Covid Entrepreneurs: The Home Kitchen
During the pandemic, everyone experienced struggles one way or another, but one especially notable problem was the number of restaurants that were unable to survive. At this same time, many individuals went out looking for side business to create a second stream of income, and a seemingly popular side hustle has been entering into the home-based kitchen business. These side businesses vary from items as simple as a family cookie recipe while others offered full dishes for carryout or catering.
Personally, I have seen an increase in individuals using Facebook or Instagram to sell their baked goods and other family recipes, and I have spoken with several prospective clients about their home kitchen operations to advise them on legal implications of home kitchen businesses. Home kitchens sometimes fall under Cottage Food Laws, which do not require significant regulatory or compliance work, but unfortunately for these home kitchens, there are many more requirements to follow than simply operating out of a residential kitchen. It’s important to understand the basics of operating a legal residential kitchen to ensure that you do not open yourself up to fines, penalties, or other liabilities.
Cottage Food Laws exist in many states now, and while they do offer valuable exemptions to small businesses preparing food from a home kitchen; the law’s application is often confused. The benefit of a home-based kitchen is its exemption from the South Carolina Department of Health and Environmental Control’s (“DHEC”) regulations, which can be a substantial undertaking for a business in its early stages.
The Home-based Kitchen laws in South Carolina require that foods be prepared at your home kitchen while also taking various precautions set under South Carolina Code Ann. § 44-1-143. Additionally, the home-based food laws have strict limitations regarding, which foods may be prepared and require the goods to be sold directly to the customer rather than to wholesalers for resale. These acceptable foods are referred to as non-potentially hazardous foods.
Non-potentially hazardous foods are limited primarily to candy, baked goods, and also other nonperishable items. Potentially hazardous foods are most widely known as time/temperature control for safety foods (“TCS Foods”), and the most common types of TCS foods include meat products, eggs, fish and shellfish, dairy, cream or custard, cooked vegetables, potato dishes, protein-rich plants, raw sprouts, cut leafy greens, cut garlic in oil, and sliced melons and tomatoes.
The requirement for home-based kitchens to avoid TCS Foods severely limits its ability to offer a variety of foods but still cuts out a small exemption to allow for small businesses to begin limited operations. The best example of a type of business properly taking advantage of Cottage Food laws are bakeries. Other types of kitchens also permitted under home kitchen laws are those making candy, dried fruit, dried pasta, and other non-perishable items.
While these Cottage Food Laws provide opportunities for a simple startup, the exemption from DHEC regulations create a substantial risk of individuals believing their kitchen is compliant with local and state laws by simply operating out of your home. This is a problem I have noticed on a regular basis as home kitchens have been more noticeable on social media advertising their sale of foods such as empanadas, dumplings, and other specialty dishes that contain meats and other potentially hazardous foods. All of these foods require that you have an approved commercial kitchen by DHEC.
When a home cook steps outside of the non-TCS foods allowed, the individual brings its business and self into the regulation of DHEC. From here, DHEC may find that you are illegally operating a food establishment failing to meet safety and health guidelines while also operating without a permit. These violations can result in fines, penalties, and even shutting down your business.
In addition to navigating the home-based kitchen laws, businesses should be careful to follow state and local laws and also protect themselves from liabilities where it’s possible. While the home-based kitchen laws are set up so that as long as you don’t break the rules, you will remain in compliance, you should always look into forming LLCs, obtaining local licenses, and organizing your other legal bases. If this area is foreign to you, it is recommended that you at least consult an attorney to understand if you need assistance immediately or if you can operate under Cottage Food Laws before undertaking significant steps in applying for DHEC licensing.
George Fowler is an associate attorney at Henderson & Henderson, LLC focusing on business law. Contact him directly with any of your business concerns or by calling Henderson & Henderson at (843) 212-3188.