The bottom line is that market study is essential before launching a food truck. It enables you to validate or invalidate your concept.
Licenses and permits for starting a food truck business vary from one state to another. However, no matter which state you are in, you will need at least three types of licenses and permits: general business licenses, food service licenses, and vehicle licenses.
General commercial licenses
Also known as a reseller’s license, a wholesale license is a license that allows you to purchase goods or products in bulk from your suppliers at discounted prices that you will resell without paying tax.
See related: A Step-by-Step Guide For Retail SMB Owners To Get a Wholesale License
This license enables you to report your business to your state sales tax authority. Any sales from your food truck are subject to state and local sales taxes, and you will need to register with your state to accurately record your sales tax payments.
Employer Identification Number (EIN)
The EIN is a number issued by the IRS that serves to identify your business for tax purposes. The EIN will be required when you need to hire employees, register your business, or apply for a loan from a bank or other financial institution.
Doing Business As (DBA) Registration
If you run your food truck as a sole proprietorship or plan to operate it under a different business structure than the LLC you have registered with the state, you will need a DBA to register the fictitious name.
Foodservice licenses are generally issued by the state or county health department. You will need different licenses to cover your truck, your kitchen, yourself, and sometimes your personal staff. Foodservice permits and licenses mostly require you to take a food safety test or have your facility pass a food safety inspection.
A health permit allows the sale of food and beverages cooked or served to the public, which needs to be regulated for public safety. Health permits are typically under the purview of a county health department. Regulations governing the requirements for the types of food businesses that need a health permit differ considerably from state to state. Depending on the size of your business, the cost of obtaining such a permit can run from a few hundred dollars to nearly $1,000.
Mobile food facility (or unit) permit
The mobile food facility permit is a permit issued in some areas by the local parks department rather than the health department, although it still has a food safety aspect. Many cities offer lower rates for food carts, kiosks, small trucks, and trucks that serve only prepackaged food and non-perishable beverages. Prices generally range from $300 to $500.
Food safety manager’s certification
This certification assures the restaurant and retail industry that a manager has the knowledge, skills, and abilities to supervise the safe storage, preparation, and serving of food in the workplace. Your food truck manager will need to take a food safety class and pass a food safety test to get one.
Employee food handling permit
Food handler cards are required in certain states for any employee who touches, prepares, or serves food. Generally, food handlers are expected to undergo brief food safety training and examine food safety topics to obtain their card. Some states, like California, mandate that all food service employees have their own food handling license.
Commercial kitchen lease contract
A lease with a licensed commercial kitchen is a prerequisite for obtaining your truck’s foodservice permits for most locations. In some cases, health inspectors may require an affidavit signed by the kitchen owner, certifying that you are a tenant in good standing. Prices differ depending on the terms of your lease.
You will need to go to the Department of Motor Vehicles to obtain commercial license plates for your truck. Some states require a commercial driver’s license (CDL) if your truck exceeds certain length and weight limits. However, some states do not allow vehicles requiring a CDL to be used as a food truck.
You may also need to obtain a parking permit for your truck. Unlike a regular vehicle, a food truck can’t park anywhere. Each town has different regulations that limit parking. In addition, neighborhood associations and local health departments may also require you to comply with their own guidelines.
Use this checklist to avoid any issues:
- Check with your county clerk for a list of areas where parking is banned or for which a permit is required.
- Contact your local motor vehicle department for lesser-known parking restrictions.
- Include overnight vehicle parking in your commercial kitchen contract.
4. Where To Buy a Food Truck And What To Consider Before Buying One?
There are several options available to you for purchasing your food truck. If you consider buying a second-hand truck, you can approach an individual seller on eBay, Craigslist, or another online directory site. By purchasing a used truck, you can usually get a fully equipped truck for around $50,000. However, you will need to repaint the exterior and possibly renovate the truck’s interior to fit your business.
There are also various ways of financing opening a food truck. Entrepreneurs can go a traditional route of a bank loan, ask friends and family for investments, or leverage existing assets. One popular option is to utilize a home equity line of credit loan (HELOC) to create some funding to kickstart your food truck business. A home equity line of credit allows you to borrow money that has been built up against the equity you already have in your home. A HELOC allows you to borrow as much money as you need and it can be used for anything, so it could be the perfect option to help fund your food truck.
A few good directory sites for finding used food trucks include the following: