How to Start a Home Bakery

You start a home bakery, often called a micro bakery, by working inside your state's cottage food law: confirm what your state allows, get the permit or food handler card it requires, buy under $1,000 of equipment, price loaves at $10 to $12, and sell through pre-orders and pickups rather than a storefront. Cottage food businesses are legal in all 50 states, and the entire setup stays under a hard ceiling of $1,000 in this course's planning. Every figure below comes from our verified micro bakery course.

The money is honest but modest. Ingredient margins on a sourdough loaf run high, roughly 80 percent on a $10 loaf costing $2 to make, yet small batches pay a low effective wage, and 4-loaf batches can mean $3 to $7 per hour. Side-hustle home bakeries commonly land at $500 to $2,000 per month, full-time operations at $3,000 to $6,000 per month. Read that range as the field, not a promise.

The law is the frame

Cottage food law is what makes the business possible without a lease or commercial kitchen, and it varies more than any other factor. Most states have no sales cap. Washington caps annual sales at $35,000 and requires a permit plus a home kitchen inspection. Michigan caps at $50,000 under its 2024 update. Florida allows up to $250,000. Texas has no state permit or fee for direct sales, bars local permit fees under a 2025 law, still requires an accredited food handler course at about $15, and caps sales at $150,000.

At the permissive end, Tennessee's Food Freedom Act requires no license, permit, or inspection at all. Georgia removed its license, fee, and inspection requirement in July 2025 while keeping an ANSI food handler course and labeling rules. Illinois caps local registration fees at $50 with no home inspection.

Make one call to your county or state agriculture office, write down every requirement and fee, and work from your own notes. The state-by-state map, with each claim sourced, is in the cottage law lesson.

Permits, cards, and insurance

Registration and permit fees commonly run $0 to $100, with stricter states higher. A food handler card can cost as little as $10 in one state, and accredited manager courses run tens of dollars and can approach a hundred. One strict-state operator documented a stack of $355 for the permit, $99 city, $50 state, and $10 handler, about $514 before the first loaf. Washington's two-year permit alone is $355.

Insurance is cheaper than most bakers expect. Cottage food coverage starts around $26 per month through FLIP at $299 per year, and home bakers average about $37 per month for general liability. An LLC runs about $100 to file in most states. The full compliance budget is itemized in the permits lesson.

Labels matter at the same weight as permits. The FDA lists nine major allergens, sesame among them since January 1, 2023, and your state's labeling rules follow from the same law that authorizes you. Get the allergen line right from batch one.

The kitchen you already have

The equipment list that actually starts the business is short. A digital scale, two loaf pans, an instant-read thermometer, bench scraper, lame, and mixing bowls come in under $100. Bread additions, bannetons and a Dutch oven, add $50 to $150, with enameled cast iron starting around $56. Volume purchases, a stand mixer and label printer, wait until volume forces them at $150 to $400.

Flour is the bulk win: about $25 to $30 per 50-pound bag at restaurant supply against roughly double at retail. Two cheap habits pay like equipment: pre-measure dry ingredients the night before, and temper eggs and butter in warm water rather than guessing with a microwave.

Throughput honesty is the part ambition needs to hear. A home oven fits two Dutch ovens, so boules come two at a time. Loaf pans across racks multiply that, and one home-baking course teaches up to 12 loaves per cycle, which the course frames as the ceiling of a determined operator, not a starting expectation. Established solo bakers reach about 60 loaves per week. The equipment tiers and oven physics are in the kitchen lesson.

Price the loaf so you earn

Plain loaves sell direct at $8 to $14, with most operators at $10 to $12 and inclusions higher. Per-loaf ingredient and packaging cost runs about $1.50 to $2.00. Every dollar added to the loaf price is nearly pure margin on the same bake, and operators in one widely read earnings thread priced at $10 plain and $12 to $14 specialty. One of them, selling a $12 standard loaf in an affluent area, grossed about $140,000 in a year and then scaled back because it was too much. Another grossed $23,850 across 32 events alongside a full-time job.

That same thread carries the counter-signal: one baker hit resistance above $10 in her market. Demand barely moves within a dollar or two, but your local ceiling is real, so test it rather than assume it.

The failure economics worth memorizing: one operator lost money on a cheesecake line at $20 to $25 each because four-hour oven pushes crowded out the bread, and another shut down entirely with the words "I lost because of energy costs. The products sold." Price the oven time, not just the flour. The honest money lesson works all of it.

Choose your storefront and get found

Your storefront is an ordering page, not a building. Hotplate charges 5 percent plus $0.55 per order. The Simply Bread app, built by a baker, takes 5 percent on app orders plus processing at 2.5 percent plus 30 cents. Square runs 2.6 percent plus 15 cents in person and about 3.3 percent plus 30 cents online. Community market booths run $20 to $75 per week, with high-traffic urban markets at $100 plus.

Local discovery is free where it counts: a Google Business Profile, daylight photos, and a few hundred door hangers that print for under $50. Operators converge on roughly 20 reviews as the threshold where bookings compound. The storefront comparison is the storefront lesson. The customer-acquisition playbook is the first thirty customers lesson.

The thirty-day launch plan

Week one is law and loaf: make the county call, draft a three-product menu from your state's allowed list, and put the signature loaf in front of five honest people. Week two is compliance and the kitchen: file the paperwork in order, buy the start-here tier, and build the cost sheet to the gram. Week three is the stage: packaging, labels, the ordering page, the Google profile, daylight photos. Week four is launch: teaser, menu reveal with RSVP, last call, then bake for the RSVP plus a small buffer.

If your state requires an inspection or zoning review, this is honestly a 60-day plan, and compressing it is how bakers get shut down; one operator documented her business stopping cold on a city zoning decision after launch. The full calendar is the launch plan lesson.

Common questions

Do I need a license to sell baked goods from home?

Depends on the state, from nothing at all in Tennessee to a $355 two-year permit with inspection in Washington. Most states land at $0 to $100 in fees plus a food handler course. Verify your own state before the first sale.

How much do home bakers make?

Side-hustle bakeries commonly run $500 to $2,000 per month, full-time $3,000 to $6,000. The ceiling is your oven and your calendar, and the failure mode is burnout and energy costs, not demand.

What sells best?

A signature loaf plus two supports. Bread margins carry the week; one operator's cheesecake line lost money at $20 to $25 each because of oven time. Menu design is the menu lesson.

Can I sell to coffee shops and stores?

Some cottage laws allow limited wholesale, and one operator documented $562.50 gross over three weeks selling to a coffee shop. Crossing fully into stores and co-packers is a different business, and the handoff point is the growing lesson.

Where to go from here

Start with the county call, bake the signature three times before you price it, and let pre-orders tell you the demand before the second 50-pound bag of flour does. If you are weighing this against other under-$1,000 niches, the business quiz compares capital, hours, and skills. The complete course is free at Start a Micro Bakery. The money side generalizes in our bookkeeping guide.

Cottage food rules differ by state and change often, so verify current requirements with your state's agriculture or health department before your first sale.