Your Cottage Foods Operation Framework & Structure
The framework and structure of your new Cottage Foods Operation is largely your choice, but here is a basic outline of all the pertinent benchmarks.
DISCLAIMER: All information listed herewith is for your encouragement and for educational purposes only. Verify all information with your own CPA, Certified Public Accountant, or a knowledgeable, trusted accounting professional. We are neither of these categories. Do not rely solely on information posted here. Do your own “due diligence” as they say!
Business Setup Checklist
1. BUSINESS STRUCTURE AND/OR FICTITIOUS NAME FILING. You have a few choices … you can be a Sole Proprietor, a Partnership, a Corporation, or an LLC. Now, if you are a Sole Proprietor or Partnership using a ‘business name’ that has not been registered via a Corporate Filing or an LLC Filing, at least in the State of Florida, you then need to make a Fictitious Name Filing.
2. FEIN NUMBER: The acronym FEIN stands for Federal Employer Identification Number. It is free to apply for an FEIN, via the Internal Revenue Service’s website at http://www.irs.gov. Do not pay for one, through a filing service, it is not necessary to pay a fee. Generally, when a Sole Proprietorship starts a business, it’s time to apply for the FEIN Number, and a Sole Proprietor only needs one number, no matter how many businesses are started … this bit of information is right on the ‘instruction’ sheet for form IRS Form SS-4.
3. STATE SALES & USE TAX. For the most part, a Cottage Foods Operation concerned with baked goods will not need to collect sales and use tax, and again this article is not the end all, be all, you’ve got to research your niche food items with your state agencies to be absolutely certain that you are meeting your state’s requirements.
4. LICENSING-CITY. Yes, you’ll need the Business Tax Receipt or fka Occupational License. Check online and with your city to determine what your category is, and how much your annual fee will be. Handle the city license first, there is no sense going for the county license if you cannot get the city license squared away.
5. LICENSING-COUNTY. Same goes here, the county will also require the Business Tax Receipt fka Occupational License fee. Check online and with your county to determine what your category is, and what your annual fee will be.
6. LICENSING-STATE. Woo-Hoo … no licensing, no permitting requirements for most Cottage Foods Operations, but check with CottageFoods.org and be sure to dig deeper and find out what your state does and does not require.
7. LIABILITY INSURANCE. This is not a must but a simple bit of paperwork and administration that is worth every ounce of your time and effort. Liability Insurance protects you and your customer. It’s worth the peace of mind. Your Cottage Foods Operation is responsible for public food safety, so take the necessary steps, many other types of businesses require liability insurance.
8. BANKING / CHECKING ACCOUNT. Set up a bank checking account that is devoted to your business at some point. You may not want to do this at the very beginning, and you don’t have to, it’s not necessary to have a separate account initially, but eventually yes it does need to be a bank account that is devoted strictly to business matters. Make a list and save receipts that are expenses that you have incurred in the course of starting and setting up your business, these are your operations expenses.
9. BANKING / MERCHANT ACCOUNT. A merchant account, the ability to accept credit cards is almost a necessity these days. If you plan on using accounting software, such as Intuit Quickbooks, then setting up a merchant account with absolutely zero monthly fees is as simple as clicking a link in the software and filling out some basic info about your business. You can choose the pay-as-you-go option and incur no fees, the rate/fee/discount that is charged per transaction is slightly higher, but for a start-up, no additional fees, are the way to go. Intuit Quickbooks will send you a card reader device that inserts into the top of your smart phone and viola, you can swipe a credit card on the spot, at the time of delivery. Being able to accept a credit card payment, person-to-person, at the time of delivery, meets the requirements of some state guidelines for Cottage Foods Operations.
10. ACCOUNTING. The simplest, easiest way to handle your small business accounting is with Intuit Quickbooks. It’s designed for small business, it’s relatively easy to use, as accounting software goes. If you want to be in business, it’s a bridge you have to cross. When the work, and the shopping, and the cleaning, and the baking are done, don’t you want to know how everything shakes out? Won’t it be interesting see exactly what your cost of goods sold is, for let’s say, a simple three dozen Toll House Cookies With Walnuts – No Chips?
There you have it, babycakes, 10 steps laid out, clearly and concisely to help you set up the structure of your Cottage Foods Operation. Get busy, you’ve got lots of creating to do!