Want to Be the Next Cake Boss? What It Really Takes to Start a Cake Business in the UK

Running a cake business from home might get you started, but if you're dreaming bigger, it’s time to move beyond your kitchen table. 

Commercial cake businesses in the UK can scale faster, serve more customers, and secure larger contracts, ranging from weddings to wholesale deals.

But growing into a proper cake business also involves premises, permits, inspections, staff, and a strategy.

This guide walks you through everything you need to know to turn your love for baking into a fully-fledged commercial operation.

Why go commercial with your cake business?

There’s only so much you can do at home. Maybe you're maxed out on orders, or your kitchen setup is limiting your creativity. A commercial cake business gives you more space, more control over production, and more legitimacy.

Going commercial is about unlocking new levels of growth, professionalism, and opportunity. It means:

Many bakers also find that a commercial setup gives them the confidence to experiment with new ranges, develop a signature look, or improve their workflow, from ingredient sourcing to packaging.

Understanding the market

Before you scale up your cake business, take time to understand your market. This helps you avoid overcommitting and ensures that your move to commercial premises is driven by demand, not just ambition.

UK baking market at a glance

Who buys cakes?

Popular cake categories:

Cakes for religious and cultural celebrations:

These holidays represent key seasonal revenue opportunities. Planning your cake calendar around them can help maintain a steady production flow throughout the year.

Legal requirements & company setup

Do you need to register a company to start a cake business in the UK?

If you’re going commercial, yes – registering your business properly isn’t optional. You can trade as a sole trader, but many cake business owners find that forming a limited company offers more benefits as they grow.

It’s not just about appearing professional (though that helps when pitching to event planners or corporate clients). 

Going LTD means your personal finances are separate, and you get access to extra protections and tax benefits. It also signals to suppliers and venues that you’re a serious operator.

💡 If you’re not sure how to register, ANNA can take care of the whole process – including setting up your business account and registering you for VAT when the time comes.

Licenses and Compliance: Don’t skip these

Before you sell your first professionally baked cupcake, make sure you’re properly registered:

1. Register with your local council as a food business. This is free and must be done at least 28 days before trading.

2. Get inspected by Environmental Health to check your premises meet hygiene standards. Don’t worry – they’re not looking for perfection, but they do want safe, clean conditions.

3. Complete a food hygiene course. Level 2 is the basic requirement if you’re handling food; Level 3 is great if you’ll be managing staff or training others.

4. Understand allergen labeling laws. No matter if you're selling boxed brownies or bespoke wedding cakes, you need to clearly list any allergens (like eggs, milk, or nuts) and keep your records up to date.

📌 Even items like edible glitter, metallic dust, and fresh flowers must be food-safe and approved. Always check your suppliers and ingredients list.

What insurance do you need?

Insurance isn’t glamorous, but it’s your safety net. Here's what most cake businesses need:

Costs & finances

Starting a cake business from commercial premises is a bigger financial commitment than baking from home, but it also opens up bigger revenue opportunities. The key is knowing what to expect so you can plan and budget confidently.

Startup costs: What to expect

The exact cost of starting a commercial cake business will depend on the size of your operation and whether you're renting a ready-to-go kitchen or fitting out your own unit. 

Here's a rough breakdown:

Monthly operating costs

Once you're up and running, your recurring costs will include:

💡 Use a dedicated business account and expense tracking tool (like ANNA) to separate personal and business finances and stay on top of tax deadlines.

Pricing strategy: Charge for the cake and your time

When setting prices, consider all your overheads, not just the cost of flour and butter.

Here's a simple formula to build your base price:

              Ingredients + Packaging + Labor + Overheads + Profit = Final Price

For example, if a 6” celebration cake costs you £7 in ingredients, takes 1.5 hours to make, and your hourly rate is £15, that’s £22.50 in labor. 

Add £5 for overheads (rent, electric, admin) and £5 profit, and your cake should sell for around £40.

✅ Include buffer room in your prices to cover last-minute changes, rework, or seasonal ingredient price increases. Offer tiered pricing for basic vs. premium finishes, and use minimum order values to make small jobs worthwhile.

Profit margins and earnings potential

Most custom cake businesses aim for a gross profit margin of 60–70% after direct costs.

Client acquisition strategy

Your cakes might stop people in their tracks, but it’s your brand that brings them back.

✨ Know what you stand for

Why did you start baking? What do your cakes say about you? Maybe it’s the way you honour family recipes, your obsession with seasonal flavours, or your zero-waste values. Get clear on your story and bake it into everything you do.

✨ Look like you mean it

Your logo, colours, and fonts: they should all feel like your bakery. Whether that’s playful and pastel or bold and moody, keep it consistent. People should recognise you at a glance.

✨ Talk like a human

No corporate waffle. Speak how you speak – warm, cheeky, poetic, whatever feels true. Your voice is an integral part of the experience, from Instagram captions to thank-you notes.

✨  Make it personal

Tell people why you do what you do. Share a snapshot of your process, a favourite customer moment, or a baking fail that made you better. That’s the stuff that sticks.

✨  Add your signature

It might be your cake toppers, your handwritten notes, or your packaging that smells like vanilla beans. Give people something to remember you by and something only you do.

Taxes, accounting & compliance

What changes when your cake business gets serious?

When you’re baking casually, maybe you just log a few payments and stash some receipts in a folder. But when you go commercial (register a company, rent premises, or take on big clients) the tax and compliance game shifts entirely.

Here’s what you’re now expected to handle:

You can’t wing this stuff. Missing a deadline or submitting messy accounts can lead to penalties, and that’s money better spent on literally anything else.

💡For more practical info on fiscal year and dates you shouldn’t miss, check out our The 2025/2026 Tax Year Calendar for LTDs [UK Full Guide].

What do you need to track?

If you want to stay out of trouble (and know whether your cakes are even profitable), here’s what to log from day one:

Trying to backfill all this at the end of the year? That’s how you end up crying into your spreadsheets.

Where ANNA +Taxes steps in

Most bakers didn’t get into this to become accountants. That’s where ANNA +Taxes is genuinely helpful.

It’s a smart, automated service built for people running real businesses – like cake makers – who want to do things properly without hiring a full finance team.

Here’s what ANNA +Taxes takes off your plate:

And the best part? It starts from just £3/month for the first 3 months. That’s less than you’d spend on packaging tape or cake toppers and it saves you hours of admin.

Conclusion

Ready to build something that lasts?

Getting serious about your cake business means setting things up properly, knowing your numbers, staying compliant, and running with the kind of confidence that only comes from being in control.

Most bakers underestimate how much time admin will take until it starts slowing everything down. Missed deadlines, messy records, and last-minute tax stress aren’t just frustrating, they also hold you back from growing.

Ready to start your cake business without the stress?

Set up your cake business the smart way with ANNA:

💫 Register your company the easy way (for free!)

Open a business account and register your Limited Company with Companies House in one go — for free!

It’s fast, fuss-free, and comes with all the support you need.

💫 Keep your business finances sorted from Day 1

💫 Want all your taxes handled too?

Try ANNA +Taxes — your smart tax sidekick that handles bookkeeping, VAT, Corporation Tax, and payroll.

It’s like having an accountant in your pocket (without the awkward small talk).

Let ANNA handle the boring stuff — so you can focus on baking joy.