Well, Irene, there are two approaches to this:
1) If you want to set up a formal business and advertise and all that, then you need to check your state, county and city laws. You will probably need a health permit, a licensed kitchen, an assumed name certificate (the name of your business), a tax ID number, and be in compliance with zoning laws.
2) There is the "under the table" approach to get started. This is just where you are baking cakes for friends, or friends of friends, who asked you to do it for them - and they are offer to pay you for your time and materials. It will not be a legal business per se .... but there are a lot of food providers that got started as "cottage industry" enterprises and then moved up to be legal when they got off the ground.
puts out a book, costs about $100, that helps answer a LOT of questions about starting your own food business.
You might also check with your local Small Business Administration - they can give you advice about what you need to do.