Running out of grill.

[Wookster]

Hey guys,
This is my first post. I found your group on google search and you seem to REALLY know your stuff. I'm currently a hobbyist, I cook on a WSM 22inch. In the past year and a half I've reached the point where I can't keep up with demand. I'm cooking every other weekend. Its for friends and family, but I am the only go to guy for BB-Q. My grill is taking a beating and I need to upgrade. My problem is if I need to invest in bigger equipment, it needs to pay for itself. I'm not talking about making a living and quitting my job. I'm talking about a part time operation where I can cook and do it all legally. I have looked at starting an LLC and finding an incubator and read pages upon pages of health codes. Is there anyone who can help me get started in the right direction? I don't claim to be a great cook, or even mediocre. I'm just at the point that to keep up with demand requires a large investment. More than I want to spend without a possibility of a return. Any help is greatly appreciated. I keep trying to be realistic, this is a hard industry to succeed in. At the same time, I never thought I'd be asked to cook for so many people.

Thanks for your thoughts.

[Pyle's BBQ]

Read a few more posts about people that want to start in this business. First place to start is you local Health Department and the person that will inspect your operation. They will be able to tell you what you need to be legal and pass inspection. Laws vary from state to state and even county and city. If you are selling this get insurance and set up the LLC. I could tell you all kinds of things to do, but unless you can clear the first hurdle it is a moot point.

[bizznessman]

Welcome aboard Brother!!!!

1) Work up a business plan detailing all of your expected costs and estimated revenues. Decide what type of service your will offer: onsite cooking, catering, what size of events, minimum orders, etc, etc, etc. Do this before you go any further to see if you believe the business fits your goals and expectations.

1) Contact your HD (Health Dept) to find out what you need in order to be in compliance with food service regs. In KS you will need to prepare all food in a certified commercial kitchen, either your own or one you rent. If you decide to go the route of your own kitchen you will need to obtain a food license. The cost the first year is $400 ($200 application fee + $200 first years fee), and then $200 each year after to renew. If you decide to rent kitchen space/time you can expect a varying amount. Here in our area of KS (Western) it runs about $100/hr.

2) Procure business insurance. a) Food Service Liability Ins: Check with your personal insurance agent to see if their company offers these policies. If not there are a number of insurance companies that specialize in food service liability insurance. Normally around $1K/yr for 1MIL coverage b)General Business Ins: To cover equipment, etc, especially if you end up with a mobile trailer.

3) The LLC approach is a very smart way to go since it offers much of the asset exposure protections similar to a Corporation but allows revenues to flow through at your personal tax rates. This will help to protect your personal assets from any possible legal issues involved with the business. In KS you are looking at around $500 to form an LLC.

4) Obtain a Sales Tax ID for reporting/remitting sales tax to the KDOR.

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The items above are just for starters. Remember, you are starting a business...not a hobby. This link is a good starting place. LINK

We were in the same position as you at one point. Do we expand or not. We decided to go for it. It is a side business for us and it has paid for itself with a little bit left over for "profit".

[pwa]

pretty much what they say but on the LLC check with your tax guy/lawyer. For me the lawyer said any lawyer worth his weight will eat thru that. LLC not what it used to be :( But consult the experts in your area

pwa

[bizznessman]

Originally Posted by pwa

pretty much what they say but on the LLC check with your tax guy/lawyer. For me the lawyer said any lawyer worth his weight will eat thru that. LLC not what it used to be :( But consult the experts in your area

pwa

I agree with pwa's cautionary statement. We had an attorney that specializes in LLC formation (KS specific) create ours. It cost more (approx $3K) but it is as iron clad as any LLC can be. LLC's can still work well if formed properly.

NOTE: If you form it "yourself" then be aware that you could easily miss crucial aspects and not be protected as much as you might believe.

The most crucial thing with any legal entity is you need to follow all the rules associated with that form of legal entity. Meet deadlines for State filings. Keep ALL funds separate from personal funds. You must always be aware of how you are presenting yourself "as the LLC and not yourself personally". These are the three most common items that cause breach and will allow an astute attorney to pierce the veil of the LLC and come after your personal assets.

Of course you could incorporate. Corporations are more personal asset protection secure but come with more regulation, a higher tax rate for retained earnings and much more paperwork.

Whatever you do, DO NOT operate as a Sole Proprietorship unless you want to risk ALL of your personal assets....insurance or not.

[Wookster]

Thanks for the responses,
It seems I'm headed in the right direction. I've found a rental kitchen about 25 miles from me that rents kitchen space for about $15-20 an hour. I'm trying to go as small as I can. Working just Saturdays or the occasional special event. Mostly non-profits and private events. Going with a couple BB-Q meats (pulled pork is my specialty.) bags of chips, and cans/bottles of soda to minimize equipment. If I can break even I'll be happy. Hardest part is the health/safety and legal. Will the health department waste their time talking to someone who is at the first step of the process?

[ssbbqguy]

That's when most HDs will want to get involved, is just starting time.It's easier and less costly to get the right way accomplished first rather than changing later. Just as said, be prepared and please consider paying yourself in your plans. People that just want to cover expenses or break even sometimes cut corners thinking no one will notice. Do it right from start to finish and your journey will be more rewarding. Think about gaining repeat business, would you want a newbie that might not care about your welfare or product, just costs or one that has done things right and steadily increases business through repeats. It's pretty simple to say, but you find out real quick if the passion is there and you can keep it. Good luck and yes they want to talk to you too. Just be prepared enough not to waste their time but gain a knowledge base for you. Steve.

