Well all is good advice BUT if you don't plan to go in business and you are just dealing with friends then don't do anything but take some cash. Once you go for insurance you are on record. I am required to file financial statements to prove my "income" is within the maximums for my policy. That creates a paper record of you doing business and then all of the above come into play.
I am a legal vendor in business selling BBQ and it's an expensive startup. Be prepared for 20-40K to start and then not making money for the first year or even 2.
Also in some states you can be a personal chef where you cater a party on-site for a customer. You in effect use their kitchen for all the work except for cooking on your pit. I know it's legal in MI and you don't need HD inspection. But you may still need business ins, sales tax ID and need to report against income.
Owner/Head Cook/Chief Bottle Washer for Great Lakes BBQ & Feed Competition BBQ Team
FBA Member, KCBS Member & KCBS Certified BBQ Judge
Spicewine medium, weber kettle, gas grill