Food for Thought How to stay on the right legal track when starting an organic food business

Q: I want to start a business making organic baked goodsfrom my home. Will I have any problems with legal authorities?

A: Your sense of the market is right on--organic food isone of the fastest--growing segments in the food industry. A 2004study by Synovate, commissioned by Whole Foods Market, found that27 percent of Americans are using more organic foods than they didthe year before. And baked goods, right after organic produce, arethe second-largest type of organic food purchased.

But producing and selling food for human consumption at homemeans you must surmount more legal hurdles than most homebasedbusinesses. First, like all homebased businesses, your businessneeds to be permitted by your city or county zoning. What onecommunity permits to be done in a home may be completely differentthan what's allowed in an adjacent community. If you live in acommon-interest development, chances are you're out of luck forhome baking--but to be sure, check your homeownersassociation's covenants, codes and restrictions. An exceptionfrom a prohibition in a zoning ordinance, called a variance or aconditional use permit, is easier to get than a waiver or avariance from a homeowners association.

Your next hurdle is determining whether state law allows thecommercial sale of food made in a home. This varies from state tostate. If you plan to sell your baked goods retail, you'll bedealing with your city or county board of health. However, if youplan to sell your organic food products wholesale, chances are,what you produce will need to be inspected by your state Departmentof Health.

You'll need to have a commercial kitchen, unless you'rein a state like Iowa that allows food prepared in residentialkitchens to be sold when gross sales are below a certain dollaramount. We've seen people put commercial kitchens in theirbasements or in additions to their homes.

Commercial kitchens are expensive, so first determine if thebusiness you plan to develop will justify the investment ofremodeling your home. Meanwhile, you can rent a commercial kitchenin a church, state park, campground or fire station thatdoesn't use its commercial-grade kitchen in off-hours oroff-season. Some states even fund incubator kitchens that can beshared to encourage startups. Check out your state'ssmall-business resources to see if this is an option for you.

Still another option is to use a mobile kitchen, such as onemanufactured by Carlin Manufacturing, which makes fully equippedcatering kitchens capable of serving 200 to 750 people. However,this is not a suitable solution unless you have no neighborsnearby.

While food provided by catering services is subject to the samerestrictions as food produced for sale--retail or wholesale--thefact is, many catering services start by cooking in residentialkitchens at home, taking the chance they won't get caught. Keepin mind, the problem for a business like yours--one that will beselling baked goods wholesale, as you probably will--is that whenyou take your baked goods to a retail store or a restaurant, theyare apt to insist you produce a state or local health departmentlicense.

Since you'll be selling baked goods, chances are you'llbe selling locally and won't be shipping via interstatecommerce. This is good, because the FDA regulates goods made inhome kitchens and requires compliance with all food safety andnutrition labeling laws. You also probably won't be able tocount on institutional buyers, like colleges, as potentialcustomers because they typically have their own policiesprohibiting the sale or use of food prepared or stored in privatehomes in their facilities.

It is feasible to make organic baked goods for sale at home.There's a ready market, but to tap into it, you will first haveto do some homework and probably surmount some hurdles.

Authors and career coaches Paul and Sarah Edwards' newbook is The Best Home Business for People 50+.Sendthem your questions at www.workingfromhome.com or in care ofEntrepreneur.