Can you bake bread on an industrial level inside a residential home?

I own a bread route and am thinking of buying my own house and making the basement into a bakery. I sell about 10000 dollars worth of bread to restaurants around long island, new york. The reason I want to do it in a house is so that I can be close by, can buy both a house and business at the same time and so I can avoid paying for rent. Right now I buy bread but would like to make it myself to make more money and have a better product. I would have about 3 employees and use about a 1500 square foot basement. Does the law allow people to do things like this or will I have problems from the city?