Are you a chef or cook who wants to know how to open a restaurant in your area? Well look no further!
Check out RR’s steps below to learn how to open up a restaurant in any state.
1.Create a Great Business Plan
The initial step with opening any restaurant should be the development of a solid business plan. Most financing companies and other lending institutions will require you to submit a business plan when applying for any loans or business grants. Business Plans allow you to objectively gauge the feasibility of a business idea by laying out the framework for every aspect of the operation. While business plans may come in many different layouts, the below components are considered to be the most critical elements of a comprehensive business plan:
- Product/Service Description
- Feasibility/Competition Analysis
- Financing Plan
- Marketing Plan
- Management & Operational Plan
- Legal Requirements
2.Determine Your Business Ownership Structure
The structure of your restaurant should be defined before submitting any applications for financing or building, as it defines the legal infrastructure of your business (we strongly recommend consulting your legal team for this step). Most restaurants operate as either Sole Proprietorships, Partnerships, or LLCs, with the exception of large chains and franchises. It’s imperative to consider aspects such as decision-making hierarchy, legal liabilities, and tax implications when deciding which business structure would be the best fit your operation. Find the main types of business structures below:
- Sole Proprietorship
- Limited Liability Company (LLC)
- Corporation (Incorporation application must be filed with your state)
3.Business Name Registration
Registering your business name or “Trade Name” is required if you plan to operate under a name that’s independent of your personal name, and is required for all corporations. Your Secretary of State’s office (or your local county) website can provide more details on registering your business.
Quick Steps to registering your trade name:
- Choose your business name
- Check business names and trademarks to assure there is no duplication on your part
- File an “Assumed Name Certificate”(also known as DBA certificate) for your new trade name
4.Obtain an Employer Identification Number
If you plan to hire any employees for your restaurant you’ll need an EIN number from the Internal Revenue Service. Your EIN will be used to identify your business for tax reporting purposes. You can apply for an EIN online by simply accessing the form at http://www.irs.gov/.
5.Register for State/Local Tax Accounts
Restaurateurs will also be responsible for state taxes (if applicable in your state). To register for a business tax account and determine which taxes are collected for your business structure (if any), you can visit your state’s Department of Revenue’s website online.
6.Setup a Business Bank Account
As a business owner, it’s important for you to have checking account that is separate from your personal checking account. Having the ability to clearly monitor and report your expenditures and profits will make for much easier and concise record keeping, tax/sales reporting, expense write-offs, etc. Many banks now even offer ancillary services for business customers including payroll services and POS systems as well.
7.Obtain Business Licenses and Permits
Each state varies in the specific licenses and permits required before opening a public food service establishment. Each city/county will also have their own regulations as well. Obtaining approval for licenses and permits can be a challenging process, and it’s best to contact your state and local government agencies to assure that you have all of your ducks in a row before submitting applications. Click here to find your state’s Health and Sanitation Department.
8.Complete Federal/State Employee Documentation
Restaurant owners who plan to hire employees are required to submit various documents regarding their employees including: employee citizenship verification, new hire reporting, and wage withholding documentation. (Note: Be sure to note how soon each form must be submitted after an employee is hired).
Access to these forms can be found at the links below:
- Employee Eligibility Verification (Form I-9) S. Citizenship and Immigration Services
- W2 Filing for Social Security Wage Withholding Social Security Administration
- Federal Wage Withholding Tax Form Internal Revenue Service
- State Wage Withholding Tax Form Department of Revenue (click on your state)
- New Hire Reporting Form of Labor (click on your state)
9.Obtain Business Insurance
State and local laws require restaurant owners to obtain specific insurance coverage based on various aspects of their establishment. Once you determine your insurance obligations you can check out sites like Netquote or eHealth Insurance to receive fast rate quotes from multiple carriers.
The most common restaurant insurances include the following:
- Workers Compensation-While requirements vary with each state, as a general rule, employers must provide workers compensation for their employees, or they must meet the requirements to self-insure (mostly larger companies usually). Be sure to contact your state’s Department of Labor about specifications for Worker’s Compensation before hiring any employees.
- General Liability
- Property Insurance
- Health Insurance
- Liquor Liability Insurance
Lastly, always remember that the better you plan out administrative requirements for your establishment, the less headaches you’ll have once you open your doors. Good luck!