North Carolina’s cottage food laws let you make and sell shelf-stable, low-risk foods out of your home kitchen once the North Carolina Department of Agriculture and Consumer Services (NCDA&CS) inspects and clears your setup. The state calls this “home processing.” There is no fee, and no permit is issued. What you get instead is a Notice of Inspection, and that document is your proof you’re cleared to sell.
Foods You Can Make at Home
Only shelf-stable products qualify. If it needs refrigeration or freezing to stay safe, you can’t make it in a home kitchen. The categories NCDA&CS allows include:
- Jams, jellies, and preserves processed to be shelf-stable.
- Baked goods like cookies, breads, and muffins, as long as they don’t contain cream, cream cheese, or custard fillings.
- Candies that stay stable at room temperature, such as fudge, brittles, and caramels.
- Dried mixes and spice blends, including cake mixes, drink mixes, and seasonings.
Cheesecakes, cream-filled pastries, and any baked goods with perishable fillings are specifically prohibited.1NC Agriculture. Food & Drug – Food Program – Home Processor Meats, dairy products, and frozen foods are also excluded.
Pickles, salsas, fermented vegetables, and other acidified foods fall outside home processing entirely. Federal rules require acidified food producers to complete an FDA-recognized Acidified Foods Manufacturing School, keep pH records for every batch, and hit a finished pH of 4.6 or lower.2Food and Drug Administration. Acidified Foods If those products are your goal, you’ll need a licensed commercial kitchen instead.
The Pet Rule
This is the disqualifier that catches people. If you have any pet in your home, you cannot operate as a home processor. It doesn’t matter whether the pet is kept in a different room during production, or only comes inside at night. The NCDA&CS enforces this strictly, and inspectors check for it. If you have indoor pets and want to move forward, you’ll need to arrange for them to live elsewhere before applying.
Where You Can Sell
North Carolina is unusually generous on sales channels. As a home processor you can sell directly to consumers from your home, deliver to customers, bring products to events like weddings and birthday parties, set up at farmers markets, sell wholesale to retail stores and restaurants, and ship through USPS, FedEx, and similar carriers.1NC Agriculture. Food & Drug – Food Program – Home Processor Many states restrict cottage food to in-person sales only; NC does not.
NCDA&CS guidance also does not reference an annual sales cap. States commonly limit cottage food revenue to $25,000 or $50,000 per year, but no such ceiling appears in the North Carolina rules.
Labeling Your Products
Whether you need a full label depends on how the product changes hands. Labels are required when items are individually packaged for self-service, sold wholesale to stores or restaurants, or shipped to customers. When you hand a product directly to a consumer at a farmers market from behind the counter, or during a delivery, a label isn’t required, but you must have ingredient information available on request.1NC Agriculture. Food & Drug – Food Program – Home Processor
When a label is required, it must include:
- The common name of the product, such as “Blueberry Jam” or “Chocolate Chip Cookies.”
- Your full name and home address as the manufacturer.
- Net contents in both U.S. customary units and metric units.
- A complete ingredient list in descending order by weight.
Federal law also requires that you declare all nine major food allergens if they appear in your product: milk, eggs, fish, crustacean shellfish, tree nuts, peanuts, wheat, soybeans, and sesame.3Food and Drug Administration. Food Allergies Errors here can lead to product seizure and, more seriously, real harm to a consumer.
A Nutrition Facts panel usually isn’t needed. Businesses with fewer than 100 full-time equivalent employees selling fewer than 100,000 units of a product annually can claim an FDA exemption by filing an annual notice, and retailers with annual gross food sales of $50,000 or less are exempt without filing.4U.S. Food and Drug Administration. Small Business Nutrition Labeling Exemption Nearly every home processor falls well inside those limits.
Getting Approved
The approval process runs in three parts: gathering documentation, submitting an application, and passing a kitchen inspection.
Documents to Gather First
If your home runs on a private well, get the water tested for coliform bacteria and E. coli before you request an inspection.1NC Agriculture. Food & Drug – Food Program – Home Processor Your local health department or a certified lab can handle the testing. On municipal water, a recent water bill is enough. If the bill goes through a leasing office or HOA, a letter from that party confirming your water service works too.
Check with your local planning or zoning department to confirm that a home-based food business is allowed at your address. Some municipalities restrict commercial activity in residential zones, and it’s cheaper to find out now than after you’ve built out your kitchen.
You’ll also need a detailed list of every product you plan to make, with product names, full ingredient lists, and the suppliers you buy from, plus sample labels for anything you’ll sell in a labeling-required channel.1NC Agriculture. Food & Drug – Food Program – Home Processor
Application and Inspection
Submit the completed Home Processor Application by email to homeprocessing@ncagr.gov or by mail to the NCDA&CS Food and Drug Protection Division. Staff review your product list and label samples to confirm your products qualify and your labels meet the requirements. This review can run several weeks, so don’t plan a launch date around it.
After the review, a food regulatory specialist schedules a physical inspection of your kitchen. The inspector looks at layout, sanitation, water source documentation, and storage. The standard is essentially the same one applied to commercial food manufacturers.
If your kitchen passes, the inspector leaves you with a copy of the inspection report and a Notice of Inspection.1NC Agriculture. Food & Drug – Food Program – Home Processor That notice is your proof of compliance. Do not begin selling before you have it in hand.
Taxes You’ll Owe
The IRS treats home food production as a business, so you report the income. Revenue and expenses go on Schedule C (Form 1040), the standard form for sole proprietors.5Internal Revenue Service. About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) Ingredients, packaging, labels, equipment, farmers market booth fees, shipping, and delivery mileage are all deductible.
On top of income tax, you’ll owe self-employment tax for Social Security and Medicare on your net profit. That’s an additional 15.3%, and it surprises new sellers who came in thinking of their farmers market income as pocket money. Once your annual tax liability passes $1,000, quarterly estimated payments are typically required.
The home office deduction is limited for cottage food operators. The kitchen itself rarely qualifies because it’s shared with regular family cooking, and the deduction has a strict “exclusive use” requirement. Inventory storage is the exception. A dedicated pantry, closet, or shelf used only for business ingredients and finished product can be deducted without meeting the exclusive use test, provided your home is the only fixed location of your business.6Internal Revenue Service. Topic no. 509, Business Use of Home
Product Liability Insurance
North Carolina does not require home processors to carry product liability insurance. Operating without it is still risky. If someone has an allergic reaction to your product or claims they got sick from it, you’re personally on the hook for medical costs and damages, and a standard homeowner’s policy almost never covers commercial food production.
Basic cottage food policies generally start around $300 per year and cover third-party injury, property damage, and legal defense. Some farmers markets and retail buyers require proof of insurance before they’ll let you sell, so you may end up needing a policy either way. Coverage limits and terms vary, so compare a few quotes before you buy.