Starting a bakery from home can be a great way to earn extra money on the side or be a lucrative full-time career. Find out how to start a bakery from your very own home in this article.

We’ll outline the basics of what you need to know to get set up and ready to take your first order, including:

  • How to set up your business legally
  • How to develop a food product
  • Dietary safety, preferences and allergens
  • How to advertise your new business
  • How to engage your target customers
  • How to budget for your business and manage your finances

Get ahead and grow your business faster using our guide for new home bakers and learn how you can save hundreds of hours back from your admin using accounting software solutions like Countingup.

How to set up your business legally

As a new baking professional, you’ll need to do two things to set up your new business: declare your new income to HMRC and meet the safety requirements for food establishments in your local area. We walk you through both below.

Registering as a sole trader

Starting a business is an exciting time for new entrepreneurs, and you have a few different options when establishing your business legally. Whatever route you choose is necessary as you’ll be able to declare the new income you’re receiving and pay any tax on your profits.

One of the quickest ways to become a sole trader: all you have to do is register for Self Assessment with HMRC. As you apply, you’ll need to verify who you are and disclose some information about your new business, like where you’re based and what your business is called. If you’d like help with this process, including how to avoid legal trouble from using someone else’s business name, read our article How to register as a sole trader.

It’s worth keeping in mind that this isn’t your only option. For example, if you have big growth plans, it may be a better idea in the long term to start a limited company instead. Learn more about the different advantages and restrictions each option might present to your business’ future in our article How to set up your business: Sole trader or limited company.

Getting food and home business licences before you operate

Whatever method you choose in setting up your business, you’ll need to register with your local authority for a food business licence as a new food provider. This step is vital as you’ll need to meet the requirements for food hygiene. Registering is free but make sure to register at least 28 days before opening to avoid fines or other legal trouble from operating an unregistered food business.

You may also need a home business licence if customers come to your home to pick up orders or make purchases. Similarly, if you plan on adapting parts of your home for things like storage, you may also need planning permission.

How to develop a food product

While the early days of your product development might involve lots of fun taste tests, there’s lots more to food businesses – especially the practicalities of scaled-up production and delivery once your baked goods are made. That’s not to say taste and presentation aren’t important, of course, but modern consumers are looking for other elements in their food purchases.

We’ve outlined the basic steps to develop your food products below. If you plan on specialising in baking for events like weddings or birthdays, your steps for larger production scales and best before labelling will differ slightly. 

Step 1: Experiment and perfect your recipes 

As a business, your aim is to make money, and with food products, you have two options: make customer favourites that everyone loves and/or experiment with new recipes to invite customer attention. Websites like Pinterest, Instagram and TikTok are where you’ll be able to see upcoming baking trends and flavour combinations that customers are excited to try. Therefore, it’s important to stay engaged with customer demand as it evolves.

Even if you already have several popular recipes, you’ll now need to perfect how they can scale when making larger quantities. Make sure to record your ingredients and processes accurately. While you might be skilled at making a few loaves or cakes within a day, there may be a point soon where you need to make even larger batches. Having this foresight now can help you create baked goods with consistent quality later.

Step 2: Measure how long your goods can last 

Once you have a menu of items available, you’ll now need to give them best before and use-by dates. Depending on what you’ve made, each food item will stay safe to eat for different amounts of time. For example, bread is safe to store at room temperatures for a number of days yet whipped cream on cakes is not. Therefore, you’ll need to provide customers with guidance indicating when they should enjoy your food before it’s too late.

If you’re new to this process, the UK’s Food Standard Agency has support available on hygiene and storage, along with online training courses.

Step 3: Plan how you’ll deliver or serve it to customers

This final step concerns how you’ll present your food to customers on delivery or for transport if they pick up purchases from your home.

In particular, you may want to consider how to keep goods chilled and up-right. Some items like bread will be easier as simple paper bags can be used. However, if you offer muffins or cakes, you’ll need to make sure any icing or fillings don’t leak or smear while they’re in transit. 

While they may still be perfectly safe to eat on arrival, customers may be disappointed with food items that no longer look like what they did when they were initially purchased. Therefore, investing in grease-proof and secured packaging may help your baked goods last longer until your customers can enjoy them.

Dietary safety, preferences and allergens

We’ve already discussed how you’ll need to make sure your food items are safe once they’re made by using best before and use-by dates. However, some customers have additional dietary needs and preferences. 

