How to Start a Bakery: Licenses, Kitchen Options, and Getting Orders Out
How to start a bakery step by step: home, rented, or retail kitchen, the licenses each needs, allergen labels, pricing, and how to deliver to customers and cafés.
To start a bakery, pick where you’ll bake (your home kitchen under your state’s cottage food law, a rented commercial kitchen, or your own shop), get the licenses that kitchen requires, register the business, label every product correctly, and decide how orders reach customers. The kitchen decision comes first, because it sets your licenses, your costs, and who you’re allowed to sell to.
This guide walks through those decisions in order, with the rules that apply nationally and links to the state rules that differ.
Key takeaways
- Your kitchen decides your rules: a home bakery runs under state cottage food law, a rented or owned kitchen under a food permit.
- Most cottage food laws ban or limit wholesale, so selling to cafés and stores usually needs a licensed kitchen.
- Shared commercial kitchens commonly rent for $10 to $29 an hour (The Food Corridor, 2023).
- Labels must name all nine major allergens, including sesame since January 1, 2023 (FDA).
- A bakery that sells mostly wholesale may need to register with the FDA; one that sells mostly to consumers usually doesn’t.
Step 1: Decide what kind of bakery you’re starting
The business model sets everything else:
| Model | Sells to | Typical products |
|---|---|---|
| Home or cottage bakery | Consumers, from home, at markets, and online | Cookies, breads, custom cakes |
| Custom cake studio | Consumers and event planners, by order | Wedding and celebration cakes |
| Wholesale bakery | Cafés, restaurants, grocery stores | Pastries, breads, desserts on standing orders |
| Retail bakery | Walk-in customers | A daily case, coffee, catering trays |
Many bakeries combine two: a retail shop that also supplies cafés, or a cake studio that sells cookies at a market.
Step 2: Choose your kitchen
Your home kitchen
Most states have a cottage food law that lets you bake certain low-risk foods at home and sell them without a full food permit. The rules differ widely on sales caps, which foods qualify, whether you can sell online, and who can deliver. Read your state’s rules before you take an order:
- Texas cottage food law: $150,000 cap; online orders must be delivered by you, an employee, or a household member
- Florida cottage food law: $250,000 cap; shipping allowed; no wholesale
- California cottage food law: Class A and Class B; Class B can sell through shops
- Illinois cottage food law: registration and a food protection manager certificate
- Alabama cottage food law: no cap; direct sales in Alabama only
Two limits come up in most states: foods that need refrigeration, such as cheesecake and cream fillings, are often excluded, and selling to a café or store for resale is often banned or restricted.
A rented commercial kitchen
When cottage food rules stop fitting, most bakers rent time in a shared or commissary kitchen. In a 2023 survey of 161 operators, 76% charged between $10 and $29 an hour (The Food Corridor). Storage, deposits, and cleaning fees come on top. Kitchens usually ask for at least $1M in liability insurance and a food handler or ServSafe Manager certificate (The Food Corridor, 2026). Our guide to commissary kitchens covers how to compare them.
Your own space
A storefront or production space gives you full control and the biggest bill: lease, build-out, equipment, and a health inspection before you open. Most bakers get there after proving demand from a home or rented kitchen.
Step 3: Register the business
The SBA lists the launch steps as: pick a location, choose a business structure, choose a name, register the business, get federal and state tax ID numbers, apply for licenses and permits, open a business bank account, and get business insurance (SBA).
An Employer Identification Number (EIN) from the IRS is free. “You never have to pay a fee for an EIN,” and the online application issues one immediately if approved (IRS).
Step 4: Get the food licenses your kitchen needs
| Kitchen | What you usually need |
|---|---|
| Home, under cottage food law | Whatever your state requires: often a food handler course, sometimes registration with the state or county |
| Rented commercial kitchen | A food permit or license from your city, county, or state for your business, even though the kitchen has its own |
| Your own retail bakery | A food establishment permit and inspection from the local health department |
| Wholesale production | A state food manufacturer or processor license in many states |
Do you need to register with the FDA?
