A lot of people — especially those who like to cook — are looking to get into the catering business these days. Here are some tips for getting off on the right foot:
Contact your state liquor commission and learn the rules
Most states don’t require a special permit to engage in a catering business, but if you’re planning to serve liquor, that’s a different story. In just about every state, you cannot serve liquor at your clients’ events unless either you have a special license — called a “caterer’s license” or “off-premises license” — from your state liquor commission. To check out the laws in your state, search online for “(your state) liquor license” or “(your state) liquor permit.” Search on the site for “catering” or, better yet, call them during business hours and befriend one of the agents, who usually will be happy to explain the rules to you and send you any necessary forms.
If you are required by state law to obtain a catering permit, ask your state liquor authority to recommend a “facilitator” — these are retired liquor agents who use their inside knowledge of the system to help businesses apply for permits. For a reasonable fee, these folks can save you a lot of time and trouble by making sure your permit application “sails through” the system. Whether or not you are required to obtain a liquor permit, you should warn your clients that your employees will “card” any guest at your clients’ events who looks under 21 years of age and you will “cut off” any guest whom you reasonably determine has had too much to drink. Not doing so may expose you to serious legal, and perhaps criminal, liability.
Register for state and local sales taxes
In just about every state, you will be required to collect and pay sales taxes on the fees you charge your customers. If you are catering for a nonprofit organization, they must furnish you with a copy of the “exempt organization certificate” they received from your state tax authority. If they don’t have one, you must charge sales tax, no matter how much they beg, plead and whine.
If somebody slips and falls during one of your events, or loses a fur coat or valuable jewelry, you can bet they will threaten to sue everyone in sight, including you. Ask your insurance broker how much it will cost to obtain basic “errors and omissions” coverage for your business.
Join a catering association
There are several associations of caterers in the United States, such as the International Caterers Association (www.icacater.org) and the United States Personal Chef Association (www.uspca.com). Join as many of them as you can afford. These organizations often provide training programs, cut-rate insurance and other benefits for their members and may even help you get business by listing you in their online directory.
Create a catering contract
Your catering association may have sample forms for these, or a local attorney can prepare one for you for a fee, which will probably be in the $300 to $500 range. Be sure your contract contains a clause:
• Requiring the client to give you a binding estimate (called a “minimum guarantee”) of the number of guests not later than 10 business days before the event. If the actual number of guests is lower, you should still be entitled to charge for the guaranteed number of guests;
• Requiring the client to pay you a “cancellation fee” (generally, one-third to one-half the contract amount) if they fail to respond to your inquiries in timely fashion, or cancel the event within two weeks prior to the event date;
• Stating that the client is solely responsible for any injury, property damage, loss or theft that may occur during the event unless caused by your “willful or criminal misconduct”;
• Allowing you to terminate the contract due to “circumstances beyond your reasonable control”;
• Requiring the client to pay the balance due under the contract either immediately before (preferable) or immediately after the event;
• Stating clearly that “while Caterer will use its reasonable best efforts to perform all services in accordance with generally accepted standards prevailing in the catering profession, there can be no assurance that Client or its guests will be satisfied with the event, or with Caterer’s performance.”