I am probably not the best one to give you advice since I only do this for my family but here is what I would do. First be fully aware of what each cake costs you that means everything cake boards, utilities, materials, your time including the shopping & clean up. Do not start off by charging less just to get customers. You will become known as the cheap cake lady and it will be harder for you to increase your prices. Not only that but you will burn out from working too much for little profit. Before you consider selling your cakes, make sure that you can provide a professional looking cake and product. Make sure that you know what the law is in your area regarding this type of home business. Get insurance. I'm not sure if you have ever worked in customer service but it isn't easy. Sometimes customer will take all the joy out of cake decorating so be sure that you are ready for it. Hopefully someone with experience can tell you a bit more.
It can be very intimidating starting a home business. Especially if you're going to go through the Health Department and get inspected. I have been starting to blog about our experience here in Virginia. You can read some of my posts here: http://bakerybutler.com/blog/category/business.
What state are you in? Maybe I can help you find the documentation you need to get going.
So the U.S. Health Department shouldn't be able to give you any problems ;) The articles in the blog mostly go over marketing your site locally using Google and writing blog posts more effectively so I think it could still be helpful.
This might help you get some information on what you're local government requires. I didn't read all the way through it so I'm not 100% sure it covers baking from home, but it's a good place to start.
Remember these simple things and start your business
Hi there! First of all best wishes on starting a new business. I too am new to the business field and one thing that I've learned so far is to have a good quality for whatever you're selling and more than that maintaining the quality with the increase of customers. Later on, you would be needing a bit of a promotion for your business. I would say to keep it low on expense, but see to that it reaches the right people. Direct mail advertising, I'll say is a good option. http://www.troimail.com/services/why-choose-direct-mail-advertising/ It's something that I've personally benefited from. Make sure you have variety of cakes for your customers to choose from. You can always start off with a price a bit lower than the cake shops in your locality. Later, after you make a good stand, you can always increase your rates.