An online food sale is one of the ways through which one can make a living using their cooking and baking skills. Ranging from homemade cookies and jams to pre-packaged snacks and other food products, many businesses are established through such online sales. Yet, there are various aspects of business operation and regulations that need to be considered when engaging in such activities.
Thus, the question arises whether it is necessary to have a business license to sell food online in the US. In most cases, yes, but the requirements differ from state to state, city to city, and county to county and depend on the kind of food sold and its preparation place. In this blog, we will cover the licenses and permits required, food handling procedures, labeling, and penalties for selling food online illegally in the USA.
Why Do You Need a License to Sell Food Online?
The reasons behind the regulation of food businesses lie in the fact that these businesses affect people's health and well-being. Even if you conduct your activities from your home kitchen, you still might be required to adhere to certain local business and food safety regulations.
Knowing about these regulations ahead of time will allow you to avoid possible penalties and other troubles. Food safety regulations can vary greatly from one state or locality to another, and you need to know what is required where you live.
Business Registration and Licensing
Before selling food products, you will normally have to set up your business and know what licenses you will need at the local level. Your business setup can depend on various factors; you can be operating as either a sole proprietorship, an LLC, or a partnership. The LLC can offer you liability protection, while the sole proprietorship setup tends to be easier to set up.
Your EIN will come handy if your setup requires you to have one. Also, most cities and counties demand that you get a business license. Most states demand that even home-based businesses acquire a business license.
Cottage Food Laws
If you want to make some particular low-risk food items in your own kitchen at home, then depending upon the laws of your state, you may be eligible for cottage food laws. Cottage food laws are those laws which are made in order to enable the people to manufacture and sell particular types of food items without using any commercial kitchen at all.
Some common examples of food items that can be manufactured using cottage food laws include bakery items, jams, jelly, candy, popcorn, granola, and dry mixes.
What Licenses and Permits May You Need?
The permits needed for an online food business will mostly be influenced by what you are selling and how you prepare your foods. A business that sells shelf-stable cookies at home may have totally different permit requirements compared to a business that sells refrigerated meals or meats.
Food Handling Permits
Cottage food laws may not be enough for your business if you sell chilled, frozen, or ready-to-eat products. You may require food establishment permits, food handlers permits, health department approval, or inspections of the facility where the food is being made.
This may be applicable to those businesses that sell ready-made meals, meals kit, dairy products, meats, seafood, and chilled sauces. In cases where you use a leased commercial kitchen, there will be more health and facility requirements.
Federal and Interstate Requirements
When selling food in another state, there might be other regulations that must be taken into account. The regulations can be influenced by the type of food, packaging, production location, and transportation.
If you sell your products on platforms like Etsy, Shopify, Amazon, Facebook Marketplace, or your own website, you should also make sure you know what is required of food sellers on these platforms. They might ask for some documentation or other information.
What Are the Food Labeling Requirements?
Acquiring a proper license or permit is just one aspect of conducting an appropriately legal food business. The labeling of food products is necessary because the customers should know what they are buying or eating when shopping for food online.
The labeling of your product becomes especially important in cases where there are packaged foods because the customer might be allergic to certain foods or cannot eat certain foods due to a health issue.
Information on Food Labels
Labeling the food can require you to give the name of the food, list of ingredients, declaration of major allergens, net weight, as well as the name and address of the business. Cottage food product labeling requires labeling the product to inform consumers that the product was made in a home kitchen where it is mandated by state law.
The labeling must be clear and understandable. Not providing the required information will pose compliance issues even when the proper business license is in place.
Online Product Descriptions
The description of your products in the online listings must match the food you are selling. The list of ingredients, any allergens, package size, storage conditions, etc., must be consistent with what is stated on the package itself.
It is even more important in the case of selling refrigerated foods and/or foods with short shelf life. This will give you the chance to make sure the customers know the right way to store the orders.
What Happens If You Sell Food Without a License?
Small does not always translate to no need for licensing. Someone who is selling some goods from the comfort of his house can be affected by various business and food regulations at state and local levels.
Fines and Business Penalties
If found guilty of conducting the business without the required licenses or permits, one may face fines or even penalties. In extreme cases, authorities can order the business to cease operations until the requirements have been met.
The cost may prove to be far greater than the cost of getting the proper license in the first place. This is why taking time to know your responsibilities before starting the business is a good idea.
Food Safety and Liability Risks
Similarly, food businesses must ensure that their customers are not exposed to any harmful food products. Should a consumer fall sick after eating your product, the lack of proper licenses or food safety practices can lead to bigger liabilities.
This is because food safety and compliance cannot merely be considered paperwork. Food businesses should handle, store, package, label, and license foods responsibly.
How Can You Start Selling Food Online Legally?
It is easier to start your online food business when you deal with all the compliance issues before placing your first order. First, you need to establish what foods you are going to sell and where these foods will be prepared. Next, it will help if you find out about the business licensing and food permits required by the government. When shipping products across state lines, check different compliance requirements for them separately from your local ones.
Check State and Local Requirements
It is possible that you might be having particular laws on cottage foods or food establishments in your state while the city or county in which you reside may have certain regulations for doing a business.
Make sure to contact the relevant department at your state or local level prior to starting the food business. It would be wise to keep copies of all licenses, registrations, and certifications that you might need in future.
Follow Platform and Shipping Rules
These websites can each have their own regulations regarding the food items. Prior to uploading your products, you will need to check these sites' requirements related to documentation, product description, packaging, shipping, and prohibited foods.
Your packaging and shipping methods should be selected according to your food. Certain foods might need controlled temperature shipment, while others would not.
Final Thoughts
Selling food through the internet can become a realistic chance for home-based entrepreneurs, side gigs, and even food establishments. Nevertheless, owning an online store does not mean that one is free from any food-related legislation when selling food. Whether one will need a business license, food permit, cottage food registration, food handler certification, or something else depends on particular circumstances.
Does one have to get a business license to sell food online in the USA? It would be correct to say that in most cases, there will be some sort of registration or licensing needed, but the specific rules may vary depending on the region and nature of the product.
