How to start a catering business
How to Start a Catering Business
The growth of corporate India has led to a rise in demand for catering business. Catering businesses today service a number of IT Parks, Factories, Malls, Schools, Colleges, Hospitals and provide employment to lakhs of workers. With the Indian economy growing at over 7% each year and many more IT parks, malls and factories being built, the demand for catering services is set to grow in the coming years. In this article, we look at the procedure for starting a catering business in India.
Setting up the Entity
The first step in starting any business is to decide on an entity type. Since, the operations of a catering business are covered under the FSSAI Act – having stringent penalties for offenses, it is recommended that a catering business be set up as a private limited company or a limited liability partnership (LLP) or a one-person company. In addition, the above entities are transferable; so, the licenses or business as a whole may easily transfer to another person for consideration. Since the above entities offer limited liability protection and are transferable, it makes them ideal for a catering business.
The catering business can be set up as a Limited Liability Partnership (LLP) if the annual sales turnover would be less than Rs.40 lakhs and capital would be less than Rs.25 lakhs – as audit would be exempted. If the LLP having a sales turnover in excess of Rs.40 lakhs of capital contribution in excess of Rs.25 lakhs, then start a private limited company.
It is better not to start a One Person Company as it would mandatorily have to be converted to a private limited company when the annual sales turnover crosses Rs.2 crores.
Obtaining the FSSAI Food Business License
the Food Safety and Standards Authority of India issues the Food Business Operator License which is a license that allows the entity to carry on activities related to any stage of manufacturing, processing, packaging, storage, transportation, distribution of food, import and includes food services, catering services, sale of food or food ingredients. It is mandatory to obtain an FSSAI Food Business License for a catering business.
To obtain FSSAI Food Business License, the incorporation documents of the business must be submitted along with proof of address, identity/resident proof of the promoters and details as per the application format. The State Government issues the FSSAI Food Business License for catering businesses. Hence, submit the application to the local FSSAI office.
The catering business would GST registration based on the annual sales turnover and state of operation. If the annual services by the catering business exceed Rs.20 lakhs, then the services of the catering business attract GST. When the catering business exceeds a turnover of Rs.20 lakhs, obtain GST registration and must start with the GST payments. To know more about starting a catering business, visit IndiaFilings.com