In general, you’ll need to make sure all your ingredients have gone through the necessary safety checks beforehand and are stored appropriately once they arrive. Specifically, major ingredients to consider are eggs that have been tested for salmonella and dairy products that have been kept chilled. Similarly, even dry ingredients like flour can have infestation problems with mites. Therefore, air-tight or otherwise sealed containers are easy ways in which you can ensure your food stock is kept sanitary and safe. 

However, allergies to eggs, nuts, gluten, and certain fruits can be a significant danger to some customers. As you’re preparing food, you’ll need to make sure that baking surfaces and allergen ingredients are kept separate – even considering the air surrounding your baked items as they’re being prepared. Where baked goods have certain allergens, you’ll need to label them as such in order to keep customers safe. Similar courtesies for vegan or vegetarian customers should also be followed in order to give your new business a good reputation.

Crucially, if you cannot guarantee that certain baked goods are completely free of allergens from when they were made (particularly nuts), it’s best to err on the side of caution and declare trace amounts to customers. The Food Standards Agency has advice and training on allergens for new food businesses available online.

How to advertise your new business

Home bakeries have several options for how they advertise to customers. You may find visual advertising is more effective as the quality of your food can be shown in its presence over social media or print. 

You can consider using platforms like Facebook, Instagram, Pinterest and TikTok to show off your tasty dishes and circulate advertisements relatively cheaply. As you’re starting out, you can begin taking simple photographs and videos of your food items to share and refine your social media marketing from there. Learn more about using social media in our guide How to use social media for business

If you plan on specialising in a certain area, especially wedding cakes, you may find attending trade shows or appearing in magazines can also help your business. This strategy relies on identifying a target market for your business (read more below); unfortunately, event and press access is often very expensive. Therefore, you may wish to wait until you’re more established until you use this advertising medium. Instead, don’t underestimate the power of more traditional methods like circulating flyers or providing free samples to get peoples’ attention. Read more about different advertising methods in our article How to advertise a small local business.

How engage your target customers

If your business is to be successful, you need to know your target customers well. Even if you’re already advertising on social media and building a decent following, identifying ways to speak directly to the people most interested in your business is vital. As previously mentioned, more targeted advertising like trade show attendance or print advertising can be used.

To know more about what sort of customers might enjoy the food you plan to make, and how to advertise to them effectively, you’ll need to conduct market research. Find out how to do this and more in our article What is a target market and how to define yours

Once you have your target market established, you’ll then need to use this information effectively in order to build your business. Learn more about marrying your target market information to your business advertising in our article How to create a marketing strategy for small businesses.

How to budget for your business

Every business needs a budget –– and small businesses are no exception. Using one, you can make sure your new venture makes every penny count and maximises your future profits. Budgeting for business is a fairly standard practice, which is why we’ve got advice available in our article How to budget for starting a business

Home baking businesses need to pay close attention to their overall profits. While new businesses often lose money for their first few months while they set up, they manage to grow to a size where they make a profit again. However, many hospitality and food businesses operate on thin profit margins. It’s therefore vital to your success that you can work out how strategy and investment changes to your business affect your profits. Learn how to calculate your business’ profit rates with our article How to calculate profit margin.

Additionally, as your business grows, you may have more demand on your household appliances like mixers and ovens. As these are essential to your business, along with the energy it takes to run them, you can claim them as expenses on your taxes. Learn more about claimable expenses for your business here, along with dedicated advice on expenses from home businesses here in order to maximise your profits.

Keep your finances organised easily with a simple app

When starting a business, bookkeeping can seem like a daunting subject – especially if you’re unfamiliar with accounting practices and tax compliance standards. 

However, built for small business owners, the Countingup app is the two-in-one business current account and accounting software solution. The Countingup app automates time-consuming bookkeeping admin, giving you more time to focus on growing your business, meeting customer demand and finessing your advertising.

Countingup provides key business tools like automated invoicing and receipt capture reminders so that you can easily keep organised records when you’re on the go. You can also take advantage of the real-time profit and loss reporting feature so you can get insights into your business at any moment, and enjoy tax estimates on your profits so you’re not caught out by a tax bill at the end of the year.

Gain complete confidence in your new business’ financial records. Find out more about Countingup here and sign up for free today.