Maybe it’s the simplicity and the demand of a hot dog stand that has made you decide to put it up as a business. This leads you to wonder if you need an LLC for a hot dog stand. The simple answer is that you don’t need an LLC, but you might want to register the food business as an LLC to protect personal assets or for tax purposes. Here are two places you can start forming an LLC for a hot dog business right now:
- ZenBusiness ($49 to form an LLC + State Fees)
- Northwest Registered Agent ($225 to form an LLC + State Fees)
Below is a guide of the different business structures you should know in order to decide what’s best for your hot dog stand. Let’s warm up those buns and understand the details of this business structure.
- Do you need an LLC for a Hot Dog Stand?
- Advantages of an LLC for a Hot Dog Stand
- How to Form an LLC for a Hot Dog Stand
- How much will it cost to file an LLC for a hot dog stand?
- Can My Hot Dog Stand Have a Different Name than My LLC?
- Do I Need an EIN To Start a Hot Dog Stand?
- Can an LLC Help with My Taxes?
Do you need an LLC for a Hot Dog Stand?
A hot dog stand or a hot dog cart is relatively considered to be a simple business. You’ve got your stand or cart, your hot dogs and buns, your toppings such as relish, chili, and sauerkraut, and your condiments such as mustard or ketchup. Depending on what else you’ll be offering, some hot dog stands also sell packaged chips on the side and canned or bottled drinks.
Hot dog stands are also considered a low-cost small business since the overhead cost is cheap and you choose the hours of your work as well as the location you’ll be positioning your hotdog stand. More often than not, a small vendor can open a hot dog stand for $15,000 – $20,000 depending on the equipment being purchased. This startup cost includes a cart, trailer, umbrella, signage, and initial inventory of sausage, buns, condiments, and sides like bags of potato chips.
Requirements in Putting Up a Hot Dog Stand
Despite it being a small and simple business, there are still some things that are required from a hot dog stand to make it a legal business. Remember that it’s important to acquire the necessary permits and licenses before rolling your hot dog stand out to the public so as to protect yourself and your customers from any health risks and permit violations.
Here are the general requirements in putting up a hot dog stand (please note that these requirements vary from state to state so it’s best to check in with your local state laws what specific requirements you need):
- Food Handler’s Permit – Some states require you to be a certified food handler in order to sell food. Training programs will usually be provided by your local health department wherein they’ll issue you a permit upon completion of the training.
- Food Vending License – This license has more to do with the specification of your stand and the location you’re allowed to operate. This license will determine if your hot dog stand is a suitable size and is safe to use. Since your hot dog stand will be mobile, this license will also allow you jurisdiction over certain areas where you can only do business.
- Health Certificate – It’s important to have a health certification when selling and handling food to avoid the risk of food poisoning and other risks that could put you and your customers in any danger. To acquire this, your local health department will inspect your food stand such as the cleanliness of your unit, your storage bins, refrigeration system, food preparation space, and garbage disposal.
- Business Registration – And because you’re doing business, you’ll need to register your hot dog stand for it to become legal.
Types of Business Structure
Since one of the requirements for running a hot dog stand is to register your business, you’ll need to choose which business structure fits your hot dog stand. Here are four business structures that are commonly used in the industry.
A single proprietorship is a business structure that has only one owner. This means that you will be running the business under your name including all legal transactions. Taxes are filed through your personal income tax. However, a single proprietorship does not have limited liability protection so if your business runs into any legal trouble, your personal assets will be at risk. This means if someone trips over your cart at an event or ends up getting sick after eating your hot dogs, these people could come after your personal assets like home, savings, and even business equipment.
A partnership is a business run by two or more business owners. They all have a share on the profits generated by the business. This structure follows a taxation process where profits and losses are passed through the business to the partners who then pay their taxes through their personal tax returns. But like a sole proprietorship, there is no limited liability protection. This can be dangerous if you end up going into business with someone that doesn’t have a stellar track record managing money or operating safely.
A company is a business structure wherein the owners are called shareholders. An owner has a percentage of the business and can sell or buy shares. A company has limited liability protection. But the downside to this is that the company undergoes double taxation wherein shareholders are taxed first at the company level and then a second time once they receive their profits.
LLC (Limited Liability Company)
An LLC or a Limited Liability Company is a business structure that is a mix of all the others. It can be run by a single owner or multiple owners and has limited liability protection just like a company has. Taxes are also flexible wherein you can file them under the rules of a single proprietorship or partnership. LLC’s also offer protection of personal assets assuming you manage the LLC correctly. Click here to start the process of forming an LLC for a hot dog business. You could complete the entire process in about 30 minutes.
Types of LLC
Out of all the business structures, you might be more interested in an LLC since it has limited liability protection and flexible taxation options. Here are two types of LLC to know more about it:
Single Member LLC
A single member LLC functions like a sole proprietorship with the added benefits of a limited liability protection. Taxes are filed the same way as a sole proprietorship. If you’ll be running your hot dog stand by yourself, this is the type of LLC for you.
