Starting a New Catering Business

[kash]

hi
i am a permanent resident and i would like to start a new catering business from my home.
[1] can you help me in what are the type of incorporation category a catering business falls in or what is the best type that i should incorporate in ? the size of the business is very small and the annual turnover will be coming around to $20000.

[2] what type of tax benefits can i get if i incorporate this company ?

[3] is incrporating the business a wise idea based on the size of my company ?

[2] For a catering business since it involves food are there any FDA requirements to be fulfilled or any other legal issues to be handled to be in the food business ?

i will really appreciate your help in this.

cheers
kash

 

[David_Staub]

You don't mention your state, so these are very general answers:

[1] A decision on choice of entity is based on an review of the facts, with a little prediction about your future needs thrown in. Since no one's crystal ball is perfect, you may find that you could have made a better choice, but in most cases changing the form later is neither complicated nor costly. An exception is that converting a corporation into an LLC later can trigger taxes if the corporation's assets have appreciated above the owner's basis. Although I find myself recommending limited liability companies more often than not, a simple corporation with an S election may work fine in your case. In Illinois, for example, a filing fee for an LLC is $500 while the incorporation filing fee and initial franchise tax is only $175. You should check out the answer in your own state.

[2] The tax benefits of a corporation and LLC are too complicated to describe in a short space, but given the anticipated revenues of your company, taxes should not be your primary concern. See [3] below.

[3] Whether you select a corporation or an LLC, you should definitely form an entity to help shield you from personal liability. Although you always may be personally liable for your own negligence, what if one of your helpers fails to wash his or her hands after cutting up a chicken and gives an entire party food poisoning? With an entity, you may lose the business but you would not lose your house and car. Without an entity, you will be personally responsible for ALL liabilities of the business.

[4] Almost all jurisdictions regulate businesses that handle food. I would start with the local health department and work my way up.

Even though your business will be small, I recommend that you talk to a local attorney who is familiar with the restaurant industry before you commit to any course of action.

David Staub