How to Start a Class B Cottage Food Business in Indiana

Indiana opened new doors for cottage food producers in recent years, and Class B licensing offers the most flexibility for home-based food businesses in the state. Unlike the more restrictive Class A license, Class B lets you sell wholesale to stores and restaurants, ship products across state lines, and build a real business from your home kitchen.

But navigating the setup process can feel overwhelming when you're juggling recipe development, market research, and legal requirements all at once. After helping dozens of Indiana cottage food producers get their businesses off the ground, we've seen where people get stuck—and more importantly, how to avoid those pitfalls.

Who This Guide Is For

This guide is for Indiana residents who want to start a legitimate cottage food business that can grow beyond farmers markets and direct sales. You'll learn:

• Exactly which foods you can and can't make under Class B rules
• The step-by-step permit application process (it's simpler than you think)
• How to set up wholesale relationships legally
• Record-keeping requirements that actually protect your business
• Common mistakes that can shut you down—and how to avoid them

Whether you're testing a side hustle or planning to replace your day job income, this roadmap will get you started the right way.

Understanding Indiana's Class B Cottage Food License

Class B is Indiana's premium cottage food license. While Class A limits you to direct sales under $5,000 annually, Class B removes the sales cap and allows wholesale distribution. You can sell to grocery stores, coffee shops, restaurants, and online customers anywhere in the United States.

The trade-off? More paperwork and stricter food safety requirements. You'll need to complete food safety training, maintain detailed records, and follow specific labeling rules. But for serious food entrepreneurs, these requirements are worth the expanded market access.

Step 1: Verify Your Food Products Are Allowed

Indiana's Class B program covers "non-potentially hazardous foods"—essentially shelf-stable items that don't require refrigeration for food safety. Here's what you can make:

Allowed foods:

• Baked goods (breads, cookies, cakes, pies with fruit fillings)
• Candy and confections
• Fruit jams, jellies, and preserves (pH 4.6 or below)
• Granola, trail mix, and roasted nuts
• Dried fruits and vegetables
• Honey (if you're the beekeeper)
• Maple syrup (if you're the producer)
• Popcorn and similar snack foods

Not allowed:

• Fresh salads or cut vegetables
• Meat products (including jerky)
• Dairy-based items requiring refrigeration
• Canned vegetables or low-acid foods
• Fermented products like kombucha
• Pet treats (these require separate licensing)

If your signature product isn't on the approved list, consider whether you can modify the recipe or pivot to an allowed item before investing time in the application process.

Step 2: Complete Required Food Safety Training

Before you can apply for your Class B license, you must complete an approved food safety training course. Indiana accepts several options:

• ServSafe Food Handler certification ($15, online, 2-3 hours)
• Learn2Serve Food Handler course ($7.95, online, 1-2 hours)
• Any equivalent course from ANSI-accredited providers

The training covers basic food safety principles, proper storage temperatures, cross-contamination prevention, and personal hygiene standards. While these courses focus on commercial kitchens, the principles apply directly to cottage food production.

Schedule your training 2-3 weeks before you plan to apply for your license, since you'll need the certificate number for your application.

Step 3: Prepare Your Home Kitchen

Your Class B cottage food business must operate from your primary residence kitchen—no separate buildings or rental kitchens allowed. Indiana doesn't require kitchen inspections for cottage food operations, but you're responsible for maintaining food safety standards.

Essential kitchen requirements:

• Clean, sanitized surfaces and equipment
• Adequate refrigeration (below 41°F)
• Hot water for washing (at least 100°F)
• Separate areas for raw ingredients and finished products
• Pest control measures
• Proper ventilation

Smart upgrades to consider:

• Digital thermometers for monitoring temperatures
• Commercial-grade mixing bowls and utensils
• Additional refrigerator or freezer space
• Dedicated storage areas for ingredients and packaging
• Scale accurate to 0.1 ounces for consistent portioning

You don't need restaurant-grade equipment, but investing in quality tools now will save headaches as your business grows.

Step 4: Apply for Your Class B License

Indiana cottage food applications go through the State Department of Health. The process is straightforward but requires attention to detail.

