How to Start a Home Baking Business in Ontario: Step-by-Step Guide + Funding Options

According to a recent report by Statistics Canada, home-based businesses are on the rise, with over two million Canadians working from home. This trend is particularly strong in Ontario, where the number of home-based businesses has increased by 14.6% over the past decade.

One of the main advantages of starting a home-based baking business is the flexibility it provides. You can work from the comfort of your own home, set your own hours, and avoid the costs associated with renting commercial space.

Additionally, starting a home-based business can be a great way to turn a hobby into a profitable venture.

However, there are also challenges associated with starting a home-based baking business. One of the biggest challenges is managing the balance between work and home life.

When your workplace is also your home, it can be difficult to separate the two, leading to feelings of burnout and stress. Another challenge is ensuring that your home kitchen meets the health and safety standards set by the Ontario Ministry of Health.

Here’s how you can start your own home-based baking business:

Step 1: Check the Regulations

Home-based food businesses (e.g. private chefs, farmer’s market vendors) are allowed to sell food in keeping with the Health Protection and Promotion Act and the Food Premises Regulation, Changes to the Food Premises Regulation that took effect on January 1, 2020 makes it easier for individuals and businesses to sell low-risk, home-prepared foods.

To check regulation: 

  • Determine the type of baked goods you want to sell: Depending on the type of baked goods you want to sell, there may be specific regulations that you need to follow. For example, if you plan to sell gluten-free baked goods, you will need to comply with specific labeling requirements.
  • Determine the scale of your operation: The scale of your operation will also impact the regulations you need to comply with. If you plan to sell your baked goods directly to consumers, you will need to comply with regulations that cover home-based businesses. If you plan to sell your baked goods to retail stores or restaurants, you will need to comply with additional regulations.
  • Contact your local health unit: You are required to contact your local public health unit where your home-based food business will be located to let them know you are a new food operator. Your local public health unit and its staff will provide guidance on food safety measures to consider depending on the food you are planning to prepare (i.e., food preparation activities, safe operational practices, etc.) 
  • Contact your local municipality: Your local municipality may have specific regulations that you need to comply with. For example, you may need to obtain a home-based business permit or a zoning permit.

Step 2: Develop a Business Plan

It is always a good idea to develop a business plan before starting any business. A business plan will help you identify your goals and objectives, and create a roadmap for how you plan to achieve them.

It will also help you determine the feasibility of your business idea, identify your target market, assess your competition, and determine your pricing and marketing strategies.

Follow these steps to create a business plan for your baking business:

  • Executive summary: The executive summary is a brief overview of your business plan. It should describe your business, products and services, target market, competition, and financial projections.
  • Business description: This section should provide an overview of your business, including your vision, mission, and values. You should also describe your products and services, pricing strategy, and unique selling proposition.
  • Market analysis: This section should analyze your target market, including demographics, buying behavior, and needs. You should also analyze your competition and identify opportunities to differentiate your business.
  • Marketing and sales strategy: This section should describe how you plan to market and sell your products. It should include a description of your marketing channels, such as social media, website, and advertising. It should also describe your sales strategy, including how you plan to reach your target customers and generate revenue.
  • Operations plan: This section should describe the day-to-day operations of your business, including how you will produce your products, manage inventory, and fulfill orders. You should also describe the equipment and supplies you need, as well as any staffing requirements.
  • Financial plan: This section should include a detailed financial projection of your business, including revenue, expenses, and profits. It should also include a break-even analysis and a cash flow statement.
  • Conclusion: The conclusion should summarize your business plan and emphasize your business’s strengths and potential for success.

Step 3: Register the Business Name

In Ontario, businesses are required to register their business name with the government. By registering your business name, you can ensure that you have exclusive rights to use that name within your industry and geographic location.

Additionally, your business name is an essential part of your branding. It’s the first thing that potential customers will see and remember about your business.

To register a business name:

  • Choose a business name: Choose a unique and memorable business name that reflects your brand and the products you offer. Ensure the name is not already in use by checking the availability of the name with the Ontario government.
  • Search for availability: Conduct a business name search through the Ontario government’s Business Name Search tool. The search will tell you if your chosen name is available or already in use.
  • Register the business name: Register your business name with the Ontario government. You can do this by filing a Business Name Registration form with the government.
  • Consider registering for a trademark: Consider registering your business name as a trademark to protect your brand and ensure that nobody else can use it.
  • Check for domain availability: Check if the domain name for your business is available. It is recommended to have a domain name that matches your business name to establish a strong online presence.
  • Update your business records: Once your business name is registered, update your business records, including your bank account, invoices, business cards, and website, to reflect your new business name.

Step 4: Obtain the Necessary Permits and Licenses

By obtaining the appropriate licenses and permits, you can ensure that your business operates legally and safely. Failing to obtain the necessary licenses and permits can result in fines or even the closure of your business.

It’s important to note that the specific licenses and permits you need will depend on the size and scope of your business, as well as your location within Ontario.

You can contact ServiceOntario or your local municipality for more information on the specific requirements for your home-based baking business.


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    Here are some of the permits and licenses you can obtain:

    • Business registration: You must register your business with the Ontario government by obtaining a Business Identification Number.
    • Business license: You may need to obtain a municipal business license from local health unit as well as your local municipality, depending on where you live and operate your business.
    • Food handler certification: You must have a food handler certification if you prepare and sell food products in Ontario. The certification is mandatory for all individuals who handle food, including baking and preparation.
    • Health inspection: Your kitchen must undergo an inspection by your local public health unit to ensure it meets health and safety standards. You must also maintain proper sanitation and food handling practices.
    • Sales tax permit: If you sell baked goods, you must obtain a Sales Tax Permit from the Canada Revenue Agency to collect and remit the Harmonized Sales Tax or Goods and Services Tax.
    • Home occupation permit: If you operate your business from your home, you may need to obtain a Home Occupation Permit from your local municipality. This permit ensures that your business activities comply with local zoning bylaws and do not disturb your neighbors.

