Legal Requirements To Start A Catering Business [2021 Edition]

Legal Requirements To Start A Catering Business [2021 Edition]

Building your own catering business from the ground up is an exciting opportunity, but it can also be challenging.

One of the toughest hurdles is often how to ensure legal compliance.

No matter whether you are operating from a residential setting or expanding your catering business to a new city, you have to meet the legal requirements.

So, what are the legal requirements to start a catering business?

In this article, we put together some of the top legal requirements to start a catering business. Keep reading to find out.

Licenses and Permits Needed To Start A Catering Business

1. Food Service License / Health Permit

The food service license/health permit is one of the legal requirements when operating a catering business.

The health permit is often issued by the local health department.

Upon submitting an application for the health permit, the local health department will visit your establishment to ensure you comply with all the food safety regulations before issuing the health certificate.

If your premises is certified as compliant and your staff passes the health checks, the head of the local health department will issue the license.

Note that the health department could make impromptu visits to your premises, and if you do not meet any of the standards, the officials will revoke the license.

2. Business Permit

A business permit is required to open and operate a catering business.

Typically, the business permit is what legitimizes your catering business, so you operate as a legal entity.

The business permit application fees will depend on the locality you choose to do business.

How To Apply For A Catering Business Permit:

  • Contact the local governing agency for guidelines on the regulations in your area.
  • Submit the permit application paperwork.
  • Wait for the licensing committee verdict.

Once the application has been reviewed, you will receive a status update.

Check out this document for insights on how to get a business permit in any of the 50 states.

3. Fire Department Permit

According to Los Angeles Fire Department, the installation or operation of appliances, systems, or the equipment that poses a fire hazard requires a fire permit.

The same regulation applies in different states and countries across the globe.

Therefore, check the fire permit fees and guidelines with the local fire department, and apply for the relevant permits.

4. Occupational Health & Safety Compliance

OSHA compliance certificate is issued in accordance with the Occupational Safety Health Act and represents the achievement of outcomes defined by the Occupational Safety and Health Administration.

Therefore, make sure you meet the requirements, and apply for the relevant certificate.

Often, you may need to renew the certificate, as an indication that your premises meet the OSHA guidelines.

5. Employer Identification Number

Business entities must have the Employer Identification Number (EIN).

The unique nine-digit number allows the IRS to identify businesses during the tax reporting period.

If your catering business is located in the United States or US territories, you can apply for the EIN online.

See how to apply for an EIN here.

6. Alcohol / Liquor License

For catering entities that plan to serve alcohol at a catering event, they require an alcohol license.

Contact the local alcohol licensing authority for specifications on the requirements to have the alcohol license.

The cost of a liquor license ranges from $300 to $14,000 based on your state.

7. Business Signage Permit

The business promotional signage requires a permit issued by the local authorities. The fees for the business's signage permits vary based on different factors.

A professional signage company could help you in acquiring the appropriate licensing depending on your zoning laws.

8. Air and Water Pollution Control Permit

At this time when environment conservation is a major topic, you may need an air and water pollution control permit.

The permit does not allow you to discharge dangerous waster into the rivers but shows that you have committed to conserving the environment.

Visit EPA to confirm if your business requires a water pollution control permit.

9. Music License

Music is essential to a catering business, especially when you want to add the ambiance, mood, and individual aesthetic.

To play music at your catering events, you need the music copyright license. Otherwise, you may have to pay hefty fines for playing music without the crucial document. The music copyright license could cost up to $500.

When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.

The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.

These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.

  • LLC: All income and expenses from the business are reported on the LLC personal income tax return.
  • S corp: Owners pay themselves salaries + receive dividends from profits.
  • C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.

Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.

Learn more about securing the right permits and licenses ➜

Need to start an LLC? Create an LLC in minutes with ZenBusiness.

FAQ: Quick Guide To Starting A Catering Business

Yes. It is legal in certain states, however, you need licenses and permits from the local authorities and from your local health department. Besides, you need ample kitchen space and a sitting place to ensure customers are comfortable. Finally, you have to market your business so that target customers will know your location.

Is A Catering Business Profitable?

According to reliable reports, the average salary for caterers in the US is $48,000, with the average profit before tax averaging 7%-8%. However, it is important you note that profitability depends on a number of factors, among them your pricing, and the cost control measures.

How Much Does It Cost To Start A Catering Business?

Prepare to spend about $10K to $50K in startup cost including the cost of licenses and permits to start a catering business. However, note that the costs can vary depending on location, premises (rented or owned), and type of equipment needed.

How Do I Grow My Catering Business?

Here is a quick overview of how to market the catering business:

  • Use social media marketing
  • Get a great website
  • Use testimonials and reviews
  • Attend networking events
  • Take professional photos
  • Identify and target niche customers

Checkout our growth ideas database for additional ideas.

What Equipment is Needed to Start Catering Business?

To operate a catering business you need to invest in:

  • Dinnerware, linens, banquet tables, and chairs (purchased or rented).
  • Portable catering and cooking equipment.
  • Serving trays, chafing dishes, beverage dispensers, and buffet serving materials.
  • A transportation van for your staff and equipment for outside catering.

Tip: You can hire the equipment and buy your own as you scale.

How Much Staff Do I Need To Start My Catering Business?

You may need a minimum of 2 staff per catering function, which would be 1 chef and 1 wait staff.

Typically, the number of staff depends on the number of guests, the function style, and the venue.

Tip : You do not need to hire permanent staff when starting the catering business. You can hire casuals on-demand, and keep retaining them as the business grows.

Conclusion

We have looked at the various legal requirements to operate the catering business. Make sure you research the licensing requirements for your specific state before proceeding with the applications. While the licensing process may sound tedious, do not operate the business without proper permits.

Pat Walls,  Founder of Starter Story

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