Business Tip: The Legalities of Putting Up A Catering Business: Complying With All Legal Requirements
Choosing the Type of Business Structure
As you start offering catering services, you may notice your income increase overtime, especially when you cater to corporate functions. Of course, this is good news to your business, but all your efforts will be for nothing when the governing authority flags you for operating a non-registered business. So it is very important to decide the type of business structure and then proceeding with the registration. For example, in the US, the IRS will red flag a caterer earning over $600 without being incorporated.
The chosen business structure will be dependent on how you want your business to be taxed and what liabilities you can risk. A sole proprietorship company entails you, as the owner, to be held accountable to whatever unfortunate incidents in your operation. This is riskier compared to limited liability caterers and corporations. Remember that you will be serving food to the public so it would be best to go for a business organization that’s able to protect your own personal asset against any lawsuits.
Limited liability company frees the owners from personal liability for debts or any liabilities the company incurs. This corporate structure is a combination of general partnership and corporation. Corporations are seen as considered as the structure with the most advantages when starting a business because they have their own identity under the law. It exercises all the rights of an individual entering into business transactions and is led by board of directors.
So what business structure will you choose?
- Sole Proprietorship
- General Partnership
- Limited Liability Company
Crafting Contracts and Obligations
A business contract with a client will include the major services to be offered, how these services will be offered and how they will be paid for. This will provide you with some form of protection if something goes wrong. The contract should be well-detailed. Agree on who will be contracting the venue and taking responsibility of the damages.
Some states have different types of licenses so select one that suits your business structure. Also, you make need to look into food-service license and liquor license.
Understanding Health Codes
There are health rules regarding how food is prepared and handled. All of these are done to ensure that caterers provide customers with high-quality and risk-free services. Hire a consultant to ensure that your equipment passes the standards set forth, and that your employees are well-trained to comply with the health rules and regulations.
There are a lot of risks associated with catering businesses: fires, food poisoning, and other hazards. Insurance will help you cope with these risks. Buy a policy that will cover up all of these incidents. Seek advice from experienced caterers on what kind of policy will suit you best.
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