How to Start a Cottage Food Business in Texas: Rules, Labels, and Taxes

To start a cottage food business in Texas, you need a food handler’s certificate, products that fall outside the state’s short list of prohibited foods, compliant labels on everything you sell, and, if you plan to sell temperature-sensitive items, a free registration with the Department of State Health Services. You can earn up to $150,000 in annual gross revenue this way without a commercial kitchen, health department inspection, or local license. The rest is knowing where you can sell, how to handle taxes, and how to protect yourself from liability your homeowners’ policy won’t cover.

Confirm Your Products Are Allowed

Texas rewrote its cottage food rules to work by exclusion rather than by approved list. Under Health and Safety Code Chapter 437, almost any food made in your home kitchen qualifies, with six prohibited categories.¹ You cannot sell:

Meat and poultry products, or anything containing them, including jerky and pickled eggs
Fish, shellfish, and seafood products
Frozen desserts and ice products: ice cream, frozen custard, gelato, popsicles, and shaved ice
Low-acid canned goods that don’t meet acidity requirements for shelf stability
Any food containing CBD or THC
Raw milk and products made from it

Everything else is on the table: baked goods, candy, jams, pickled vegetables, fermented foods, dried herbs, roasted coffee, granola, popcorn, and even frozen uncut fruits and vegetables as long as they stay raw and unprocessed.²

Get a Food Handler’s Certificate

Before you sell anything, complete a food handler course from a state-accredited training program. Courses are widely available online and typically run $10 to $20. Your certificate is valid for two years, and you’re required to keep it on file at the home where you produce food.²

If your products include pickled or fermented vegetables, plan on additional recordkeeping. Keep your recipes on file along with pH test results for each batch, and confirm the finished product has an equilibrium pH of 4.6 or below.¹

Register with DSHS if You Sell TCS Foods

Texas now permits cottage food producers to sell foods requiring temperature control for safety, known as TCS foods. That covers items like custard-filled pastries, cream cheese frostings, and quiche. If any of your products fall into this category, you must register with the Department of State Health Services through its online portal. Registration opened September 1, 2025, and costs nothing.²

Registered operations get a unique DSHS identification number that you can put on your labels in place of your home address. That’s a real benefit if you’d rather not print where you live on every package.

TCS foods carry stricter handling rules. Cold items must stay at or below 41°F, hot items at or above 135°F, both in storage and during delivery. You also can’t wholesale TCS foods to a cottage food vendor or donate them. Shelf-stable products aren’t subject to those restrictions.²

Label Every Product Correctly

Each item must be individually packaged to prevent contamination, and every package needs a label with:

Your business name
Your home address or, if registered, your DSHS ID number
The common name of the product
Any major allergens present: eggs, tree nuts, soy, peanuts, milk, wheat, sesame
The disclaimer, in exact wording: “THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE THAT IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION.”

All text must be legible and in English. For items too bulky for conventional packaging, put the required information on a receipt or invoice given to the buyer instead.²

Certain products carry extra requirements. Pickled fruits and vegetables, fermented vegetable products, and plant-based acidified canned goods each need a unique batch number. TCS foods must show the date the food was made and include a 12-point safe-handling statement: “SAFE HANDLING INSTRUCTIONS: To prevent illness from bacteria, keep this food refrigerated or frozen until the food is prepared for consumption.” Frozen fruits and vegetables need a similar statement telling the buyer to keep the food frozen until preparation.²

Know Where You Can Sell

Texas gives cottage food producers a lot of room. You can sell directly to consumers from your home, at farmers’ markets, at farm stands, and at virtually any other location in the state, as long as the sale is direct from you to the buyer.¹

You can take orders online, but delivery has to be in person: by you, someone in your household, or an employee. Shipping through the mail or a delivery service isn’t allowed. All sales must happen inside Texas; no crossing state lines.²

Recent law also created a “cottage food vendor” category: a Texas person or business that contracts with you to sell your products on your behalf at farmers’ markets, farm stands, food service establishments, and retail stores. Vendors who buy your products wholesale must register with DSHS. Only shelf-stable products qualify for wholesaling to a vendor. Products sold this way must include the production date on the label.²

Stay Under the $150,000 Cap

Your annual gross revenue from cottage food sales can’t exceed $150,000. DSHS adjusts the cap each year for inflation using the Consumer Price Index, so it may edge up over time.¹ Cross it, and you’re no longer a cottage food operation under the law. That means a commercial food manufacturer’s license and the facility requirements that come with it. Keep clean financial records year-round so you always know where you stand.

Handle Taxes and Business Setup

Cottage food income is self-employment income. Report your net profit on Schedule C of your federal return, and if you expect to owe $1,000 or more in federal tax, plan on quarterly estimated payments to avoid penalties.

Most food sold in Texas is exempt from sales tax, but some categories like candy and soft drinks are taxable. If you sell any taxable items, get a Sales and Use Tax Permit from the Texas Comptroller before you collect tax from customers.³ Contact the Comptroller’s office if you’re not sure whether a specific product is taxable.

A sole proprietor with no employees can use a Social Security number for tax purposes and doesn’t need a federal Employer Identification Number. You’ll need an EIN once you hire anyone or form an LLC. To operate under a business name different from your legal name, file an assumed name certificate (a DBA) with your county clerk. Filing fees vary by county but are usually modest.

Get Product Liability Insurance

Most new cottage food producers overlook this, and it’s the biggest gap. Homeowners’ and renters’ policies almost always exclude business activities, so if a customer gets sick and files a claim, your personal policy will likely deny coverage.

Product liability insurance built for food businesses closes the gap. The Food Liability Insurance Program, widely used by cottage food producers, offers coverage starting around $299 per year for operations under $50,000 in sales and $399 for higher-volume sellers. Standard policies typically provide $1 million per occurrence and $2 million in aggregate. Many farmers’ markets require vendors to carry liability insurance and name the market as an additional insured, which usually runs another $50 to $100 per year.

It isn’t legally required in Texas. Going without it is a gamble that grows with your sales, and a single foodborne illness claim could easily exceed the personal assets of most home producers.

Check Local Zoning and HOA Rules

State law prohibits local governments from regulating cottage food production operations, requiring licenses or permits, or charging fees for producing or selling cottage food.¹ That protection is real, but narrow. Your city or county can still apply general home occupation rules covering signage, customer traffic, parking, and outside storage to any home business, cottage food included. Check with your local zoning office before you start selling from your front door.

Homeowners’ associations are a separate matter. State law does not stop HOAs from enforcing deed restrictions or community rules against home-based businesses. If your covenants prohibit commercial activity or set conditions on it, those restrictions still apply. Read your HOA rules before you invest in equipment or inventory.

Quick-Start Checklist

Complete a food handler course from an accredited program and keep the certificate on file
Confirm none of your products fall into the six prohibited categories
Register with DSHS through the online portal if you plan to sell TCS foods
Design labels with your business name, address or DSHS ID, product name, allergens, and the required disclaimer, plus batch numbers and safe-handling statements where they apply
Check local zoning rules and your HOA covenants before you launch
Set up recordkeeping to track revenue against the $150,000 cap and pH results for pickled or fermented products
Buy product liability insurance sized to your sales volume
File a DBA if you’re using a business name, apply for a Sales and Use Tax Permit if you sell taxable items, and plan for self-employment tax on Schedule C

1
State of Texas. Texas Health and Safety Code Chapter 437 – Regulation of Food Service
2
Department of State Health Services. Texas Cottage Food Production
3
Texas Comptroller. Sales Tax Permit Requirements