How to Start a Bakery

To start a bakery, decide on a model that fits your budget (home-based cottage-food, storefront, wholesale, or online), then handle the legal basics: choose a business structure, register your business, and get an EIN. After that, you will need local health department permits, a food handler certification, and a clear grasp of your state's cottage food laws if you are baking from home. This guide on how to start a bakery walks you through each step in order, so you know what to do first and what can wait.

Which bakery model should you choose?

Before you buy a single mixer, pick the model that matches your money, time, and goals. Your choice shapes almost every decision that follows, from permits to pricing.

• Home / cottage-food bakery. The lowest-cost way in. You bake shelf-stable goods (cookies, breads, some cakes) in your home kitchen and sell directly to customers. Most states allow this under cottage food laws, usually with a sales cap.
• Storefront bakery. A retail space with a display case and often seating. The dream for many owners, but also the most expensive and permit-heavy path.
• Wholesale bakery. You bake in a commercial kitchen and sell to cafes, restaurants, and grocers rather than the public. Fewer walk-in headaches, but you need volume and reliable accounts.
• Online / delivery bakery. You sell through a website or local delivery, baking from home or a rented commercial kitchen. Low overhead and flexible, but you live and die by marketing.

Many owners start home-based to test recipes and demand, then graduate to a storefront or wholesale once they have steady orders.

What are the startup costs and equipment?

Costs vary widely by model. A home bakery can launch for a few hundred to a few thousand dollars. A full storefront commonly runs $70,000 to $150,000 or more once you factor in a lease, buildout, and commercial equipment.

Core equipment most bakeries need:

• A commercial-grade oven (convection or deck) and a stand mixer sized to your volume
• Sheet pans, cooling racks, proofing containers, and quality bakeware
• Refrigeration and freezer space for dough, dairy, and finished goods
• Prep tables, a three-compartment sink (for licensed kitchens), and food-safe storage
• Packaging, labels, and a point-of-sale system for taking payment

Buying gently used equipment from restaurant auctions or closing bakeries can cut costs dramatically. Do not forget working capital: set aside enough to cover ingredients, rent, and your own pay for the first few months while sales ramp up.

How do you handle the legal setup?

The legal side is more manageable than it looks when you take it one step at a time.

1. Choose a structure. Most small bakeries form an LLC, which separates your personal assets from the business. A sole proprietorship is simpler and cheaper but offers no liability protection.
2. Register your business. File with your state and pick a business name. If you will operate under a brand name that differs from your legal name, you may also need a DBA. See our guide on how to register your business for the details.
3. Get an EIN. This free federal tax ID from the IRS lets you open a business bank account, hire employees, and file taxes. Apply online in minutes.
4. Open a business bank account. Keep bakery money separate from personal money from day one. It makes taxes and pricing far easier.

What permits and certifications do bakeries need?

Food businesses face more oversight than most, and the rules are highly local. Here is what to expect.

Health department permits

If you operate a commercial kitchen or storefront, your county health department will inspect your space and issue a food establishment permit. Inspectors check your equipment, sinks, refrigeration temperatures, and cleanliness. Call your local health department early; they will tell you exactly what your county requires, and some rules (like needing a separate handwashing sink) affect your buildout budget.

Food handler certification

Most states require at least one person, and sometimes every food worker, to hold a food handler or food safety manager certification. These courses are inexpensive and can usually be completed online in a few hours. They cover safe temperatures, cross-contamination, and allergen handling.

Cottage food laws that matter for bakeries

If you bake from home, cottage food laws are your best friend, and your rulebook. Nearly every state allows home bakers to sell certain shelf-stable, low-risk foods without a commercial kitchen. A few things to know:

• Only approved foods qualify. Breads, cookies, muffins, and many cakes are usually fine. Anything requiring refrigeration (cheesecakes, cream fillings, custards) is often prohibited.
• Sales caps are common. Many states limit annual cottage food revenue, after which you must move to a licensed kitchen.
• Labeling is required. You typically must label products with ingredients, allergens, your address, and a statement that the food was made in a home kitchen.
• Where you sell may be restricted. Some states allow only direct sales (farmers markets, home pickup) and not wholesale or online shipping.

Check our overview of business licenses and permits to see how these pieces fit together.

How do you price baked goods for profit?

Underpricing is the most common way bakeries quietly lose money. Price for profit from the start.

Start by calculating your true cost per item:

1. Ingredient cost. Add up the cost of every ingredient in one batch, then divide by the number of units it yields.
2. Labor. Pay yourself an hourly wage and fold that time into each item. Your work is not free.
3. Overhead. Spread rent, utilities, packaging, and permits across your expected sales.

Add those together to get your cost per item, then apply a markup. Many bakeries aim for ingredient costs around 25 to 35 percent of the selling price, which leaves room for labor, overhead, and profit.

Tip: Review your prices every few months. Flour, butter, and eggs swing in price, and a recipe that was profitable last year may be losing money today.

How do you set up a website and Google Business Profile?

Customers will look you up before they buy. A simple, clear online presence does most of the selling for you.

Your website does not need to be fancy. Include what you sell, your prices or ordering process, your location or delivery area, and an easy way to order or contact you. Clear photos of your baked goods matter more than clever design. If you take orders online, add a simple order form or an e-commerce tool.

Then claim your free Google Business Profile. This is what makes you show up in Google Maps and local search when someone types "bakery near me." Fill in your hours, photos, and contact details, and ask happy customers to leave reviews. For a local bakery, a strong Google profile often drives more traffic than the website itself.

How do you get your first customers?

Early sales come from your community, not from strangers. Start close to home.

• Tell everyone you know. Friends, family, coworkers, and neighbors are your first buyers and your first word-of-mouth engine.
• Show up in person. Farmers markets, craft fairs, and local pop-ups put your product in front of buyers and let you gather feedback fast.
• Partner locally. Offer samples to nearby cafes or offices. A standing wholesale order can stabilize your income.
• Post consistently. Share fresh-bake photos on Instagram and local Facebook groups. Food is visual, and social media is free.

Our guide on how to get your first customers goes deeper on turning that early interest into repeat orders.

Frequently asked questions

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

In most states, yes, but cottage food laws make it accessible. You typically register your business, follow your state's cottage food rules on approved foods and labeling, and often complete a food handler course. Requirements vary by state and county, so confirm with your local health department.

How much does it cost to start a small home bakery?

A home bakery can start for a few hundred to a few thousand dollars, mostly for equipment, ingredients, packaging, and permits. Because you use your existing kitchen, your overhead stays low, which makes home baking a smart way to test demand before investing in a storefront.

What baked goods can I legally sell under cottage food laws?

Generally shelf-stable items that do not require refrigeration: breads, cookies, muffins, and many frosted cakes. Foods with cream fillings, custard, or fresh dairy are usually restricted because they carry higher food-safety risk. Your state's approved-foods list is the final word.

This is general information, not legal or tax advice; food rules vary by state and county.

Getting the order right is the hardest part of starting a bakery, which is exactly what Scafflow helps with. It turns all of this into a personalized, step-by-step checklist across legal, finance, brand, website, and marketing, with vetted tools for each step. If you want the big picture first, start with our general startup checklist.

Ready to start baking?

Turn this guide into an ordered, personalized plan you can actually work through. Build your free bakery checklist and take the first step today.