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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

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  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 ↗

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  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. What bakery businesses charge

    Retail items $3–$8, custom cakes $4–$8 per serving ($60–$300+ per cake), wholesale to cafes at roughly half retail with volume. Cottage-food home operations keep overhead near zero to start. Steady wholesale base plus event and holiday spikes (weddings, Thanksgiving, Christmas, Valentine's, Mother's Day). Custom orders carry the margin; wholesale carries the volume.

  7. 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 ↗

  8. The mistake most first-year bakery owners make

    Jumping to a storefront too early. Most successful bakers start under their state's cottage food law (limited licensing, revenue cap), prove demand at farmers markets and wholesale, then take on a commercial lease with real numbers.

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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.

What should I charge for bakery?

Retail items $3–$8, custom cakes $4–$8 per serving ($60–$300+ per cake), wholesale to cafes at roughly half retail with volume. Cottage-food home operations keep overhead near zero to start.

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.

How much does a bakery business license cost?

It depends on your state and exactly which license applies — a state professional license commonly runs $50–$300 plus any exam or renewal fee, and a local city/county business license is often another $25–$100. That's separate from the $50–$300 LLC filing fee if you form one. Use the License Finder tool with your state for the exact fee for bakery work.

How much does bakery business insurance cost?

General liability insurance for a solo bakery operator typically runs $300–$800 a year, more with commercial auto coverage or a higher liability limit. Most contracts, landlords, and license boards require proof of coverage before you can start.

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.

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