The themes for today’s installment are: Liability and Taxes.
I am hesitant to devote an entire post to such dour, scary topics, but they have loomed large for me since Part 1 and are very important. And since they are important, and unavoidable, I can share a little of my experiences with them as Rosemary and I keep inching closer to starting Sunberry Baking Company in earnest.
When you are doing anything with food for sale, liability is and should be a major concern for you. I understood that prior to the Sunberry undertaking, sort of like I understood that the Eiffel Tower is in Paris (or possibly in Las Vegas, though I have never been there either…). It made conceptual sense, but it was not visceral, not immediate, not “real.”
The situation is pretty obvious: You, as a food entrepreneur, are serving people products that you have made with your hands or by your employees in your kitchen, and those products will be ingested and digested. In a perfect world, that process of exchange and consumption goes swimmingly and everyone is happy. But sometimes, your hands or something else can introduce bacteria, viruses, or other nasties that can make people sick. Or, even if you do nothing wrong with your food, some hapless customer may slip on your floor. Or a piece of equipment may explode and set everything on fire.
This element of risk in operating a food business is where liability has entered my life as a food entrepreneur. It is frightening, yes, to think that someone could sue our business…and other businesses and individuals that are somehow connected with Sunberry Baking Company. Or that our entire endeavor could go up in smoke.
While being regaled with these horror stories, I kind of began envisioning my insurance agent as a supehero. Think about it: He, through his superpower of knowing about and providing me with a business insurance policy (including general liability, property damage, and more), is helping to protect me from the wrath of villainous liability. Yay!
Seriously…I have never been one to read insurance contracts for fun, nor to get coverage for anything but to protect myself against nightmare scenarios. But, as a new entrepreneur, I am learning just how important it is to take liability into account–which is why we formed our business as a Limited Liability Company (LLC), why we are seeking a commercial kitchen that will be inspected, why we will be following food handling and packaging guidelines closely, and an element of why we are using reliable, high-quality ingredients in all our products.
Insurance will help us wrestle the villain liability, but there is no insurance against taxes. Like insurance, I have tried to put as little time and effort into taxes as possible (though I have prepared my own so far since coming of taxable age). But like liability, taxes are an inherent part of running a business, and so I have been wading through the various types of taxes, different by location and governmental level, in order to get us and keep us in good standing with the various tax-levying agencies.
It is a little confusing, though, to try to figure out what exactly the tax rates are for different types of food, when and where you need to collect them, and how to report them. There are local taxes, state taxes, and federal taxes, each with their own rates, requirements, filing frequencies…
I am getting a better grip on all of this (I think), but it is still intimidating. That is why a key item on my to-do list is to meet with an accountant in order to go over everything a little more closely, so she can help me understand what all our responsibilities are.
Just because liability and taxes are scary does not mean we can run from them. Thanks to superheros like our insurance agent and accountant, and so many other reliable individual resources out there, any new entrepreneur can work through the terror and be successful.
- Justin Van Kleeck