Food Franchise Business · Getting Started

How to Deal with Insurance and Taxes

Getting Started with a Food Franchise

Yes, insurance and taxes are all part of the game! Even restaurants need to have insurance in place to protect them and their customers. And even restaurants have to pay taxes. The more you know about each the easier it will be to bite the bullet and make sure that you're paying both.

There are two basic types of insurance that you should have: Workers' Compensation Insurance and Restaurant Property/Liability Insurance.

Workers' Compensation Insurance is your insurance against liability that is imposed on you when one of your employees has an injury while working for you. You'll be required to pay benefits and provide care for any employee that is injured on the job, killed on the job, or becomes sick due to the work environment.

Restaurant Property/Liability Insurance protects you and your customers against the loss or damage of personal property.

It's important that you have both types of insurance or you could face some serious fines and penalties if anything happens on your restaurant premises.

There are other types of insurance that many restaurants carry. Following is a list of insurance coverage that you can purchase for your business.

• Property insurance. This includes building and tenant insurance, contents insurance, insurance for theft, insurance if your food supply is ruined and needs replacing, and insurance for your restaurant equipment.
• Crime. You may want to have insurance for any crime that is committed to your restaurant such as employees stealing from you.
• General liability. This is just like the liability that you carry for your personal home insurance and is a must when it comes to operating a business.
• Liquor insurance. This is important if you're operating a restaurant where you are selling alcohol.

No matter how careful that you think you and your employees are being, there is always the potential for an accident to happen. You want to be as well covered as you can with the right kind of insurance so that you can adequately pay for the losses and damages. Some common accidents that occur in restaurant include:

• Grease buildup leading to kitchen fires
• Inadequate or infrequent cleaning of hoods, ducts, filters, deep fat fryers and fans
• Absence of automatic and manual fuel cutoff valves
• Improperly extinguished cigarettes and candles
• Inadequate wiring or other electrical defects
• Overheated motors in refrigeration and air conditioning units

Taxes are part of the reality of owning any type of business, a restaurant included. You'll have to pay Federal as well as State Taxes. The restaurant business is notorious for tax fraud.

Take the time to find out what insurance requirements you need to meet and what taxes you have to pay. There are experts out there who can help you make the right decision, such as insurance brokers and tax consultants. You don't want to be in operation and find that you are violating a tax law that you could easily have known about ahead of time if you'd only asked the right questions.

Good luck finding the perfect food franchise opportunity!

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