Do you want to know the legal requirements you need to starting a bakery? If YES, here is a checklist of bakery business licenses, permits & insurance.
No doubt starting a bakery company is indeed a serious and competitive business which is why the legal entity you choose will go a long way to determine how big the business to can grow. Choosing a legal entity for a business such as a bakery company is a bit complicated especially if you decided to grow the business big. Some of the areas that need to be strictly looked in during the legal aspect of the business include:
Getting your Bakery Business Licenses, Permits & Insurance
1. Licenses and Permits
Apart from complying with food safety laws specific to your state, you may be required by your state laws to acquire special permits and licenses before you can start and run a bakery. This depends upon whether you’re into full service bakery making your own baked goods or whether you simply resell baked goods that you buy wholesale.
The bakery may be subject to regular inspections by health officials. You must have excellent sanitary practices and maintain a bakery providing food which is safe to eat. Hazard Analysis & Critical Control Points is a management system you can implement which will analyze the safety of the food you’re selling to the public. It allows you to monitor processes from raw materials to the finished product.
3. Legal Structure: A legal structure must be set up for your bakery which includes setting up a fictitious name in your county, filing a DBA with the county clerk, or establishing a corporation and apply for an employer identification number with the IRS. Either of these two options will allow you to conduct business where you live.
4. Taxes: You must collect sales tax if your state mandates sales tax on baked goods. This money is then turned over to your state’s revenue department. The collection of sales tax depends on your specific state’s requirements for restaurants and bakeries. Normally, you must file tax forms with your state to obtain a tax ID number so that you may pay the required sales tax to the revenue department.
5. Business Structure
You need to consider how you will set up your business. There are pros and cons for different business structures, and it is up to you to decide which works best for you. This could include been a general partnership, a limited partnership, an LLC, a “C” corporation, or a “S” corporation.
It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice on the legal structure to build on.
6. Possession of necessary licensing: It’s a norm that Opening a food business requires having some sort of food business license. Food safety laws are specific to each state, so it is important that you are aware of the food safety laws in your own state, and the relevant licenses you must obtain.
7. Drafting a safety policy: No matter how you look at it, there is a need to detail your expectations; such as expecting staff to dress properly, not to wear open-toed shoes, to use the appropriate equipment, etc, and you also need to set out a clear procedure to be followed in the event that someone gets hurt.
List of Legal Documents You Need to Run a Bakery
In The United States of America and of course all over the world, the bakery industry is amongst the industries that is highly regulated so as to avoid costly health breaches in the country. If you are considering starting a bakery company, then you are expected to meet the legal documents requirements as stipulated in the constitution of your country.
These are some of the basic legal document that you are expected to have in place if you want to start a bakery company in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Memorandum of Understanding (MoU)
- Employment Agreement (offer letters)
- Operating Agreement
- Company Bylaws
- Operating Agreement for LLCs
- Insurance Policy
Is Professional Certification Needed to Start a Bakery?
The bakery industry is one of the industries that is highly regulated so as to prevent costly health breaches that might arise if not properly taken care of, as this could endanger the health situations of a country. It is for this reason that if you are looking towards beginning a bakery company, then you should acquire relevant certifications with the appropriate bodies.
While it is safe to say that, there are necessarily no professional certifications required for this industry, it’s indeed a necessity that you get acquainted with the following industry regulators in the United States of America.
- American Bakers Association
- Retail Bakers of America
- Progressive Baker
- Independent Bakers Association
- American Society of Baking
- American Culinary Federation
The Best Insurance Needed for a Bakery
In the United States and of course in most countries of the world, you can’t operate a business without having some of the basic insurance policies that is required by the industry you want to operate from. Besides, the nature of the bakery industry requires that you have the proper insurance cover in place or else you will be forced out of business if anything goes wrong with the products.
So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best insurance policies for your bakery company; it is their duty to help you assess the risks involved in the type of bakery business you intend running and then advice you accordingly.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own bakery company in the United States of America;
a. General Liability Insurance: This insurance covers your business against claims for bodily injury and property damage. When adding property coverage to a General Liability policy, this is often referred to as a Business Owner Policy or BOP insurance. There are many facets to BOP insurance. General Liability protects your small business from injury or damage caused by your employees cause or injury to 3rd parties while on your premises
b. Commercial Auto Insurance personal travel — liability, collision and comprehensive, medical payments (known as personal injury protection in some states) and coverage for uninsured motorists.
c. Workers Compensation Insurance
Workers Comp covers the medical and lost wage costs (similar to disability) when an employee suffers a work-related injury or illness. This is generally required in most states if your business has any employees. Depending on what state you start your bakery in you might be required by law to carry Workers Comp insurance even if you have only one employee.
d. Professional Liability Insurance: This insurance provides coverage in the event that a business is held legally liable for damages which are cause by your improper advice or negligence. It is also referred to as Errors and Omissions insurance or E&O insurance.
Intellectual Property Protection and Trademark
If you are about to start your own bakery company, then you should consider filing for intellectual property protection. Filing for intellectual property protection for a bakery company goes beyond protecting your company’s logo and other documents’
This could be in form of writing disclaimers that can point to that fact. For example, something like this is really useful: “While we take all reasonable care in the preparation of each item, please consider that each item has been produced in facilities which handle a range of food products, including but not limited to, milk, eggs, peanuts, gluten, etc. It is not possible to guarantee the total absence of any of these ingredients in any of our items.”
If you want to file for intellectual property protection and also register your trademark in the United States, then you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.