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How to Start a Bakery Business

What it takes to legally start a bakery business in the US — licensing, structure, EIN, taxes, insurance, and your first customers. The steps are the same everywhere; the forms and fees depend on your state, so pick yours below for the exact links.

Typical startup cost
$1,000–$5,000 (cottage) to $30,000–$150,000 (storefront)
Licensing
usually local only
Best structure
LLC for most
First customers
referrals + local search

  1. Check the licensing for bakery work

    Most states have a cottage food law that lets you sell certain non-hazardous baked goods from home with limited or no licensing, up to a revenue cap. Anything perishable, wholesale, or over the cap requires a licensed commercial kitchen and health permit. This is the part that varies most by state — some require a state license or registration before you can advertise, others leave it to the city or county. Confirm both your state board and your local government before you take a job.

  2. Decide what the business needs to open

    Retail or wholesale baking — a storefront, a cottage-food home operation, or a commissary-based delivery model. The setup areas that usually matter for a bakery business: Cottage food law vs. commercial kitchen decision, Health permit + food handler cert, Labeling and allergen rules, Wholesale accounts vs. retail, Production scheduling. Typical cost to get operational: $1,000–$5,000 (cottage) to $30,000–$150,000 (storefront).

  3. Pick a structure — sole proprietor or LLC

    You can start as a sole proprietor with no filing, or form an LLC (usually $50–$300 depending on your state) for liability protection. For hands-on trade work where something can go wrong on a customer's property, most owners choose the LLC.

    LLC filing fee and steps by state ↗

  4. Get a free EIN from the IRS

    An Employer Identification Number is free and takes a few minutes online. You need it to open a business bank account and to hire.

    IRS — Apply for an EIN ↗

  5. Register for state taxes and get insurance

    Register with your state's tax agency if you'll collect sales tax, then line up general liability insurance — most contracts and license boards require proof of coverage.

  6. Get your first bakery customers

    Farmers markets, Instagram, wholesale pitches to local cafes, and custom-order word of mouth. Wholesale to cafes and grocers gives volume; custom cakes and events give margin. Many bakers start under a state cottage food law and graduate to a commercial kitchen.

    Getting customers for a bakery business ↗

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Frequently asked

How do I start a bakery business?

Check the licenses for bakery work in your state, pick a structure (sole proprietor or LLC), get a free EIN from the IRS, register for state taxes, open a business bank account, get general liability insurance, then set up a Google Business Profile and line up your first jobs. The order and the exact forms depend on your state.

Do I need a license to start a bakery business?

Most states have a cottage food law that lets you sell certain non-hazardous baked goods from home with limited or no licensing, up to a revenue cap. Anything perishable, wholesale, or over the cap requires a licensed commercial kitchen and health permit.

How much does it cost to start a bakery business?

Plan for $1,000–$5,000 (cottage) to $30,000–$150,000 (storefront) to get operational, plus $50–$300 if you form an LLC (varies by state). An EIN is free, and general liability insurance runs a few hundred dollars a year for most solo operators.

How much do bakery businesses make?

It depends on your rates, your utilization, and your area. See the income and pricing breakdown for a bakery business for typical owner take-home and what to charge.

Where do the first bakery customers come from?

Farmers markets, Instagram, wholesale pitches to local cafes, and custom-order word of mouth.

Official sources

Fees and timelines are commonly-cited figures last reviewed September 2026 and can change — always confirm on the official site. This is educational information, not legal or tax advice.

Related

AI-generated guidance is for educational purposes only and is not legal, tax, or investment advice. Disclosures · Trust center