Are you passionate about food and looking to start a low cost business then Food Truck Business May be a viable option. We have compiled ” How to Start a Food Truck in California: Step by Step Guide”
Choose Type of Food & Menu
It is important that you decide on what type of Food you want to serve your customers. You need to decide if it will be American Burgers and Fries or Fusion, Is it going to be Indian Curry Bowls or Asian noodles. Once you decide the type of food then you can move on to the next step.
Make sure you work on your Menu & Pricing. Its important for you to visit other food trucks and restaurants so you can get a feel for what other Food Trucks in California are charging for food.
Decide on Entity Type
Depending upon how many truck you plan on having, and how much profit you projected to make you want to pick the right type of entity. You have many choices such as
You can Incorporate your business
- C Corporation
- S Corporation
- Limited Liability Company (LLC)
- Sole Proprietorship
- General Partnership.
We have many entity comparisons available on our website. You should read those and learn more before deciding which entity is best.
Decide a Business Name (DBA: Doing Business As)
Decide on a Business Name for your food truck. Once you pick the name make sure you register fictitious business name at the county clerks office where you plan on conducting the business. For example, County Clerks office for Alameda County is in Oakland.
File Your Business Entity with California Secretary of State
If you decided to incorporate your Food Truck instead of being a Sole Proprietorship, then you need to File your Business Entity with Secretary of State.
You can either do the incorporation yourself or hire a Company Like Rocket Lawyer to do it for you. You can hire an attorney but it cost more than double than other online services.
This process can take anywhere from 3 days to 30 days depending upon how busy secretary of state is and if you pick a regular or an expedited option. So you want to get going on this process as soon as you can.
Pick a Physical Location & Sign Lease
If you plan on having a physical parking Location for your food truck, then you need to start looking around the city and local area.
Depending upon all the spots you will be parking your truck, you need to talk to different landlord to make sure they are in agreement with the type of food you will be serving and they are ok with you parking there for certain times of the day.
Make sure the zoning is correct for the Food Truck business. What zoning means is certain areas of city and county only allows a certain types of business in certain areas.
Make sure you receive a copy of the lease and review it detail. If you prefer you can have a real estate or business attorney review the lease to make sure there is no clause in the lease that will hurt you financially later.
Tip: If possible, only sign a month to month lease so you can check out each location and how much sales you get from each location.
Apply for State, County and City Licenses and Permits
You need to obtain appropriate State, County and City Licenses and Permits to legally operate your business.
You need to obtain a California Sellers Permit. If you plan on selling hot food and taxable items, you need to collect and submit sales tax to CDTFA every quarter. You can learn more about this requirement by clicking here
You also need to follow all Local laws such as Health Permits and food handling certificate. These are essential for safety of public.
Hence its critical that you check with your County and City to make sure you obtain all city licenses and county licenses.
Apply EIN & EDD Number for your Food Truck Business
Once you receive your Articles back from Secretary of State then you can Apply EIN for your Entity. EIN(Employer Identification Number) is a Tax ID number for your business.
You can Apply EIN either online using this link
Or you can fill out SS4 and obtain EIN via IRS Fax or Phone.
You also need to apply EDD number. You need EDD number in order to process your payroll. This is tax id number for State of California. You can Apply EDD number Utilizing this Link.
Apply for Financing
If you have enough savings then you can skip this step, if not you can start looking to obtain financing options.
You can get either a SBA loan 7A or a regular business loan. We recommend using a local bank or credit union as they are usually easiest to work with. You can read our guide regarding SBA 7A loan by clicking here. You can also look into and apply for SBA Micro Loans.
Obtain Business Insurance
Since not only you will be serving food, and also driving around the city, check with an insurance agent who specializes in business insurance for Food Facilities and ideally food trucks. You will need proper insurance to protect your business and your employees.
You need to look into getting:
Workers Compensation Insurance(For Employees)
Business Vehicle Insurance
Open a Business Bank Account
Once you have your entity documents such as Articles of Incorporation, EIN number and organization Minutes , you can open a bank account for your food Truck business.
Make sure you pick a bank that is business friendly and that doesn’t charge you arm and leg for depositing or withdrawing money.
Apply and Obtain Merchant Credit Card Service
Most small business accept credits card now. If you plan on accepting credit card with your business, you need to check with your bank and make sure you apply for Merchant Credit Card Service so you can start accepting credit card. Make sure you pick a service such as Square or Quick Books that allows you to accept payments utilizing mobile.
Setup a Website and Start Marketing
Starting a business is not enough. You need to get the word out in the community. Setting up a website for your business and start marketing online is the best strategy for a small business startup.
You not only need to setup a site, you need to update and let customers know what days and what times you will be at what location.
Furthermore, make sure your website is mobile friendly so people on the move can easily access your business hours, and locations.
Hire & Train Employees
You need to determine if you need employees to run the business or you will be starting it solo. If you do need employees then hire a payroll company or an accountant who can help you setup payroll for employees.
You need to have each employee fill out a W4 Form, I-9 form and employment Application and provide it to your payroll company.
Once you hire employees you need to start training them to make sure they learn to serve your customers. Employees when properly trained that help run a smooth business.
Schedule a Date for Grand Opening
It is important to plan a date for Grand Opening for your Food Truck Business. This is only way you can make sure all your systems are working properly. We recommend you do a soft opening first where you invite friends and family’s and have them try your food.
In summary, we hope these steps will help you start your food Truck business in California successfully. We recommend you Print out or make a to do list using, “How to Start a Food Truck Business in California: Step By Step Guide” and follow it.
If you need more help read our other articles and visit this website often to learn more tips and strategies in the future.
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