This web page was created by citizens instrumental in the cottage food law movement in SC to provide basic information about the new SC Cottage Food Law and some steps to take if you are interested in starting a home bakery. This site is not intended to be legal advice. We will update the page as needed so please check back often for any changes. Last update: February 23, 2013.
If interested in starting a home bakery in South Carolina, these are some things you should do:
First, read the law to educate yourself on the requirements for compliance. Click on "The Law" on the left side of this page to read it. A few things to note in general are that you can only bake non-potentially hazardous foods such as cakes, cookies, candies, and breads, and they must be labeled according to federal guidelines. Foods not allowed are jams and jellies, meat or vegetable products, and anything that would require refrigeration. Home kitchens will not be inspected by The Department of Health and Environmental Control. You still must comply with safe food handling practices and sanitation procedures, and DHEC reserves the right to inspect your kitchen if a complaint is made against you. You may not sell your product to be resold in other stores or restaurants. Also, your income is limited to $15,000 in gross sales.
Second, make sure where you live is zoned for a home occupation before you get your state business license. The ordinances will be different for each county, and it is very important that you understand what your city or county requires. Please call your county or city government offices for information. Some areas will require a local business permit or license. You should be able to find some of the zoning information here:
http://publicrecords.onlinesearches.com/South-Carolina-Laws-and-Codes.htm
Third, You will be required to get a retail business license from the South Carolina Department of Revenue, and to collect sales tax. Sales tax returns must be made every month even if you have no sales, and they can easily be done online. If unsure about how to structure your business, you should contact your accountant to determine whether you should file as a Sole Proprietorship, or Limited Liability Corporation. Please read the Business Tax Guide put out by the Department of Revenue to learn about opening a business in South Carolina.
http://www.sctax.org/NR/rdonlyres/321BA22E-F158-472F-9B54-F5A4026BBA25/0/2012BusinessTaxGuide.pdf
Also go to http://www.irs.gov/ to read the information for small businesses.
When ready to apply for your business license, go to to this link and click on "start your business": https://www.scbos.sc.gov/
You will create an account, and then fill out the application, saving the information as you go. You can log out and finish it later if necessary. If you are filing as an LLC, the process guides you through registering the articles of organization with the Secretary of State. The retail license is $50, and if filing as an LLC, there is an additional $110 for filing your Articles of Organization with the Secretary of State.
When you register your business, you will also be registered for Business Personal Property Tax (PT-100), which is a tax that is imposed on all furniture, fixtures, and equipment used in the business and must be filed annually to the SCDOR.
The SC Code of Laws states in Section 12-37-220 (A)(5) (A) "Pursuant to the provisions of Section 3 of Article X of the State Constitution and subject to the provisions of Section 12‑4‑720, there is exempt from ad valorem taxation: (5) all household goods and furniture used in the home of the owner of such goods and furniture, such to include built‑in equipment such as ranges, dishwashers and disposals, but this exemption shall not apply to household goods used in hotels, rooming houses, apartments, or other places of business;"
What this means is that you will not be required to pay Business Personal Property tax on those built in items used in your home bakery. But when you do your annual taxes, if you have any business assets that you claim on your federal or state tax return, then you also have to claim those on the PT-100 with the allowed depreciation. If you do not claim any assets on the Federal or State return, then you will file the PT-100 as a zero return. If you do not file the PT-100 at all, you will get an estimated tax bill from your county with penalties that you do not owe, and you will have to get that straightened out. If you close your accounting at the end of the year, the PT-100 form must be filed to the SC Department of Revenue by April 30.
Fourth, If you are planning to sell from a farmer's market or a flea market, you must apply for an exemption from inspection and label review with the Department of Agriculture. It is a simple, fill out and mail in form, and there is no fee involved. (Note: If you only plan to bake custom ordered baked goods from your home, you do not need to fill out this form.) The form can be found here:
Fifth,We highly recommend that you obtain liability insurance that covers your business.
The above information is only a general guideline to help you get started, and as mentioned above, does not substitute for legal advice, and you alone are responsible for making sure you have met all the requirements. If unsure what to do, contact your accountant, or an attorney. If have questions, you can go to our Facebook page and leave your comments/questions there. We check on a daily basis and will do our best to answer any questions you might have. http://www.facebook.com/SCCottageFoodLaw
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