It has never been particularly easy to operate a home-based food business in Connecticut. In particular, the low revenue cap has made it difficult for entrepreneurs to earn a living. But that aspect of Connecticut’s cottage food law has recently changed.
Here at Aeton Law Partners, we work with all types of businesses to ensure their legal needs are met. Our Connecticut business attorneys are ready to serve you and your business today.
Raising the Revenue Cap
Under previous law, Connecticut had one of the lowest revenue ceilings for home-based food businesses. The cottage food law, which governs home food producers, limited these businesses to $25,000 annually. That figure was for gross (total) sales, not net. This was one of the lowest revenue caps in the country. The Institute for Justice reports that only four states had lower limits.
Even before our current inflationary economy, $25,000 was not much money. A home-based food producer was restricted in his or her ability to earn a living. A producer was forced to either take a second job or rent a commercial kitchen. But those kitchens can cost tens of thousands of dollars a year to rent. On top of that, there are far more regulations that control the commercial production of food.
But this aspect of Connecticut’s cottage food law has now changed. SB 187 was signed into law in May. It doubles the old $25,000 cap to $50,000. While many states have no such limit, this new law at least provides some breathing room for home food producers.
What Else to Know About Home-Based Food Businesses
Connecticut’s income cap is just one part of a broader cottage food law. If you are planning to start such a business, there’s a lot to consider. Depending on where you live in the state, local rules may also affect you. Talk to an experienced Connecticut business law attorney before beginning your home-based endeavor.
You will also need to decide what sort of legal entity your company will have. Many home-based food producers are sole proprietors. But you should bear in mind that a sole proprietor is personally responsible for all business debts and liabilities.
This may not be the best option if you are running a food business, since consumers could be harmed by your product. A food poisoning lawsuit could mean that you, personally, would be responsible for paying significant damages. Consider forming a limited liability company (LLC) or corporation to limit your personal liability.
Food producers must generally comply with various governmental regulatory requirements. But cottage food producers may be able to escape some of these rules. You may be allowed to produce and sell food from home, provided you:
- Use only your private home kitchen and do not use commercial equipment to make your food
- Sell your food products directly to consumers (not through a supermarket, wholesaler, or broker)
- Have yearly gross (total) sales of no more than $50,000 (previously, $25,000)
- Make only certain kinds of food
- Properly label your food
The restriction on the type of food you can make is an important one. Home food producers are only allowed to make specific categories of food. They include breads, certain types of cakes, candies, and dried fruits. You cannot produce cooked vegetable products, meat, or poultry for sale at home.
Let Aeton Law Partners Serve Your Home Food Business
It’s a good idea to speak with a knowledgeable Connecticut business attorney before starting your home food business. Our dedicated attorneys can explain the relevant rules and regulations you must follow. We can also help you select a legal entity for your business that best protects you. Ready to begin your business? Give us a call today.