What Is a Restaurant Concept? Restaurants, bars, and other hospitality related businesses are really no different to traditional businesses. How to Run a Restaurant: Legal Structure. This entity is a match for restaurateurs who want to be the boss — the only boss. There must be a common vision, mission, and commitment, and a high level of communication, creativity, and expertise between partners. You have five basic choices: a sole proprietorship, a partnership, a limited liability company or a corporation- … It is quite common for family members and friends to venture into the restaurant business together. Remember that fees, tax considerations, and reporting requirements will influence your choice in business structure. Partnerships are very inexpensive and easy to form. Hospitality operations, Partner selection is the single most crucial component … Becoming a restaurateur combines an enormous amount of passion and vision. Receive coupon codes and more right to your inbox. By using this site, you signify that you agree to be bound by these Universal Terms of Service. © Kahn, Litwin, Renza. When selecting your business structure, consider if you want an Initial Public Offering (IPO) of company stock. Taxes can be filed separately from the personal taxes of the corporation's owners. Similar to sole proprietorships, the business isn't a separate entity, and the owners file the business's taxes when doing their personal taxes. So, what kind of business partnership are you embarking on? Instead, they're more common for large chains and establishments with multiple franchises. A C corporation is an independent entity that is taxed separately from its owners. Restaurants, Copyright © Typsy 2019 All rights reserved, What to look for in a restaurant business partner. All Rights Reserved, Voluntary and involuntary withdrawal of a partner, What to do in the event of a partner’s death, Keep your personal assets separate from that of the business, Quickly establish credibility with customers. Many countries, states, provinces and local municipalities have different information on their registered requirements. Each partner contributes to the business through money or expertise or connections and shares profits and losses. Unfortunately, within LLCs, while the owners are referred to as members (similar to what stockholders within a corporation are), LLC structures may not be made public. Contact any member of our Hospitality Services Group. Here are the three that are most useful to a restaurateur. Stan Smith, an attorney with Womble Carlyle Sandridge & Rice, says restaurateurs planning on opening multiple units are best off establishing a separate LLC for each location. Not million, billion. Make sure that you select the right partner. Hospitality managers, Even if you are partnering with a close friend or relative, you will want to be sure that he/she has the skills and resources to be a good business partner. While LLCs offer limited personal liability and many freedoms, there are some downsides as well. But, LLCs can be time consuming and difficult to set up, so they're not optimal for small restaurants and businesses. Consider creating a partnership agreement before going into business together. LLCs offer tax-treatment flexibility. If you aim to operate a Michelin restaurant successfully, then you may need to use this org chart example to have a good knowledge of its organizational structure. Members are protected from personal liability for any business decisions or debts that are incurred. Sometimes, corporations can be taxed twice. Â© 2003-2020 WebstaurantStore Food Service Equipment and Supply Company â€” All Rights Reserved.Do Not Sell My Personal InformationVariation ID: Types of Restaurant Ownership Business Structures | WebstaurantStore, The Leading Distributor of Restaurant Supplies and Equipment. Element, Independent Ownership vs. Questions? Can your restaurant concept withstand not only the market, but also two or more owners? November 03, 2020, By LLC owners can divide profits up in any manner that they choose, which is a perk given the risks of opening a restaurant. A restaurant bookkeeper oversees the finances and budgets for a restaurant. With hundreds of thousands of products available and millions of orders shipped, we have everything your business needs to function at its best. Non- Profit Organizations. Understanding the differences between a limited liability company and a corporation will help you to select which structure will work best for your restaurant. Partnerships are a beneficial ownership structure, but there are some downsides as well. And even if you do have all of those qualities, it can often be too much for one person to endure. Thanks!
Follow her on Twitter: @deborahsweeney and @mycorporation. Similar to sole proprietorships, there is no legal separation between the business and the partners, so there is a lot of personal liability if the business fails or goes into debt. Teamwork is a big advantage to establishing a partnership. Because of the ownership structure, cooperatives are more collaborative than other types of businesses. Teamwork is a big advantage to establishing a partnership. Income tax is not paid on a corporate level. Often, one partner looks after the back-of-house while another looks after the front-of-house, or is one partner just there to assist in finances while the other operates the business? Privacy | Together, you’ll share profits and losses. It is far better to discuss issues early, before they get to a point where they damage your partnership, working relationship, or personal relationship. Restaurant accountants or bookkeepers can often offer advice on reducing overhead costs and reducing food costs in your establishment. You should also consult an attorney and an accountant if you need additional legal and financial advice regarding taxes, liability and financing, and your goals. When selecting a business structure for your company, there are four main choices: It is recommended that the majority of small businesses, such as restaurants, choose an LLC. Pro tip: Being your own boss means that you’ll also be held completely liable for all of the company’s debts. Find out how we can help you achieve your goals. It is best to work off the skills of each individual partner. If you're planning on starting a large restaurant chain, a C corporation may be the best type of business for you. One partner might be better at managing the kitchen, while one is more cut out for managing the staff, for example. To ensure potential partners are on the same page, it is imperative that you all have a similar vision, mission, values, and culture statements. There are many different ways that you can organize your business and the ownership structure, but not every type is viable for the foodservice industry. You will inevitably run into issues if you and your partner’s goals are not aligned, or if one of you has growth or franchising plans that he/she has not communicated to the other.