The legality of setting up a catering business: comply with all legal requirements

Choose the type of business structure

As you start catering, you may notice your income increase over time, especially when you cater corporate functions. Of course, this is good news for your business, but all your efforts will be in vain when you are flagged by the government authority for operating an unregistered business. Therefore, it is very important to decide on the type of business structure and then proceed with registration. For example, in the US, the IRS will red flag a caterer who earns more than $600 without being incorporated.

The business structure chosen will depend on how you want your business to be taxed and what liabilities you can risk. HAS Single owner company implies that you, as the owner, are responsible for any unfortunate incidents in your operation. This is more risky compared to limited liability catering and corporations. Remember that you will be serving food to the public, so it would be best to opt for a commercial organization that can protect your own personal assets against any lawsuits.

The limited liability company releases the owners from personal liability for debts or any liability incurred by the company. This corporate structure is a combination of general partnership and corporation. Corporations are seen as the structure with the most advantages when starting a business because they have their own identity before the law. It exercises all the rights of a person transacting business and is governed by a board of directors.

So what business structure will you choose?

  • Single owner
  • General Partnership
  • Corporation
  • limited liability company

Preparation of Contracts and Obligations

A commercial contract with a client will include the main services that will be offered, how these services will be offered and how they will be paid for. This will provide you with some protection if something goes wrong. The contract must be well detailed. Agree who will hire the place and who will be responsible for the damages.

License prioritization

Some states have different types of licenses, so select one that suits your business structure. Also, you should check the food service license and the liquor license.

Understand health codes

There are health rules regarding how food is prepared and handled. All this is done to ensure that the catering services provide customers with high quality and risk-free services. Hire a consultant to make sure your equipment meets established standards and that your employees are well-trained to comply with health rules and regulations.

asset protection

There are many risks associated with catering businesses: fires, food poisoning, and other hazards. Insurance will help you deal with these risks. Buy a policy that covers all of these incidents. Seek the advice of experienced caterers on which type of policy best suits your needs.

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