Micro bakery: how to start one and run it on pre-orders

What a micro bakery is

A micro bakery is a very small bakery, often one baker with one home or rented oven, that bakes in small batches and sells to a known list of customers. Most micro bakeries sell bread first: sourdough loaves, rolls, focaccia and a few pastries. Customers order ahead, and the baker bakes only what has been ordered.

That pre-order model is what separates a micro bakery from a general home bakery. A home bakery may take custom cake orders, sell at markets with a full table, or supply a café. A micro bakery keeps a short fixed menu, opens orders for a set bake day, closes them when the oven is full, and hands the bread over at a pickup time or delivers it. Nothing is baked on spec, so very little goes to waste.

"Micro bakery" is not a legal category. No state licenses a micro bakery as such. Your legal status comes from your state's cottage food program, or from its retail food rules if you bake in a licensed kitchen. The rest of this page explains how to tell which applies to you. It is general information, not legal or tax advice, and rules vary by state, county and city.

Cottage food or licensed kitchen: the legal status of a micro bakery

Every state sets its own rules for selling food made at home. These cottage food laws allow foods that are low risk, such as most breads and cookies, to be made in a home kitchen and sold to consumers, usually with a yearly sales cap and a label stating the food was made at home. The FDA Food Code is a model that local, state, tribal and federal regulators use to develop or update their own food safety rules, and it covers restaurants and retail food shops. Cottage food rules come from state law, so the cottage food program in your state is the source to read.

The table compares three state programs that many micro bakers ask about. It shows how far apart the rules are: one state requires a county registration and training, another bars local permits for direct sales, and a third needs no state food permit at all.

A licensed kitchen is the other route. If your state does not allow a product from a home kitchen, if you need to sell wholesale to cafés, or if you outgrow the sales cap, you bake in a kitchen that holds a food permit. That can be your own small commercial space or rented hours in a shared commercial kitchen. Your county or city environmental health office can tell you which permit applies and how inspections work under your state's retail food code.

Some breads also change your status. Fillings that need refrigeration can take a product out of a cottage food program: California's approved list covers baked goods without cream, custard or meat fillings. In Texas, for example, a cottage operation selling foods that need time and temperature control requires registration with DSHS for foods that need time and temperature control for safety (TCS).

How to start a micro bakery

These steps follow the order most home bakers work through. Check each one against your own state and county before you take money.

1. Read your state's cottage food program page

   Search your state health or agriculture department site for its cottage food page. Note which breads are allowed, the yearly sales cap, whether you register or hold a permit, and whether online orders and delivery are allowed.

2. Check county and city rules

   Counties and cities can add home business rules, zoning limits on customer pickups and their own fees. Call your county environmental health office and city planning office before your first sale.

3. Pick a short menu

   Choose two to four products you can bake well and consistently, such as a plain sourdough, a seeded loaf and one sweet item. A short menu keeps ordering, baking and labelling simple.

4. Set up the business

   Choose a business name and structure. An employer identification number from the IRS is free, and some banks ask for one to open a business account. Keep bakery money separate from personal money from the first sale.

5. Make compliant labels

   Write a label for each product with the name, ingredients, allergens, net quantity, your business details and your state's home-kitchen statement. The next sections list what the labels must say.

6. Open your first pre-order

   Pick one bake day, set a limit that fits your oven, take orders and payment ahead, and choose a pickup window. Start with friends, neighbours and colleagues, then open a waitlist when bake days sell out.

Bread subscriptions and pre-orders

A bread subscription is a standing order: a customer pays ahead for a loaf every week or every two weeks for a set number of weeks, and collects it on bake day. Subscriptions give a micro bakery a known number of loaves to bake each week, cash before the flour is bought, and fewer unsold loaves.

Most micro bakeries run a mix of the two. Subscribers fill most of the oven, and a few spare loaves go on a weekly pre-order list that opens on a set day and closes when it sells out. Running both lets new customers try the bread before they commit to a subscription.

• Set the term. Four-week or eight-week terms paid up front are easy to track and easy to pause between terms.
• Fix a cut-off. Close orders a day or two before the bake so you can buy flour and start levain on time.
• Choose how the bread reaches the customer. Pickup from your porch or a set location keeps the rules simplest.
• Check delivery and shipping rules. In California orders taken by phone or online may be fulfilled in person, by mail or by a delivery service. In Texas, online orders are allowed when, among other conditions, the operator, an employee or a household member delivers the food in person. In Florida, sales are allowed on your website, by mail order and in person.
• Track the sales cap. Subscription revenue counts toward your state's yearly cottage food limit, so total it every month.

What a micro bakery label must say

Cottage food labels carry a statement that the bread was made at home, plus the usual food label details. Each state words the statement differently and sets its own type size, so copy it exactly from your state's page.

Allergens matter more for bread than most bakers expect, because wheat is in almost every loaf and seeds are common toppings. Federal law names the major food allergens as milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat and soybeans, and it added sesame as the 9th major food allergen, effective January 1, 2023. One way to list them is a “Contains” statement next to the ingredient list, for example “Contains wheat, milk, and soy.”

California labels also need the registration or permit number and the county that issued it, and the net quantity in both US (pound) and metric units. Small makers are often exempt from the Nutrition Facts panel: FDA's small business exemption covers retailers with annual food sales to consumers of not more than $50,000, among other conditions.

Micro bakery equipment and costs

A micro bakery can start in a home kitchen with a domestic oven. The limit is oven space: a home oven bakes a few loaves at a time, so bake days are long. Most micro bakers start with the basics and add a larger oven once subscriptions fill every bake day.

• Baking: Dutch ovens or a baking steel, bannetons or proofing baskets, a bench scraper, a lame for scoring and cooling racks.
• Measuring: a digital scale that reads in grams, a probe thermometer and food-safe tubs for levain and dough.
• Mixing: hands and tubs work for small batches; a stand mixer helps with enriched doughs.
• Packaging: paper bread bags, labels with your required statement and a way to print them.
• Storage: dedicated, labelled shelves for bakery ingredients, kept apart from household food.
• Orders and payment: a simple order form or online store that takes payment ahead and caps orders per bake day.

Costs depend on your state's fees, your local flour prices and what you already own. A clear way to price is per loaf. Example: if a loaf uses $1.80 of flour, salt and packaging, and you want $6 an hour for a bake day that yields 20 loaves over 8 hours, labour adds $2.40 a loaf, so a $9 price leaves $4.80 a loaf before fees and taxes. Replace the example inputs with your own numbers.

Taxes for a micro bakery

If you run a micro bakery on your own, its profit is usually self-employment income. The IRS says you owe self-employment tax if your net earnings from self-employment are $400 or more. A home baker selling direct does not register with FDA as a food facility, because under FDA's registration rule the private residence of an individual is not a facility. Sales tax on bread depends on your state, because states set their own rules for taxing food. Check your state revenue department's page on food sales before you set prices.

Where Nation fits

Questions about micro bakeries