Starting a small business

[Bobafett]

This will be a long one, but I know there are some smart people on here who can offer some feedback and advice.

Since moving back to the rural south, I have been trying to figure out my career path here.   The pandemic showed me that I am mentally done with the everyday grind of running a restaurant.  I have done a few caterings that were quite profitable, but that?s not enough to support us.

So I started looking for gaps in a food market that I can fill.  The pizza options in a 30 mile radius are:dominos, little caesars, pizza inn, Pizza Hut, and one ?upscale? chain called lost pizza.  I have developed a take and bake concept that I deliver to different areas on different days.  In Wisconsin and Minnesota, almost every pizza restaurant also offers take and bake, but outside of a few papa Murphy?s scattered about the south, it?s not a thing.

Now I am up against growth and legality.   I obviously need to form an LLC or dba, but I have no clue how to determine what is better for my situation.  I also need to find a space to make these that is licensed by the health department.   

I have a friend of the family who runs a word of mouth cookie business that could also use some extra kitchen space to ramp up her business. 

I have been mulling over a co-op kitchen idea where the business has the license and equipment/utilities and people could join, similar to a country club, and schedule time for kitchen space.  Perhaps have a small counter service that could sell the different items out the front door, or allow people to make jams/spices to sell at farmers markets.

I also need to determine how to market this pizza business.  Word of mouth for 1 month has spread me to sell about 40 pizzas a week.   A website and ordering portal are the next things I?m trying to figure out.  How hard is it to set up a website and use Shopify or PayPal or Venmo as payment options?  I?ve never done any graphic design or website design, but I am fairly competent with new technology.

Thanks and I look forward to any responses.

[mbw]

I think ytowndan used to own a pizza place, he would be helpful.
Also, McGrupp is currently starting a pizza business as well.
I dont know if they post here often but they should be easy enough to get in touch with.

great idea, good luck!

[PIE-GUY]

Ghost kitchens are a real trend these days. There are a couple in austin and a huge one being built now. Basically, it allows a restaurant to open with low startup cost and sell to go only. Lots of Uber eats and other delivery platforms swing thru there all say picking up orders.

That said, they are big buildings with multiple commercial kitchens. Building a single shared commercial kitchen could actually work pretty well.

I also know folks who have gotten businesses off the ground by renting kitchens in churches that are basically commercial grade and rarely used.

[rowjimmy]

I don't have any professional advice to offer but I do think both the takeaway pizza & co-op kitchen are solid ideas and I wish you all the luck.

[emay]

It might be hard with pizza but the Food truck model has been working well here in Denver w/ Square site pre-order. A couple do the pre order only model where they announce on Instagram that they are opening up their Square site menu and take pre orders for a day and then arrange pick up at a local brewery or dispensary. Usually wonton or Hibachi type food trucks though but maybe you can set up something similar with a co-op kitchen space with pick up outside too.
Square sites are fairly easy to set up and have their own check out platform. Let me know if you need help setting it up. You can get the square card readers as well for onsite payment.

[shoreline99]

I also know folks who have gotten businesses off the ground by renting kitchens in churches that are basically commercial grade and rarely used.

This. Many churches have to carry a full-on commercial kitchen license and this might be a good way to start.

[Superfreakie]

LLC vs. DBA as sole proprietorship

I would highly advise taking the LLC route and once the LLC is granted by the state or commonwealth, file Form S 2553 with the IRS to turn it into an S-Corp.

The S-Corp designation allows you to avoid the double taxation problem that LLCs owned by a small number of people face: paying tax on the company's profits and then paying tax again on the same money when they/you draw profit to pay themselves/yourself.

With an S-Corp, you simply file your profits (and possible salary) on your K1 tax filing and are then only taxed once. It is important to note, however, that after your LLC is granted you have 2 months and 15 days to file the S-Corp Form with the IRS.

The S-Corp designation was created to allow small business owners to take advantage of the limited liability benefits that bigger companies formed as LLCs enjoy. Prior S 2553, small business owners stayed away from LLCs due to the double tax problem; this was the tradeoff for liability exposure.

