How Do You Start a Cottage Bakery Selling Decorated Sugar Cookies?

So you want to start an in-home cottage bakery selling custom-decorated sugar cookies? Awesome! We’re here to help - you have to do these seven things: confirm your state's cottage food laws allow it, ensure your HOA allows it (people forget this step), decide on a business name (check for similarly named competitors), register your business (you don’t need an attorney for this), open a business bank account, set up a dedicated baking and decorating workflow at home, and start marketing.

Most people can launch for under $500 and take their first paid order within a month with decent marketing. The hard part isn't the baking - it's treating it like a business from day one. Below, we'll walk through each step in the order I'd tackle it if I were starting over today.

1. Confirm your state's cottage food laws

2. Check your HOA or property management laws (if applicable) 

3. Choose an uncomplicated business name and check for trademarks

4. Register your business with your state

5. Open a business checking account with a local credit union (if possible)

6. Procure the necessary equipment for food labeling (if required) and product production

7. Create the social media accounts you’ll use to promote your business

That’s a lot of work in a short list! Let’s dive into the specifics to see if opening your own cottage bakery is the right fit for your lifestyle. You’re asking the right questions to get started. 

What equipment and supplies do you need to start a cookie business at home?

We can’t start a sugar cookie cottage bakery without supplies - so let’s take a look at their costs! Likely, if you’re considering selling sugar cookies, you already know how to bake them, which means you’ve got the equipment needed to start up production right away. Here’s the kitchen equipment list if you haven’t purchased these items yet (shop sales! No need to overpay when we need to save money to get this business off the ground!). Here’s the list, and we’ll dive into specifics with brands, models, and pricing below.

For equipment you’ll use and reuse for each order, to get started, purchase:

1. A stand mixer

2. A rolling pin with height adjustment

3. Spatulas

4. Scribes

5. Bowls

6. Edgeless baking sheets

7. Cookie storage containers

Most of these items you likely already have, which is great - use what ya got! Keeping costs low when you’re starting a new business is vital to keeping the business lean and healthy. Many of these are taste-specific, but to give you a rough idea of the cost of getting started, let’s find some specific products to reference. Here are the brands and cost breakdowns most bakers start with:

1. KitchenAid 4.5 Qt Stand Mixer - $399.99 

2. Joseph Joseph PrecisionPin Rolling Pin - $18.71

3. Mainstays Silicone Kitchen Spatula - $2.97

4. 6 Piece Cookie Scribe Bundle - $3.99

5. Amazon 2 Pack Large Flat No Edge Non-Stick Baking Pan - $29.99

6. 3 Stainless Steel Mixing Bowls - $29.89

7. Cookie Storage Containers - $4.99 - $20.00 

In time, you’ll want to upgrade your equipment to allow for bigger production runs, fast turnaround for increased workflow, and a better experience all around. You know what the twins say - don’t fight your gear! 

When you’re ready to upgrade your equipment, do it on an as-needed basis. Upgrading everything at once will drain your bank account as well as overwhelm you since many of these items have a learning curve. 

We’re not done yet - we need additional supplies to get this baking business off the ground and into cookie town! You won’t get far in sugar cookie decorating without these:

• Tipless piping bags

• Parchment sheets or baking mats

• Cookie cutters

• Food Colors for icing

There are so many options when it comes to piping bags, but focus on micron count (the thickness of the bag) and seams (less is more). Some Amazon brands have been prone to bursting, so stick with cookie supply shops; they know what bakers are looking for. Tipless is the way the sugar cookie industry has gone; there is no need for expensive couplers that are hard to keep clean. Happy day!

When it comes to cookie cutters, you can go with steel or 3D-printed, but start with the basic shapes. It’s easy to get spend-happy with all the amazing cutter shops - but simple shapes and plaques to start off with won’t eat up your profits before you’ve made your first sale. Pro-tip: When purchasing cookie cutters online, save the image file of the decorated cookie. You likely won’t be able to remember what this looked like after you’ve purchased enough cutters. 

Same with food coloring for your icing. If you learn a bit of color theory, you won’t have to spend so much on buying specific colors. But if color theory is your arch nemesis, good news - companies like AmeriColor sell many color variations to fit your cookie design ideas.

• Tipless Piping Bags from Cookie Cutters by Nori - $5.25

• Baking Mats from Chua Cookie - $16.00

• Nancy Plaque Cutter from Kaleidacuts - $5.00 (4’’)

• AmeriColor Food Gels - $3.00 (.75 oz)

But wait - there’s more… to spend! We also need our ingredients. You can have all the bowls in the world and still not be able to produce a single cookie - to the grocery store we go! Your ingredient costs will depend greatly on the recipe you choose for your sugar cookie base. Most bakers start with very simple vanilla recipes and tweak flavors and additives once they have their foundation. We recommend this approach too. Don’t walk before you run, bakers!

• Meringue Powder

• Powdered Sugar

• Flour

• Eggs

• Butter

• Extracts (if needed) 

Your icing recipe can leave out our meringue powder (the most expensive ingredient listed), and it’s a glaze; however, if you’re looking for punchy colors you see on those cool Instagram Reels, you’re going to want a recipe that includes meringue powder (we recommend BaketyBake’s Royal Batch - $38.00/1lb.).

You’ll likely want to purchase a projector as soon as possible (the KODAK Luma is a favorite for bakers - but heads up, it’s $239.99), which also means you’ll need a laptop and a stand to hold the projector. Projectors allow the bakers to project an image onto the cookie and “trace” it (wait, you thought these bakers were just really good at drawing!? They have a secret - the projector!). Most bakers get the Arkon Mount stand ($124.95). You may need additional cables to connect the projector to a laptop or iPad. 

Now we need to be able to package the cookies for customer pick-up. For packaging supplies, you’ll want to start with:

• Boxes

• Business cards

• Decorative bows or stickers

• Labeling (if required)

• Cookie Care Cards

Beyond the listed items here, bakers likely end up purchasing dehydrators to speed up the drying process, airbrush machines to add texture to designs, stand-up freezers for batch freezing dough, upgraded mixers like the Bosch Universal Plus that can produce a lot more volume than the KitchenAid, direct-to-food printers like Eddie - the list goes on! 

Careful now - there’s no end to how much you can spend on getting started, so play it safe and only purchase the necessities. You can always purchase and upgrade later on when we have solid cash flow. 

How do cottage food laws affect selling decorated cookies?

When you’re considering starting a sugar cookie business, you’ll need to confirm with your cottage food laws. Cottage food laws are the state and county-specific laws governing each cottage baker in every state in the US. Yep - it’s as confusing as it sounds. Each state has different laws regarding what cottage bakers can sell, what ingredients they can use, whether they can ship, labeling requirements, and how bakers need to handle sales (in-person, online, or wholesale). These laws will make or bake… I mean, break you, so you’ll absolutely need to confirm all systems are go before you get “knead deep” in dough (my puns are everywhere). 

Did you know New Jersey is the only state that doesn’t allow cottage bakeries? 

Your state’s department of agriculture website will be your first stop to determine if and what you’re allowed to bake. Failure to get proper licensing (if required - not all states require this) or failure to follow guidelines can result in fines and closure - not good for cash flow - yikes!

Health inspections and kitchen inspections are also state-specific requirements - and yep, some states don’t allow cottage bakers to have pets accessing their kitchen areas (something to keep in mind, Fido). North Carolina doesn’t allow cottage bakers to have pets at all. Wild, right? 

These laws are constantly changing. In Iowa, they’ve removed the requirement to have the cottage home address on labels. In Virginia, they can now accept online payments. Bakers advocating for law changes really does work!

Joining local state-specific Facebook groups can help you get a better understanding as well. While there are state-specific guidelines, there are also locality requirements and fees, too. Ensure you’ve checked for both before your opening day. 

If you live in a community governed by an HOA or a property management company (specifically in apartments and condos), check to see if they allow for home-based businesses. The last thing you want is to get shut down because your clients are required to come to your door to pick up their cookie orders, and a neighbor reported you. If you find that you’re not allowed to sell from your home, we’ve had some bakers find friends outside of HOAs who allow a method of selling called “pop-ups.” 

And while not specifically related to cottage law, check for trademarks filed with the US Patent Office. This free search will help you know whether or not that cool bakery name you just thought up has been trademarked by another company (who can come and shut you down later - yep, even after you’ve grown a name for yourself). 

What are the first steps to take before your first cookie sale?

Can we make the cookies? Check! Can we legally sell the cookies? Check! Now we need to market the cookies and be able to take payments - and this is where Sugar Cookie Marketing shines bright. You can’t start a cottage bakery without making money, right?

When it comes to the business and marketing side of things, you can get really bogged down with tasks, but starting off - keep it simple. We can always go back and add on and optimize later when we have more funds to keep our bakery business floating shiny side up. 

First, we need an EIN number (it’s like a Social Security number but for businesses in the US). It’s state-specific, but typically pretty simple (in Virginia, it’s $50/yr to file). Once you file with your state, you’ll get that EIN number, which will then allow you to open up business accounts that will allow us to collect payments. 

You don’t need an entire website to be able to accept money from clients. There are forms that allow payments, as well as payment apps like PayPal and Venmo that allow you to accept business transactions. There are fees, though, so keep in mind what your selected platform is charging you.

• PayPal Fees: 2.99% + $0.49 per transaction

• Square Fees: 2.60% + $0.15 

• Venmo Fees: 2.29% + $0.10 

And these fee structures are constantly changing, so make sure you check for email updates (they typically go up; weve never seen them go down). 

Optional (but recommended) - You’ll also want to confirm you can get insurance for your home-based bakery. FLIP insurance offers yearly policies that’ll protect you against lawsuits from slips and spills at client pick-ups. You might also be able to contact your homeowner’s insurance and see if they offer any add-on policies. Shop around! Insurance can get pricey. This will likely require the EIN number we got when we registered with our state. Budget about $150 - $200 per year for this cost.

Now we’ll need some marketing - to get started, let’s keep it cheap. Facebook Pages are the number one lead source for bakers right now, and they cost $0.00 to set up, so that’s where we’re going to start. You’ll want to create some general branding items like a cover photo and a logo image (Canva can help with this, or hire a designer on websites like Fiverr or Etsy to keep costs low). 

Using that Facebook page, see if you can join your local community groups on Facebook. Ensure you check the rules before pitching your product - you don’t want to get permanently banned for breaking the rules! 

Be consistent in your marketing - for more marketing tips, check out this article on getting started with your cottage bakery marketing here.

If you need help with the basics of setting up these accounts, our Bakers Business Basics Membership has the 13 foundational courses you’ll need to get started in the right direction when it comes to marketing and order intake. We kept it simple so you can keep your costs low, too!