It depends on who you sell to. The FDA requires facilities that manufacture, process, pack, or hold food for consumption in the US to register (FDA), but exempts retail food establishments and restaurants (21 CFR 1.226). A retail food establishment is one whose direct sales to consumers are worth more than its sales to all other buyers, and “consumers” doesn’t include businesses (21 CFR 1.227).
So a bakery that sells mostly to walk-in and online customers is usually exempt. One that sells mostly to cafés and stores usually has to register, and renew every other year.
Step 5: Label your products
Every packaged product needs a label that names the food source of each major allergen. The FDA’s nine major allergens are milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat, soybeans, and sesame; sesame was added effective January 1, 2023 (FDA). You can declare them in the ingredient list, such as “whey (milk),” or in a “Contains” statement.
Cottage food bakers also need their state’s required statement, such as California’s “Made in a Home Kitchen” or Florida’s “Made in a cottage food operation that is not subject to Florida’s food safety regulations.”
Step 6: Price for profit, including delivery
Start from cost per item: ingredients, packaging, labor at a wage you’d pay someone else, and a share of kitchen rent. The median wage for bakers was $17.86 an hour in May 2025 (BLS), a fair baseline for valuing your own time.
Then add delivery. A delivery is a cost per order, so either charge for it, set a minimum order, or build it into wholesale prices. Our guide to delivery radius and zones covers how to price delivery by distance.
Step 7: Plan how orders reach customers
| Order type | How it usually moves |
|---|---|
| Pickup orders | Customer collects from your shop or kitchen |
| Custom cakes | A scheduled delivery timed to the event, in a vehicle where the cake rides flat |
| Online orders | A daily or weekly delivery route, or shipping where your state allows it |
| Wholesale accounts | A standing early-morning route before cafés open |
Check your state’s cottage food law before you hand delivery to anyone else: Texas and Illinois, for example, limit third-party delivery for cottage food. Once you bake in a licensed kitchen, a courier can carry wholesale runs and customer orders.
We run scheduled and same-day routes for bakeries in 100 US metro areas, including a courier service in Austin, Salt Lake City, and Richmond. Recurring morning routes carry wholesale orders to several cafés in one run, every drop has live tracking and a photo, and SUVs, minivans, and cargo vans fit trays and tiered cakes. See our bakery delivery service, or price a route in the delivery cost calculator.
Frequently Asked Questions
Can I start a bakery from home?
In most states, yes, under a cottage food law, for low-risk foods that don’t need refrigeration. Sales caps, allowed foods, and delivery rules differ by state, so check yours first.
What licenses do I need to open a bakery?
It depends on your kitchen. A home bakery follows your state’s cottage food rules. A bakery in a rented or owned kitchen needs a food permit or license from the local or state health authority, plus a business registration and tax IDs.
Does a bakery need FDA registration?
Usually not if it sells mostly to consumers, because retail food establishments are exempt. A bakery that sells mostly to businesses, such as cafés and stores, usually must register (21 CFR 1.226).
How much does it cost to rent a commercial kitchen for baking?
Most shared kitchens charge $10 to $29 an hour, based on a 2023 survey of 161 operators (The Food Corridor). Storage, deposits, and insurance add to that.
Can a home bakery sell to coffee shops?
Usually not under cottage food law, which bans or limits wholesale in most states. California’s Class B and Texas’s registered cottage food vendors are exceptions with conditions.
What allergens must be on a bakery label?
All nine major allergens used in the product: milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat, soybeans, and sesame.
The Bottom Line
Start with the kitchen. A home kitchen under cottage food law is the cheapest way to test demand, within your state’s limits. A rented commercial kitchen opens wholesale and a wider product range at $10 to $29 an hour. Then register the business, get the permits your kitchen needs, label every allergen, and price each order with delivery in it. To see what delivery from your kitchen would cost, use the delivery cost calculator.