Required application materials:

• Completed cottage food operation application form
• Copy of your food safety training certificate
• $100 application fee (check or money order)
• Written standard operating procedures for your products
• Labels for each product you plan to sell

Creating standard operating procedures (SOPs):

Your SOPs document exactly how you make each product, from ingredient sourcing to final packaging. Include:

• Complete ingredient lists with brand names when possible
• Step-by-step preparation instructions
• Critical control points (temperatures, timing, pH levels)
• Packaging and storage procedures
• Allergen control measures

For example, if you're making chocolate chip cookies, your SOP might specify: "Preheat oven to 375°F. Cream butter and sugars using KitchenAid mixer on medium speed for 3 minutes. Add eggs one at a time, then vanilla extract (Brand X, lot number tracked). Mix in flour blend until just combined. Fold in chocolate chips. Drop 2-tablespoon portions onto parchment-lined baking sheets. Bake 9-11 minutes until edges are golden. Cool completely before packaging in sealed bags with labels."

Submit your application by mail to the Indiana State Department of Health. Processing typically takes 4-6 weeks, though it can extend to 8 weeks during busy periods (especially in spring when many producers apply).

Step 5: Design Compliant Product Labels

Class B cottage food labels must include specific information required by Indiana law. Missing or incorrect labels are among the most common reasons for business shutdowns.

Required label elements:

• Product name and complete ingredient list (in descending order by weight)
• "Made in a home kitchen that has not been inspected by a regulatory authority"
• Your name and address
• Net weight or volume
• Allergen warnings for the Big 8 allergens (milk, eggs, fish, shellfish, tree nuts, peanuts, wheat, soybeans)
• Date of production or expiration date

Label design tips:

• Use at least 12-point font for required text
• Place the cottage food disclaimer prominently on the front or back panel
• List allergens clearly—"Contains: Wheat, Eggs, Milk" works better than burying them in ingredient lists
• Include your business name even if it's different from your legal name
• Consider professional label printing for a polished look, especially for wholesale accounts

Test your labels with sample products before ordering large quantities. Many producers discover spacing or text size issues only after printing hundreds of labels.

Step 6: Set Up Business Operations

Business registration:

While not required for cottage food operations under $5,000 annually, Class B businesses should register with Indiana and obtain appropriate business licenses. Register your business name with the Indiana Secretary of State and obtain a federal EIN from the IRS for tax purposes.

Insurance considerations:

Homeowner's insurance typically excludes business activities. Contact your insurance agent to discuss:

• Business personal property coverage for equipment and inventory
• Product liability insurance for food products
• General liability coverage for business operations

Several providers offer affordable coverage specifically for cottage food businesses, with annual premiums often under $200 for basic protection.

Record keeping requirements:

Class B operations must maintain detailed records for at least two years:

• Purchase receipts for all ingredients and supplies
• Production logs showing dates, quantities, and batch codes
• Sales records including customer names and contact information
• Distribution records for wholesale accounts
• Any customer complaints or product returns

Step 7: Find Your First Wholesale Customers

Class B licensing opens doors to wholesale relationships that can scale your business significantly. Start with local accounts that align with your products and values.

Potential wholesale customers:

• Independent coffee shops and cafes
• Farm-to-table restaurants looking for local suppliers
• Specialty grocery stores and co-ops
• Gift shops and boutiques
• Corporate catering companies
• Wedding and event planners

Approaching wholesale prospects:

• Lead with your story—why you started making this product and what makes it special
• Bring samples and professional marketing materials
• Understand their ordering cycles and delivery requirements
• Be prepared to discuss pricing, minimum orders, and payment terms
• Follow up promptly and professionally

Remember that wholesale customers typically expect 30-50% margins, so factor this into your pricing from the beginning.

Avoiding Common Pitfalls

Underestimating demand: Many cottage food producers struggle to keep up with orders once they find their market. Plan for growth by streamlining your production process and considering equipment upgrades early.

Ignoring seasonal fluctuations: Baked goods often see higher demand during holidays, while other products may be more consistent year-round. Track your sales patterns and adjust production schedules accordingly.

Mixing personal and business expenses: Keep separate bank accounts and credit cards for your cottage food business. This simplifies tax preparation and provides clearer financial visibility.

Skipping product liability coverage: While not required by law, one product-related lawsuit can destroy your personal finances. The cost of insurance is minimal compared to the potential risk.

Next Steps: Launch Your Class B Business

Starting a Class B cottage food business in Indiana requires patience and attention to detail, but the payoff is significant freedom to grow your food business. Once you receive your license, start small with a few core products and reliable customers, then expand gradually as you refine your operations.

Ready to take your cottage food business online? Koti helps Indiana cottage food producers build professional online stores, manage wholesale orders, and connect with customers across the country. Our platform handles the technical details so you can focus on what you do best—creating amazing food products.

Visit koti.market/sell to learn how we support cottage food businesses at every stage of growth.