Do You Need an LLC for Your Food Truck Business?
Food trucks can be a delicious money maker. According to Food Truck Nation, the food truck industry is estimated to have reached $2.7 billion in revenue in 2017. This is a 300 percent increase in revenue in the past three years, with food trucks active in over 300 cities. Combined with a relatively inexpensive price tag, this growth makes food trucks a competitive option for aspiring food service entrepreneurs.
Starting a food truck business can be lucrative, but it can also be a risky and complicated path. When it comes to owning and operating any type of business (including a food truck), you will want to protect your assets from any potential liabilities.
For example, each state has their own set of rules and regulations that food truck businesses (and businesses in general) must follow. This can all be difficult to navigate, especially if you are a first-time business owner. Food Truck Nation notes that: “On average, starting and maintaining a food truck business for one year requires an entrepreneur complete 45 separate government-mandated procedures over the course of 37 business days and spend $28,276 on permits, licenses, and ongoing legal compliance.” Yikes!
Your Food Truck LLC
The amount of ongoing legal compliance you may need when owning and operating a food truck business lends itself to plenty of risk. In order to protect your personal assets from all those risks, you may want to consider forming a limited liability company (LLC). An LLC does just that — limits your liability and separates your personal assets from your business assets in case any legal issues may arise.
In the food truck industry (and the food industry in general), there are plenty of risks you’ll take every day. The chance of serving food that inadvertently makes someone sick is high, and we unfortunately live in a society that often turns to litigation. Forming an LLC to protect your personal assets is certainly worth it when compared to the amount of potential risk.
An LLC is just one business entity option you can choose from — but it’s one of the most popular options when it comes to the food truck industry because of the structure and low costs associated with it. However, you can also evaluate whether to incorporate your food truck company, or operate as a sole proprietorship or partnership. That decision ultimately depends on your business goals, taxation, costs and what your state legally requires of your food truck.
Starting a Food Truck Business: How To Form Your LLC
Besides crafting your menu, deciding on a fun brand name and finding a truck, you might want to consider forming an LLC to protect everything you are building. As discussed above, forming an LLC for your food truck business can be a smart move to mitigate risk.
It is also easy and quick to form your LLC with Incfile for as little as $0 plus state fees. Here is a short overview of the steps involved in forming your food truck LLC:
- Select a state and business address
- Name your LLC
- Select a Registered Agent
- Decide how to file: do it yourself or hire an expert
- Obtain and file your Articles of Organization
- Create an Operating Agreement
- Get a federal Employer Identification Number for your LLC
Each state may also have their own requirements that you will need to comply with. After you form your LLC, you will need to acquire certain permits and licenses to operate in the city and state that your food truck business is serving in. For example, you will need licensing from a local health department by passing a health inspection.
If you are looking for more information about local licenses and permits, check with your city or county clerk’s office. You can also use Incfile’s Business License Research package, which will tell you all the permits you need to have in place, and even fill out the paperwork for you.