    Step 5: Obtain Insurance

    As a business owner, you face certain risks and liabilities that can result in financial loss. For example, if a customer gets sick from eating your baked goods, you could be held liable for damages.

    Insurance can help protect you from these risks and provide peace of mind. Depending on the nature of your business, you may need to obtain different types of insurance coverage.

    To obtain appropriate insurance:

    • Assess your business risks: Determine the types of insurance coverage you need by assessing the risks involved in your business operations.
    • Commercial General Liability Insurance: This type of insurance provides coverage for property damage or bodily injury to a third party that may arise from your business operations. For example, if a customer becomes sick after eating your baked goods and sues your business, general liability insurance can cover the legal fees and settlement costs.
    • Product Liability Insurance: This type of insurance provides coverage for claims arising from defective or harmful products that you sell. It can protect you from potential financial losses if a customer suffers an illness or injury due to consuming your baked goods.
    • Home-Based Business Insurance: This insurance is designed specifically for home-based businesses and provides coverage for property damage, theft, and business interruption. It can also cover equipment and supplies used for business purposes.
    • Automobile Insurance: If you use a vehicle for business purposes, you should consider commercial auto insurance. This type of insurance provides coverage for accidents and other damages that may arise while using the vehicle for business purposes.
    • Research insurance providers: Research and compare insurance providers that offer coverage for home-based businesses in Ontario. You can do this by checking online reviews and ratings, asking for recommendations from other business owners, or contacting a licensed insurance broker.
    • Request a quote: Contact the insurance provider or broker and request a quote for the type of coverage you need. Provide them with detailed information about your business, including the products you offer, revenue, and location.
    • Compare quotes: Compare quotes from multiple insurance providers to find the most suitable coverage for your business needs and budget.
    • Purchase insurance: Once you have chosen an insurance provider and coverage, purchase the insurance policy. Ensure that you carefully review the policy details and understand the coverage and exclusions.
    • Maintain your insurance: Maintain your insurance coverage by paying your premiums on time and updating your coverage as your business evolves.

    Step 6: Purchase Baking Supplies and Equipment

    Being careful when purchasing baking supplies and equipment for your home-based baking business can help you produce better products, operate more safely, manage your expenses more effectively, and work more efficiently.

    Here are some things to consider while making these purchases:

    • Determine your needs: Determine the type and quantity of baking equipment and supplies you need based on the products you plan to offer. Make a list of essential items and prioritize them based on your budget and business needs.
    • Research suppliers: Research and compare suppliers of baking equipment and supplies. You can do this by checking online reviews and ratings, asking for recommendations from other business owners, or visiting local stores.
    • Compare prices: Compare prices of equipment and supplies from multiple suppliers to find the best deals. Consider the quality of the products and the supplier’s reputation when making your purchase.
    • Purchase equipment and supplies: Purchase the equipment and supplies you need. Ensure that you have a reliable source for ongoing supply of ingredients and materials.
    • Set up your workspace: Set up your workspace and organize your equipment and supplies for maximum efficiency and productivity.
    • Test your equipment: Test your equipment before starting production to ensure that everything is in working order and meets your needs.
    • Maintain your equipment: Maintain your equipment regularly to ensure it stays in good working condition. Follow the manufacturer’s instructions for cleaning and maintenance to prolong the lifespan of your equipment.

    Step 7: Promote Your Business

    Even if you have a great product, if people don’t know about it, they won’t buy it. Promoting your business can help you create awareness, generate interest, and attract new customers.

    Promoting your business can also help you establish a reputation for quality and reliability. By consistently delivering high-quality products and excellent customer service, you can create a positive reputation that can help you attract new customers and grow your business.

    To promote your business:

    • Create a website: A website is an essential tool for any business, and it will allow you to showcase your products and services to potential customers. Make sure your website is easy to navigate and visually appealing. Include a menu, pricing, and contact information.
    • Use social media: Social media platforms like Facebook, Instagram, and Twitter can be powerful tools for promoting your business. Use these platforms to share pictures of your baked goods, announce new products or promotions, and interact with customers.
    • Offer samples: One of the best ways to attract new customers is by offering samples of your baked goods. You can offer samples at local events or farmers’ markets, or even in your local community.
    • Network with other businesses: Networking with other businesses can help you build relationships with other professionals and potential customers. Attend local business events, join local business groups, and participate in online forums related to your industry.
    • Offer discounts: Offering discounts or promotions can help attract new customers and encourage repeat business. Consider offering a discount on a customer’s first purchase or a discount for referring a friend.
    • Provide excellent customer service: Providing excellent customer service can help you build a loyal customer base. Be responsive to customer inquiries, be friendly and courteous, and go above and beyond to ensure customer satisfaction.
    • Use customer reviews and testimonials: Positive customer reviews and testimonials can be powerful tools for attracting new customers. Encourage satisfied customers to leave reviews on your website or social media pages, and highlight these reviews in your marketing materials.


    Starting a business requires hard work, dedication, and a willingness to learn and adapt. As you embark on your journey as a home-based baker, remember to stay focused on your goals, seek out advice and support from other business owners, and stay up-to-date on industry trends and best practices.

    With determination and a commitment to excellence, you can turn your passion for baking into a successful home-based business.

    Resources for Home Baking Business in Ontario

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