How to Set Up a Food Truck LLC

how to set up a food truck llc

Entrepreneurs who wish to set up a food truck LLC can remain competitive and enjoy tax advantages and liability protection. To start this type of business, you’ll need to figure your startup costs and recurring expenses, target your market, and determine how much you can charge customers. You’ll also have to think up a memorable business name.

how to set up a food truck llc

What Does It Cost to Open a Food Truck LLC?

Before you file the paperwork to establish your LLC, you’ll need to create a budget. Below are the primary expenses:

Insurance, Permits, and Licenses

Depending on the requirements of your locale, your costs for insurance, permits, and licenses may vary. You should consult with an attorney about compliance.

Food Truck Vehicle and Trailer Costs

The costs for your vehicle will depend on how it is equipped and the food you plan to sell. Some trucks feature trailers with kitchens or just have an area to warm up dishes. Low-end prices for vehicles are around $20,000 with totally equipped models surpassing $100,000. You may also prefer to rent your vehicle.

Graphics and Wrapping

Adding a billboard-type exterior to your food truck usually costs about $1,000.

Food and Ingredients

Again, what you pay depends on what you plan to sell. On average, expect to pay, on the low end, about $1,000 monthly.

Vehicle Maintenance and Fuel Costs

If you don’t travel a great distance but stay local, you should be able to save costs in this area.

Payroll and Employee Hiring Costs

If you plan to pay employees, figure about $2,000 per month per employee.

Marketing and Sales Promotions

You’ll need to promote your business online and offline. Usually, this will cover website design and development, ads, and flyers. You’ll also have to factor in what you’ll pay for social media. If you focus on these types of promotional aids, your costs should not be too excessive.

Targeting Your Customers

Who do you plan to target for customers? To ensure your success, you need to find out what they like for a quick lunch or snack. Knowing their likes and preferences will help you plan your menu. For example, if you plan to sell to office workers, they may like sandwiches and salads. On the other hand, if you sell menu items at a construction site, your customers may prefer hamburgers and fries. 

Charging Your Customers

To figure out how much to charge customers, think about where you wish to locate your food truck. Your prices should be comparable to similar restaurants in the area. To make more money, you might consider moving to an after-hours site and selling more dinner-based dishes.

Choosing a Business Name

You’ll need to select a unique name for your food truck LLC. This has to be done  before you register your LLC business. 

Check web domain availability, your state’s business records, and social media sites to make sure you don’t duplicate your choice. Have a back-up name in mind in case someone else has grabbed your first choice. 

Forming Your Food Truck LLC

It’s important to establish a legal entity for your food truck business. It will protect you from getting personally sued. By establishing an LLC, no one can go after your personal assets such as your house or car(s). 

Use a professional service to establish your LLC so you make sure you do everything right. After all, establishing a business entity is not an everyday event. Because each state has its own rules for establishing an LLC, this is the best way to handle the process.

Filing Your Food Truck LLC through the Secretary of State (SOS)

Once you register your food truck business’s name, you can go ahead and take the steps required to establish your food truck LLC. This will include:

  • Filing articles of organization to establish the rules for your company
  • Naming the registered agent (they must be based in your state)
  • Setting up how the LLC is managed (by a manager or the members)
  • Giving the LLC a classification for tax purposes (single member, disregarded entity, partnership, or corporation). The IRS further defines these categories on its website.
  • Creating an operating agreement to keep on file to manage internal conflicts.

Retaining the Services of a Registered Agent: Why It’s Important

You’ll need to retain a registered agent to handle any legal paperwork, especially the receipt of legal documents during the formation of your LLC and any transactions thereafter. You may act as your own registered agent or hire a company or person to do the work for you. Usually, it is better to delegate the activity to ensure you won’t miss any requests for paperwork.

Registering for Federal and State Taxes

You cannot open a food truck business without registering for taxes first. Before you do this, you’ll need to obtain an employer identification number or EIN. An EIN is like a social security number but you use it to file business taxes instead of a personal return. 

You’ll need an EIN to pay employees and open a business bank account. You can get an EIN for free through the IRS.

Reviewing the Requirements for Your LLC Taxes

As an LLC, you may operate as a single-member LLC or may set yourself up like a partnership. As a single-member LLC, you’re considered a disregarded entity and must file a Schedule C with your form 1040 or 1040-SR tax return. 

If you and someone else owns the business, you’ll record your tax on IRS Form 1065 and figure the tax on Schedule K-1. It’s important to hire a tax advisor and accountant to ensure you keep accurate records and books.

Opening a Business Bank Account

Once you have your EIN, you can apply for a business bank account and credit card. You need to do this, or establish a separate account, to protect your personal assets. By taking this measure, you’ll separate your LLC’s assets from our personal holdings. Doing so will make keeping accounting records easier and filling your taxes a simpler process.

Filing Your LLC’s Annual Report

You will also need to file an annual report, usually each year, that provides the SOS with your business’s name and address and details about its managers and signatories. This is important to do, as you may have to pay fines and penalties if you don’t make the filing. In some cases, a state may dissolve your LLC if this type of update is not made.

Who to Call about Forming a Food Truck LLC

Are you a small business person who would like to form an LLC? Whether you plan to establish a food truck LLC or have another venture in mind, you can establish yourself conveniently and easily. Contact the Corporation Center for further details at 800-580-4870 today.