years.
Cottage Food has minimal requirements (pets out during production). MEHKO requires more setup. Commercial requires full commercial kitchen compliance.
Cottage food requires specific label statements, ingredient lists, allergen warnings, and your name/address. Non-compliance can shut you down.
Cost ingredients + packaging + labor + overhead × markup. Cottage food margins are good (lower overhead) but volume is limited. Don't underprice—your time has value.
Cottage Food: farmers markets, from home, online orders. Class B adds wholesale. MEHKO can use delivery apps in some areas. Build direct customer relationships.