[marubozo]

I don't want to derail this, but since LLC and liability has come up, which it often does here, there needs to be some clarification since most people think that once you set up an LLC (or even a corporatoin) and operate under the scope of that, then you are personally protected. It is far more complicated than that.

There are three types of legal "wrongs" that can land you in a lawsuit, but the two most business owners are concerned about are contractual wrongs and tort wrongs. A ”contractual” wrong is a failure to do something you agreed to do: I gave you $20 to mow my lawn, you didn’t do it, I want my money back.

Everything else is a “tort” wrong. The most common tort is negligence, which includes most lawsuits, like car accidents, getting people sick, or slip and fall. In negligence, you had a general duty to do something in a reasonable way (like drive your car safely) and you messed up, so you have to pay for the harm you caused. This is what business owners are most concerned with. Unfortunately, the LLC is good for limiting liability in contractual wrongs, not tort wrongs.

Most everyone knows, although not by name, “vicarious liability” and “the doctrine of respondeat superior.” If, in the course and scope of your employment, you cause someone else harm, then your employer is liable for your conduct.

Here’s what you probably don’t know:

An agent is subject to liability to a third party harmed by the agent’s tortious conduct. Unless an applicable statute provides otherwise, an actor remains subject to liability although the actor acts as an agent or an employee, with actual or apparent authority, or within the scope of employment.

An “agent” is a broader definition of “employee:” it’s anyone acting on behalf of the company.

Let me reiterate what that all means: the general legal rule across the country is that individuals acting on behalf of a company are personally liable for their tortious conduct, even if they did so on behalf of the company.

There's plenty of case law out there illustrating this.

Assume you hit a pedestrian with a car at a fair you were vending at, defame someone in a blog post, or cause a fire. It doesn’t matter if you were “employed” by your LLC when you did it — you will still be personally liable, as will the LLC that ”employed” you.

Thus, in order to “protect your assets,” you need to put enough money into the LLC that it can completely pay any tort judgment against you, or else the injured person can go for your assets long after it has bankrupted the LLC. That just defeats the nominal purpose of the LLC (to avoid liability), since you’ll have to pay the same amount anyway, just through the LLC.

Again, there are plenty of reasons for setting up an LLC, such as protecting investors, limiting contractual liability, limiting liability arising from employee’s conduct, and a host of business and tax uses, but avoiding personal liability for your own conduct isn’t one of them.

So, you still want to set up an LLC for many of the other benefits, but don't go into it assuming that will protect you in the event of a lawsuit. Unless your business is worth enough to cover any judgement against it, they can additionally go after your personal assets to recover damages.

That's why having good insurance is the single most important item when it comes to starting a business, even if it's a small scale operation. The LLC is nice, but if you personally do something wrong, make someone sick, or burn down the midway at the county fair, the fact that you are acting under your LLC isn't going to help you.

Sorry, rant off. My wife is an attorney, so this has always been a big discussion point whenever I've set up and managed my many businesses over the years.

Here's a link that better explains the ins and outs of the kind of protection an LLC truly offers: http://www.nolo.com/legal-encycloped...ate-guide.html

[Wookster]

That's great info. I have been working for an LLC for almost a decade now and we were sued when one of our owners rear ended someone in a company vehicle. The main purpose for the LLC was accounting purposes. That way it has its own account to work out of and to allow me to avoid sales tax on some things. I will be partnering with a friend so it helps with some of the legal issues with that.

I know I mentioned not wanting to get paid, but I guess that's my minimal expectation. If I make money that's even better. The wifey will have less of a problem with my bb-q when it brings her shiny things made of rare metals.

[toadhunter911]

OK, I'll be the guy to throw cold water on the whole thing. If all you want is to "break even", and cook for your friends, then learn to say no. Cook only what you can, when you can. Believe me, cooking BBQ for profit is NOT an easy business to succeed in. You have to be driven, and good at it. And even then there's no guarantees. Cook for fun, cover your expenses, and avoid the heartache.

That said, if I misread the tone of your post and you really want to do this right, good luck. Get an attorney, contact your local HD, take a serv-safe class, and go for it with everything you got!

[Wookster]

Originally Posted by toadhunter911

OK, I'll be the guy to throw cold water on the whole thing. If all you want is to "break even", and cook for your friends, then learn to say no. Cook only what you can, when you can. Believe me, cooking BBQ for profit is NOT an easy business to succeed in. You have to be driven, and good at it. And even then there's no guarantees. Cook for fun, cover your expenses, and avoid the heartache.

That said, if I misread the tone of your post and you really want to do this right, good luck. Get an attorney, contact your local HD, take a serv-safe class, and go for it with everything you got!

I think partly what you are reading into is my way of thinking. I set expectations low, then see how far I can exceed them. For me personally it helps fight the lows and self doubt that can sometimes creep in during the less than easy times. If I can pay my expenses I will be satisfied, If I can do well enough to go all out, quit my job, work 80 hours some weeks and spend days away from my family at a time. I already do that for a living, just without the grill. Work for myself and make tasty meat, what could be better?

The other part is this is what my 3rd-4th post in a new forum? I'm choosing my words carefully because I'm the new guy and I don't want to accidentally insult someone right out of the gate.

I'll wait till I get to know you all a bit better before I start intentionally insulting you.

Oh I was talking with the owner of our business yesterday. Picking his brain about the L.L.C. and getting some feedback on my idea. He informed me that the company will be getting a large trailer mounted smoker in a few weeks. I am free to use it and the company van. Talk about stupid luck. I know nothing about the smoker yet. I think one of our clients built it. So it could be interesting.