Smoking for money... need some advice

[darthtrader]

A few family friends like my smoked goodies so much that they want to pay me for more. From a practical standpoint, is this something I need to be cautious about as far as regulations go?

Thanks in advance, guys.

[Gowan]

If you are talking about family or VERY close friends, it's probably best to barter or have them cover your costs. As soon as you exchange product for money, you are in business, and that road leads to compliance with health department and business licensing rules, sales tax payments, liability insurance, etc. etc.

If the money involved is more than a couple hundred and you want to remain on the down-low then at the very least buy a liability policy. It's scary how fast the bonds of family and friendship dissolve sometimes when somebody gets sick or injured and blames you.

[C Rocke]

All true!

[loracle]

Hi all; I'm having the same kind of concerns that @darthtrader is having (people willing to pay for my smoked goodies) and I'm wondering if anyone could steer me in the right direction for this liability insurance thingy. I'm in California (Los Angeles area). Thanks.

[darthtrader]

Yep! ^^What loracle said.^^^

How does one transition from backyard BBQer to selling product? Can I get liability coverage without having the health department involved? At what point does the health department apply? I'm also in SoCal.

[Gowan]

I can't give you specific advice for your location, but I can give you some idea of how things work in my County here in Georgia, if you want to be considered legal by the various authorities. Disclaimer: I am not an attorney or accountant!

For the Tax Man: the Feds permit you to use SSN as a Tax ID if you are operating as a sole proprietorship. Your state income tax people may also allow this, but the sales tax people will assign you a sales tax ID #. To be legal, you will have to send appropriate sales tax payments monthly or quarterly. Even if you aren't charging your customers sales tax, you are required to pay it. Typical cost: 5-7% of sales.

For the Licensing Dept: your County and/or possible City will probably require you to buy a business license. Typical cost: about $100 to start

For the Bank: it's best to have a separate checking account for your catering business, especially if you operate under a name that is not your own (i.e. Super BBQ). Most banks won't cash a check that isn't payable to you personally. Typical cost: a box of checks

For the Law: to be legal, you have to file with the government if you wish to operate a business under any name other than your own. If you want to be John Doe, caterer you don't need to file, but if you want to be Smokin' Doe's you need to file DBA (Doing Business As) documents. Typical cost: $100 from LegalZoom.com or see your lawyer.

For the Health Department: in my state you are supposed to have a kitchen that passes the HD inspection in order to cater. Your home kitchen will not be acceptable; you must have a commercial kitchen, be it fixed or mobile. This means three bay sinks plus handwash, commercial grade appliances, etc. Very expensive to build yourself, however you don't have to do so. You can rent time in a commissary kitchen that has passed inspection. Typical cost: varies by market. Start with http://www.culinaryincubator.com to find a shared kitchen near you.

For Yourself: you absolutely must protect yourself from losing everything should someone decide to sue you because they sat on your hot firebox or experiencing mental anguish from gaining weight after eating your pork. Visit an independent insurance agent who can sell you the special caterer's liability policy you will need. A million dollar policy is bare minimum these days. Typical cost: about $200 per year.

With the exception of the liability insurance, it is possible to fulfill each requirement as you are forced to by officials or circumstance. Just be aware that if operate without being in compliance retroactive punitive action is possible. For example, catering small private parties for friends and neighbors may allow you to fly under the radar, until one of the invited guests turns out to be a health inspector.

Again, the above does not constitute legal or financial advice - check with your CPA and lawyer before acting. Hope this helps!

[C Rocke]

Originally Posted by CivilWarBBQ

I can't give you specific advice for your location, but I can give you some idea of how things work in my County here in Georgia, if you want to be considered legal by the various authorities. Disclaimer: I am not an attorney or accountant!

For the Tax Man: the Feds permit you to use SSN as a Tax ID if you are operating as a sole proprietorship. Your state income tax people may also allow this, but the sales tax people will assign you a sales tax ID #. To be legal, you will have to send appropriate sales tax payments monthly or quarterly. Even if you aren't charging your customers sales tax, you are required to pay it. Typical cost: 5-7% of sales.

For the Licensing Dept: your County and/or possible City will probably require you to buy a business license. Typical cost: about $100 to start

For the Bank: it's best to have a separate checking account for your catering business, especially if you operate under a name that is not your own (i.e. Super BBQ). Most banks won't cash a check that isn't payable to you personally. Typical cost: a box of checks

For the Law: to be legal, you have to file with the government if you wish to operate a business under any name other than your own. If you want to be John Doe, caterer you don't need to file, but if you want to be Smokin' Doe's you need to file DBA (Doing Business As) documents. Typical cost: $100 from LegalZoom.com or see your lawyer.

For the Health Department: in my state you are supposed to have a kitchen that passes the HD inspection in order to cater. Your home kitchen will not be acceptable; you must have a commercial kitchen, be it fixed or mobile. This means three bay sinks plus handwash, commercial grade appliances, etc. Very expensive to build yourself, however you don't have to do so. You can rent time in a commissary kitchen that has passed inspection. Typical cost: varies by market. Start with http://www.culinaryincubator.com to find a shared kitchen near you.

For Yourself: you absolutely must protect yourself from losing everything should someone decide to sue you because they sat on your hot firebox or experiencing mental anguish from gaining weight after eating your pork. Visit an independent insurance agent who can sell you the special caterer's liability policy you will need. A million dollar policy is bare minimum these days. Typical cost: about $200 per year.

With the exception of the liability insurance, it is possible to fulfill each requirement as you are forced to by officials or circumstance. Just be aware that if operate without being in compliance retroactive punitive action is possible. For example, catering small private parties for friends and neighbors may allow you to fly under the radar, until one of the invited guests turns out to be a health inspector.

Again, the above does not constitute legal or financial advice - check with your CPA and lawyer before acting. Hope this helps!

To answer the question in general - The Health Dept always applies. All of us who cook, vend, and cater legally as our business, spend a tremendous amount of time, effort, energy, and money to do things correctly, and in compliance.

All info above here on the mark. My 1MM/2MM per occurence General Liability policy is $640 per year. Comm'l vehicle/trailer is 3x that. Add in commercial kitchen rental, business license, Web site, marketing, supplies and equipment - None of it comes cheaply.

[C Rocke]

Originally Posted by loracle

Hi all; I'm having the same kind of concerns that @darthtrader is having (people willing to pay for my smoked goodies) and I'm wondering if anyone could steer me in the right direction for this liability insurance thingy. I'm in California (Los Angeles area). Thanks.

Need a Business License first, then a Tax ID number to collect and pay sales tax to CA BOE. Next, must either have the capability to "cook on site" for each job, or have access to a licensed (Health Dept permitted) commercial kitchen or commissary for food storage and/or preparation. No food for sale or free distribution may be prepared in a home or residential kitchen per CA DEH regulations. If you vend at a location, you must have a Health Dept permit for that event/location, and in many cases need a Serv Safe certification or Food Handler's Card. Heath Dept is the first stop based on your business model.

[42BBQ]

Great question darthtrader, mainly because the same thoughts are going through my own head. I have a loose five year plan for entering the market as a vendor. I know my initial setup cost will approach $20,000 most likely. That is why it is a five year plan! My only advice to you as a NON caterer/professional pitmaster is this: make a choice to do it, or not do it. When you make the decision to do it, go after it with a vengeance. Do everything with all of your God given ability. Obviously you can Que based on the initial question. Don't do anything half @$$ed. This is the American Dream, to have a passion, pursue it, and make it your living. Good luck brother!

[Ford]

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.