Guest post by Pia Cato
You know you need to cover the legal aspects of operating a home cake business but it all seems so confusing and where on earth do you start! Don’t worry, while this may sound scary, I can reassure you that it is just a case of following a few simple steps. To help you I have put together a fabulous easy to use legal checklist. This checklist covers the top ten tasks you need to complete in order to comply with UK law and run a professional food business. Let’s make your business legal!
Your Legal Checklist for Your Home Bakery Business
1. Register as self-employed with HM Revenue & Customs (HMRC) within 3 months of becoming self-employed
HMRC has a fantastic user friendly website and you can register as self-employed extremely quickly, click here and simply follow the steps. But before you get started you must decide which legal structure is right for your business, sole trader, partnership or limited company. It is important to understand the different risks and benefits associated with each structure. Please note that as a self-employed person you are responsible for paying your own tax and National Insurance contributions each year.
2. Register your home kitchen with your local council
You must do this at least 28 days before you start any food operations, again this is a straightforward process and you can do it online. Use the handy search section on the gov.uk website to find out which council you need to contact. Failure to register your home kitchen may result in a fine, imprisonment for up to 2 years, or both. It doesn’t cost anything to register and your registration can’t be refused.
Once you have registered online, your local council will arrange for an Environmental Health Officer to visit your kitchen at a time and date convenient with you. They will ask you questions about your cake business, the recipes you use, decorating techniques, how you store food, your cleaning procedures as well as inspecting your kitchen and premises. They are they to help you and will make recommendations for improvement if need. While this may sound scary, they honestly want to work with you and help protect you, your food business as well as the customer.
3. Take a look at the Food Standards Agency website
It can often take time for your Environmental Health Officer to schedule a visit so while you are waiting get ahead of the game but checking out Food Standards Agency website for help and guidance. This is a brilliant website and will help with your general food law knowledge, labelling advice as well as helping learning about professional food practices and processes, such as keeping written records of all your suppliers, your recipes, up-to-date records of your food safety management procedures and understanding the principles of good food hygiene. It is also worthwhile downloading the Safer Food, Better Business Pack and completing it ahead of your Environmental Health Officer visit as this is something that they will want you to do.
As a bonus the Food Standards Agency has a great free online training allergy course. It is a straightforward course and once you complete it, you can print out a certificate or upload the certificate jpeg to your website.
4. Complete your level 2 Food Hygiene certificate
You can complete level 1 but all the UK councils require level 2 so you can easily skip right to this certificate. The Food Standards Agency website will help you prepare for the short examination. You can either complete this online, in the comfort of your own home, or you can find an in-person course. There are various websites you can obtain your qualification from but I use highspeedtraining.co.uk for when mine needs updating and it currently costs £20 + VAT.
5. Sign up for business insurance
Business insurance is essential if you are operating a business as it will protect you when times are bad, or, if cake disaster happens. There are many small business insurance brokers out there. I currently use Direct Line as I found them to be the most competitive, plus there are super friendly. I pay just over £55.00 per year. But be sure to look around and purchase the best insurance that works for your needs and remember to update them if anything changes.
6. Update your car insurance policy
If you are planning on delivering cakes yourself make sure you update your car policy. Tell them that you are using it for business. You never know what is round the corner! Unfortunately, back in 2012, a car went into the back of me while I was driving to a cake selling event. I had hundreds of dainty cupcakes in my car, so you can imagine the scene! Cakes were completely wrecked and to make matters worse my car was written off. Luckily I had business car insurance and was fully compensated. Therefore, I urge you to make sure you are fully protected too.
7. Inform your mortgage lender or landlord
It is always important to make sure you let you know mortgage lender or landlord know that you will be running a business from home. As there maybe certain restrictions or you may need to sign new contracts. Also be sure to tell your home insurance provider too.
8. Open a separate bank account for your business.
It is vital to keep your personal finances and business finances separate. Shop around. Look into whether a personal bank account or a business bank account would be the better option for you. There are pros and cons to both. If you are running a limited business you must use a business bank account. However, if you are a sole trader you can operate your business from a personal account.
9. Keep records of your business income and expenses
From now on you must keep every single receipt and invoice relating for your business. It is the law to keep records of all your business income and expenses for at least fives years. By getting into the habit and keeping up-to-date records it will help you to prepare your accounts and tax returns. As well understanding where your money is coming from and where it’s going out. You can undertake these duties yourself or you can outsource this aspect to a bookkeeper or accountant. I personally outsource my accounts to a fantastic team of accountants and would be lost without them.
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