How to start a cake and baking business from home

How to start a cake business from home – a 10-step guide

1. Register as self-employed

When you’re starting your home baking business you need to tell HMRC you’re self-employed so that they know you need to pay tax through the Self Assessment system. You need to do this even if you’re going to be running your home baking business as a side hustle, part-time or if you have another job.

To set up as a sole trader – the simplest business structure – telling HMRC is all you need to do to register your business. If you want to set up as a limited company instead, the process is a bit more complicated. See our step-by-step guide to setting up a limited company for more information.

Butterwick Bakery, a sweet treat bakery business based in the Midlands, share their story of starting a bakery business in this video:

2. Follow selling cakes from home legal requirements in the UK

Complying with the rules can seem scary initially but they’re quite simple to get to grips with.

First, you should think about getting a food hygiene certificate, namely a Level 2 hygiene certificate if you’re new to working with food. This is a good way to understand the rules you need to follow.

Home businesses are also subject to a food hygiene inspection, where you’ll be awarded a hygiene rating from one to five. Your local authority will arrange to visit your home after you’ve registered your business.

As an overview, your kitchen and premises need to be clean and kept in good condition. You need to be following good food hygiene practices in your kitchen, including cleaning and protection against contamination and pest control. However, your home baking business won’t be measured by the same standards as a big commercial premises like a restaurant.

Rules for food preparation areas

The Food Standards Agency lists what regulations food preparation areas should follow:

• floors and walls – should be in good condition, well-maintained, disinfected, and in a good state of repair
• ceilings – should be in good condition, easy to clean, and free from mould, condensation and flaking paint and plaster
• windows and doors – should be easy to clean and disinfect, and built so dirt can’t build up. There should be insect-proof screens that can be easily removed for cleaning
• facilities for cleaning equipment – you should have good facilities for cleaning, disinfecting and storing utensils, including equipment, with a supply of hot and cold water
• facilities for washing food – you need a sink for washing food and cleaning equipment, and a separate sink for washing hands (if you have a downstairs toilet, this should be fine as long as it’s not too far away – all of these facilities should be kept clean and disinfected)

Ideally you need a separate fridge for your personal food, but if this isn’t possible you should be clear about which foods are for your business and make sure there’s no cross-contamination.

Pets should be kept out of the kitchen and food preparation areas. Children shouldn’t be allowed in the kitchen while food is being prepared.

Allergens and food labelling

Finally, make sure you’re up to speed on food labelling regulations and Natasha’s Law when it comes to giving allergen information.

The Food Standards Agency has lots of resources that you can use for your home baking business, including the Safer food, better business pack, which is based on hazard analysis and critical control point (HACCP) principles.

We also have a guide to health and safety for restaurants, catering and hospitality businesses, which might be useful for your cake business.

Photograph: Africa Studio/stock.adobe.com

3. Register your premises

Another regulation when you’re starting your cake business is that you’re required to register your premises with the local authority’s environmental health service at least 28 days before you start trading. This doesn’t cost you anything and your registration can’t be refused. Someone will come to your home and check your food preparation area. To get contact details for your local authority, use the food business registration tool.

Keep in mind regulations we’ve listed in this article are a guide. It’s always best to get advice from your local environmental health authority if there’s anything you’re not sure about.

4. Sort your home baking insurance

It’s important to think about business insurance when you’re setting up your baking business. Public liability insurance and product liability insurance (usually sold together) can cover you if you’re sued by a member of the public for injury or damage.

For example, you might have a claim made against you if someone falls ill after eating one of your cakes, or if you knock over an expensive vase when you’re delivering a cake to a customer’s home.

There’s also stock insurance and tools insurance, plus employers’ liability insurance if your home baking business will have any employees. Go to our home baker insurance page to get started.

5. Tell your landlord or mortgage lender

If your home is rented, you need to get permission from your landlord to run your business. However, the law says that your landlord can’t unreasonably withhold or delay their permission. If you own your home, you may need to get permission from your mortgage lender to run your home-based baking business.

6. Think about standing out

There’s a large number of baking businesses out there, so you need to think about how you’re going to differentiate yourself. You could specialise in vegan or gluten-free bakes, for instance, or concentrate on children’s party cupcakes or wedding cakes.

Since cakes are difficult to transport, you need to have a good sense of your local market, as most of your customers need to be close enough for in-person delivery or collection.

Photograph: Tatsiana/stock.adobe.com

7. Develop an online presence

You make a product that looks beautiful, so photographs are key.

Set up a simple website

Your website should include important details like what you do, where you’re based, and how people can place an order, and add plenty of mouth-watering photos.

There are tons of website builders to choose from, including WordPress, Squarespace and Wix.

Show up on Google

A Google Business Profile is an important part of any local advertising strategy. This means your business will appear in Google search and Google Maps when people are looking for cake businesses in their local area. If customers can’t visit your home to buy your cakes, you can hide your home address on your listing and still appear in the local area as a delivery business.

Share content on social

Set up a Twitter account, a Facebook page, and an Instagram account for your business, and keep them updated with posts and photographs.

It’s important to interact with other people on social media, so spend a few minutes each day liking and commenting on other people’s posts, and following relevant accounts.

You could even consider selling your cakes on Instagram.

Another idea could be to record video tutorials and baking tips and publish them on YouTube or TikTok. Or why not publish your recipes as a cookbook and promote them on Instagram? This is a great way to establish yourself as a baking authority while also creating a new revenue channel for your business.

8. Get out and about with your baking business

Although you’re setting up your baking business from home, it’s a good idea to get out and tell people about your business and develop a reputation locally.

Consider applying for a stall at local events, including food markets and fetes. You can offer people free samples, sell cakes, and give out flyers and leaflets to promote your cake business.

9. Keep track of your ingoings and outgoings

Since you’re running your own business, you need to keep track of your income and your business expenses so that you can enter this information when you complete your tax return.

Our guide to tax-deductible expenses should help you figure out which expenses you can subtract. Remember that you need to keep your receipts as HMRC may ask you to produce evidence of your expenditure.

There’s lots of small business accounting software available that can help you to manage your business finances.

You’ll also want to use a budget calculator and choose the best business bank account, so you can keep your personal finances separate.

10. Market your business

People need to discover your wonderful cakes, so it’s important to think about marketing strategies. As well as going to local events with your cakes and using social media to reach potential customers, think of other ways.

If you’re specialising in wedding cakes, you may be able to put flyers in a wedding dress shop, or develop a relationship with a local wedding venue, for example.

If you’re making vegan cakes, perhaps you can get permission to put flyers in a local vegetarian restaurant, or write a guest post for a popular vegan blog.

You could also try Google Pay Per Click (PPC) ads or Facebook advertising, although remember to narrow the audience down to your local area so that the adverts are only appearing for people within your delivery zone.

Download our free business plan template to map out everything from your initial idea and financial investment to your marketing strategy and plans for growth.

Harpreet Kaur is the owner of dessert parlour business, Oh So Yum, and shares her tips for growing your business.

Is starting a cake business still right for you?

If you’re not set on starting a cake business, there are plenty more creative business ideas you can start from home. Why not think about:

• starting a clothing business
• starting a craft business
• starting an online shop
• starting a food truck business

Read our guide to the best small business ideas in the UK to see the latest trends.

More useful guides for small businesses

• Business Name Generator
• How to start a business from home
• Home baking businesses rise 230%
• What are the best passive income ideas?
• What type of business insurance do I need?

Have you got any more questions about setting up your home baking business? Ask them in the comments below.

Photograph: Pantovich/stock.adobe.com