I would like to open a home-based bakery. What are the rules & regulations?

This is a complex question because there is a division of responsibilities for these facilities between NYS Agriculture & Markets and the Erie County Department of Health. The 3 most common scenarios are described below.

  1. If you want to produce baked goods at home to only sell primarily wholesale (to stores, restaurants, etc.) you may need a 20-C Food Processor permit from NYS Agriculture and Markets. http://www.agriculture.ny.gov/FS/general/license.html
  2. If you are the only employee, AND want to use just your existing kitchen equipment (no commercial equipment allowed), AND you intend to only sell wholesale (to restaurants and stores) or to sell retail only at a farm, farm stand, craft fair, flea market, farmer's market and a few other specific locations (see link below) AND are making only certain types of baked goods (see link), you may be able to get a 20-C exemption from NYS Agriculture & Markets. http://www.agriculture.ny.gov/fs/consumer/processor.html 
  3. Under most other situations, the business would be subject to regulation as a retail bakery covered under NYS Sanitary Code subpart 14-1, Food Service Establishments. A permit would be required from the Erie County Department of Health to operate the business, and use of a home kitchen that is part of the living or sleeping area of the residence would not be allowed. A separate food service kitchen, separated from living or sleeping quarters by complete partitioning and solid self-closing doors would be required.

Additionally, the local municipality should be consulted to determine whether the proposed business use of the property is allowed under the zoning regulations of that municipality.