Multiple Member LLC
A multiple member LLC is a business structure that functions much like a partnership or corporation. Taxes are first filed by the business using Form 1065 (U.S. Return of Partnership Income) and then each owner is required to file Schedule K-1 to show each partner or owner’s share of the company. They’ll then file this with their personal income tax return.
So do you need an LLC for your hot dog stand? That depends. There are so many business structure options for you to choose from so it all comes down to which structure suits your business style and organization. But if you prioritize the protection of your business more, then an LLC is what you need.
Advantages of an LLC for a Hot Dog Stand
You’re almost sold on the idea of an LLC for your hot dog stand but you want more reasons to convince you you’re on the right track. Don’t stress out because we have here a number of advantages that an LLC can provide to your growing hot dog cart empire.
Limited Liability Protection
One of the main advantages of an LLC for your business is the limited liability protection it can provide. This means that the owners aren’t liable for whatever legal problem that the business may face. The owners’ personal assets such as their investments, homes, bank accounts, cars, etc. are protected. This also helps keep the owner’s personal financials separate from the business end.
As mentioned above, registering your business as an LLC gives you taxation options as opposed to registering as a company. These options can make filing your taxes easier which in turn reduces any stress you might experience when it comes to these things.
Single or Multiple Owner
You don’t need to worry about whether or not you’ll be the only one handling the business or you’re teaming up with a couple of friends to run your hot dog stand. An LLC is flexible with how many people can be registered as the owners.
How to Form an LLC for a Hot Dog Stand
If you’re already swayed by now, here are a few steps on how to form an LLC for your hot dog stand so you understand the basic steps.
Step 1: Choose Your State
The first step in forming an LLC for your hot dog stand is to choose a state where you’re going to register your business. It is always advisable to choose the state where you live since it’s easier for you to process your papers within reach. But you can still choose to register outside your state since there are some states that are considered business friendly when it comes to taxes and privacy.
Step 2: Choose a Name for your LLC
You’ll need to give your hot dog stand a unique business name when you register for an LLC. Start thinking of a good one as early as you can.
Step 3: Choose a Registered Agent
You as the owner will be busy in putting up your business so you need a registered agent to receive official documents upon registering for an LLC on your behalf. The agent will also bring you peace of mind since these documents can be quite taxing.
Step 4: File Your Articles of Organization
File your Certificate of Formation or a Certificate of Organization. Details such as name, management type, and principal place of business will be required. This step makes your LLC official.
Step 5: Write Up Your Operating Agreement
An operating agreement is an outline that shows the ownership of your LLC as long as the duties of each owner. It also includes management structure, member voting rights, and the distribution of profits and losses.
Step 6: Apply for an EIN
An EIN or Employee Identification Number is needed if your LLC has multiple owners. This will be used to file taxes. However, if you are a sole proprietorship or a single member LLC, you don’t need to get an EIN. But this is also unless you have several employees under your care and if you are needed to process excise tax returns.
How much will it cost to file an LLC for a hot dog stand?
One concern you might have are the costs to file for an LLC for your hot dog stand. The answer for this depends on the state where you’ll be filing. The filing fee is between $40 and $500 so just check your local state laws to find out the exact cost.
Can My Hot Dog Stand Have a Different Name than My LLC?
Yes you can! Businesses, even a hot dog stand, can have a different name other than the one registered. This is known as a DBA or a Doing Business As. You’ll need to register this with your local state so that when customers buy from you and they’re aware that you have a different registered name. This is a straight forward process and many businesses operate with a DBA.
Do I Need an EIN To Start a Hot Dog Stand?
As mentioned above, an EIN or Employee Identification Number is only needed to file your taxes if you registered your business as a multiple member LLC. This is because you’ll be using it to process excise tax returns and if you’re hiring several employees to work for you. If you’ll be running the business as a sole proprietorship, you don’t need one. Unless, of course, you’ll also be hiring a lot of people but if you’ll be running the hot dog stand by yourself, you don’t need one.
Can an LLC Help with My Taxes?
What’s great about registering your LLC is that you can have options when filing your taxes. Remember that when you’re a single member LLC, you can file your taxes under the rules of a sole proprietorship. This means you only have to file your taxes through your personal income tax return. As for a multiple member LLC, your taxes are filed under the rules of a partnership. So in a way, an LLC does help you with your taxes.
There you go! We hope this guide was able to help you decide on the right business structure for your hot dog stand and whether or not you need an LLC. What’s important is that you are able to register your business so it’s legal and you can run your hot dog stand without worrying about any violations.
If you’re ready to make it official and form an LLC for your hot dog business, click here to get started for only $49 + State Fees. You can even write off the costs of forming an LLC on your taxes next year as a business expense.