Starting a Home Based Bakery Business
Starting a Home Based Bakery Business in India
The bakery and baked goods business in India has witnessed massive growth over the last few years backed by a strong demand for processed foods. In addition to increase in number of stores of established bakery chains and individual bakeries, bakery business has been taken up as a home based business by many a number of women entrepreneurs. Establishing a bakery business requires very minimal capital investment and manpower, making it a very for homemakers and students. In this article, we look at procedure for starting and operating a home based bakery business in India.
Many of the small, independent bakeries have been setup as either a proprietorship or partnership and are classified as unorganized. Bakery chains would be setup as a private limited company or limited company to help scale-up and access various sources of funding.
Limited Liability Protection: For a home based bakery business, it is best to start a limited liability partnership (LLP) or a one person company (OPC). Both LLP and OPC offer limited liability protection for the promoters of the business, which is an important aspect for any food business. The Food Safety and Standards Authority of India prescribes heavy penalty for any any contravention to the FSSAI rules; thus, operating as a LLP or OPC can help mitigate limit risks in operating a food business.
Transferability: To operate a bakery, a food business operator license, VAT registration and trademark registration would have to be obtained. With a LLP or OPC, all these registration would be obtained in the name of the business, thereby making the business easily transferable to another person with all the licenses and registration required to continue to maintain the business.
Minimal Compliance: Both LLP and OPC require lesser compliance related formalities when compared to a private limited company, making it the ideal choice of entity for a small business operated from home.
Food Business Registration
FSSAI Food Business license is required for any person or entity involved in food manufacturing or processing or packaging or distributing. Having a FSSAI food business license will also help the bakery sell baked items to retail chains, which insist on its vendor having FSSAI licenses. Moreover, operating a food business without a valid FSSAI license attracts stringent penalty of imprisonment of upto six months and a fine of not more than five lakh rupees.
VAT registration or TIN Number is required for any business that is involved in the sale of goods or products. Baked goods are taxable under VAT. Hence, VAT registration must be obtained from the local sales tax authorities for even those operating a home based bakery business.
Trademark registration is one of the cheapest and easiest to obtain registration for any business. Trademark registration would protect the brand of the business and can help create a unique identity for the business. Many of the successful bakery businesses establish a strong social media presence for marketing its products. Some good examples of a bakery having a good social media presence are:
In such instances, its important to have a trademark registration to ensure that the brand is not abused or used by unauthorized personnel. Further, trademark registration costs just Rs.6000 through IndiaFilings and could protect the brand for 10 years, making it very essential for operating a successful bakery business.