Admittedly, an LLC may cost a little more to file than simply declaring yourself as a sole proprietorship DBA. Legal Zoom will do it for a few hundred dollars + State/Commonwealth fees. In Massachusetts, it's about $1,000 total. Rhode Island, about $700.

If you have assets (house/savings/vehicles, etc...) the money spent to set up the LLC will bring much peace of mind.

One final point, while an LLC protects your personal assets, if you use them for business they can be seized by creditors. For example, you have an LLC and you list your house as the location of the business; manufacturing your widgets in the basement of said house and using rooms upstairs to box widgets and run an office. If this business gets into financial trouble, the house would be considered fair game for creditors as it was clearly part of the business - and they have a right to all business assets. If you had not done business in this manner in the house, then you keep your house.

Having said all that, maybe your restaurant pop-up has no liability risk, so this is all unecessary. I get sued fairly frequently, so it's a no-brainer.

[GBL]

Fuck you, I'll see you in court

-some guy, probably

[Superfreakie]

Fuck you, I'll see you in court

-some guy, probably

It's actually:

"Fuck you guy, you'll see, you think you're so fucking smart with your big words. I'll be changing your company name to mine after I sue your ass for everything you own."

- all of them

[shoreline99]

Fuck you, I'll see you in court

-some guy, probably

Pretty much.

I set up an LLC for my business with my accountant years ago, it's worth spending an hour or two with a guy who also knows what other paperwork you need to establish for tax purposes (sales/use tax, ein, etc). He can also help you set up a simple bookkeeping system.

I would also set up two LLC's - one for the co-op kitchen business (if you go that route) and another for the pizza business. You may find one carries more profit (or liability) than the other

[Bobafett]

Thanks for some good info.

My brother in law is quite an entrepreneur and we talked Friday night about LLC/S-Corp route.   I agree that there would be 2 separate LLCs setup. 

The church kitchen idea is a good shout too.

I?ve come up with some good logo/marketing ideas, just need to start building a website and think through the order/production/delivery/payment process.

  I?ve been using Venmo and cash to receive payments, but I?m already feeling a bit of wariness with taxing and staying undercover before I go totally legit.  Should I just buy a car wash?

[ytowndan]

When I sold my place in August of '08, online ordering was really only something a handful of large chains did (and in only the biggest markets), Grub Hub and the like were non-existent, and you didn't need a "social media presence" to survive in a competitive industry.  Things seem to have changed so very much in the Baker's Dozen years since I've been out of the business.  So when it comes to these sort of things, I'm basically useless.   :hereitisyousentimentalbastard

My best advise is to go the s-corp route, largely for the tax reasons that Superfreakie so excellently spelled out.  Since you're no n00b in the food service industry, I'll skip the kind of general restaurant advice that might be helpful to others.  But if you have any pizza-specific questions I'd be happy to try and help.  I think that if you feel you have a superior product and there's room in the market, then fucking go for it!  But, perhaps a bit of research into how take and bake would be received in your area wouldn't hurt.  If it's a completely foreign concept around there, you never know what could happen. In 2005 we had a Papa Murphy's come into town and close in less than a year.  Well-funded as they were, it just didn't work.  Though, this was 16 years ago, and it's crazy competitive around here. 

I love your kitchen co-op idea!  Good luck, and I hope you keep us updated.

[mopper_smurf]

Thanks for some good info.

My brother in law is quite an entrepreneur and we talked Friday night about LLC/S-Corp route.   I agree that there would be 2 separate LLCs setup. 

The church kitchen idea is a good shout too.

I?ve come up with some good logo/marketing ideas, just need to start building a website and think through the order/production/delivery/payment process.

  I?ve been using Venmo and cash to receive payments, but I?m already feeling a bit of wariness with taxing and staying undercover before I go totally legit.  Should I just buy a car wash?

I saw what you did there.