You could argue that opening a restaurant is the epitome of the small business dream. It’s often showcased in the media, possibly because it’s such a personal and passionate endeavor. The kind of food on the menu and the decor are all a reflection of who restaurateur is and what drives them to succeed.
But beyond the glamour and idealism of owning a restaurant lies a number of legal challenges that will trip up well-intentioned, but ill-prepared, entrepreneurs.
What is the Best Legal Structure for Your Restaurant?
One of the first decisions you will make after you’ve decided to get in the restaurant game will be to choose the legal structure of your business. While there are several options, the most popular one for restaurants is an LLC. A sole proprietorship is out of the question, because it leaves you personally susceptible to lawsuits. LLCs not only protect you legally, but they don’t require a board of directors and shareholder meetings like corporations (S corp, C corp), something many smaller family-owned businesses may prefer to avoid. If you would like help filing your Articles of Organization, please go here and get a free instant quote!
Licenses and Permits
Serving products that people put in their bodies will always require stricter regulatory oversight than most other businesses. Besides a general business license, there are food service permits, food safety permits and alcohol licensing. The Small Business Association’s Permit Me tool is a very handy way to figure out what licenses and permits you will need by simply entering your zip code and type of business.
More On Food Safety
Study and refer to your local health codes. There are strict rules about how restaurants can handle, store and prepare food. There are also employee hygiene requirements. As long as these expectations continue to be met, you will be in good standing with your local environmental health department.
Before you choose your restaurant’s location, fully understand the zoning laws that pertain to your potential place of business. What if you want to add to the existing structure years down the road, even if it’s not something on your mind now? You may be restricted from doing so. A local land use attorney can help better understand potential restrictions, permits and other aspects of the law.
Commercial Lease Negotiations
Commercial leases aren’t set in stone like the 10 Commandments. That means you need to be prepared to negotiate changes that suit your needs. If you are inexperienced or uncomfortable with contract negotiations, hiring an attorney may be a wise decision.
Restaurant owners are vulnerable to lawsuits in many aspects of their business, whether it’s an injury to a customer or employee, or medical expenses related to food poisoning. If someone leaves your establishment drunk and causes harm to others, you are held responsible unless you are protected by liquor liability insurance.
Of course, it’s not just about protecting yourself from lawsuits, but protecting your assets in case of damage or theft. Insuring your property is a must.
Every state has different legal requirements, so do your due diligence. No one said this restaurant stuff would be easy, but if you work hard and play by the rules, you may just end up the toast of the town.
Jason Knapfel writes for Horenstein Law Group, which offers a broad scope of services related to legal issues affecting business owners.