Starting a Catering Business — Key Considerations

Catering Business

If you have a passion for food, starting a catering business is a great way to fulfill your dream. You can be your own boss and make good money. Catering provides a stable source of income and allows you to work for different kinds of people and in different settings. For example, weddings, birthday parties, corporate parties, funerals, etc. 

If you have ever wondered if starting a catering business is easy, it is not. However, it is worth the effort. A successful catering business requires several key considerations and compliance with the law. 

A restaurant CPA in Oakland can help you do that. They are well-versed with the current laws of the state and have experience tackling legal problems. 

Key considerations for starting a catering business in California 

Catering Business

Find your specialty

Caterers come in all forms. Since the market is so competitive, it can be difficult to find your unique niche. There are several profitable niches, including community caterers, corporate catering, and format event catering. Once you figure out how big of a business you want to establish, you can decide your specialty more easily. 

Determine what kind of events or people you want to cater to. Are there any specific events or festivals that you are more interested in? For example, if you are more eager to serve at birthday parties and weddings, find out what food is most commonly requested there. 

Investigate local licensing and permits

When it comes to opening a new business, getting licenses and permits is very important. Without them, your business might be shut down on its first day. The laws vary from state to state. For example, in some states, you are not allowed to use the same tools in your work kitchen as you do in your home kitchen. 

Here are some permits and licenses that you must obtain to open a business in California:

  • Food Handler’s License, also known as Food Service License
  • Catering Business License
  • Food Facility Health Permit
  • Certificate of Occupancy
  • Liquor License Permit
  • Business License
  • Employee Health Permit
  • Seller’s Permit

Register your catering business and get an EIN

In California, you must register your business name in the state you want to build it in. A catering business involves food, and thus, you may have to get other registrations as well. For example, you need a Health permit in California. The health department will check whether you are preparing the food in a safe and sanitary place. 

Next, you will need to apply for an Employer Identification Number or EIN. It is used as an identification number for business tax purposes. It is mandatory to have one. 

Determine your finances and expenses

Opening a catering business is neither easy nor cheap. It costs between $10,000 and $50,000 to open the business, and catering owners can expect to make around $50,000 and $80,000 a year. With such a big range of finances to manage, it is important to have a plan in place. 

Catering business expenses may include the following: 

  • Marketing
  • Equipment
  • Labor
  • License
  • Appliances
  • Permits
  • Utilities
  • Packaging
  • Transportation
  • Food

Get insured

A catering business can be risky. If something goes wrong, such as your staff or client gets injured, you could be liable. For example, it won’t be the first time someone is getting food poisoning after having catering food. 

That is why getting insured is a crucial step. Insurance agents recommend caterers get general liability coverage, workers’ compensation, and umbrella liability coverage, which provides protection when multiple injured parties are involved. 

If your employees are going to drive vehicles, consider getting motor insurance as well. 

Hire a CPA today!

Opening up a new restaurant business invites a lot of financial confusion. However, you do not have to do it all alone. Hire a restaurant CPA today!