The food delivery market has been thriving in the USA with the revenue in 2020 to reach US$23,991 million and predicted to reach US$29,222 million in 2024 at a CAGR of 5.1%, as per Statista. This lucrative market is being embraced by existing as well as new food businesses. However, to start a food delivery business there are various legal formalities required to keep your business running smoothly and saving it from being sued. Therefore, in this blog, we would be talking about what all legal formalities are needed to start a food delivery app in the USA.
The food delivery sector is gaining traction every day with people wanting on-demand food at their convenience and food ordering and delivery apps. Starting a food delivery business faces lesser challenges as compared to starting a business in any other industry. All that one is required to do is to partner with local restaurants, cafes, and food outlets who are willing to deliver their food to customers without having to worry about deliveries, and ensure that the legal requirements are fulfilled.
Legal Documents Required
Before we come down to discussing some of the essential legal formalities in detail, here’s a list of legal documents that you may require to start a food delivery app in the USA. Running any business in the USA without having complete documentation is as good as inviting trouble for your business, and therefore the documentation needs to be completed with care.
- Business license and a business plan
- Certificate of Incorporation
- Tax Identification Number
- Non-Disclosure Agreement (NDA)
- Registration for Commercial Vehicle Operator
- Food and Drink Handlers Certificate
- Health Inspection Certificate
- Proof of ownership for Vehicle and Vehicle license
- Commercial Driver’s License
- Operating Agreement for LLCs
- Insurance Policy
Licenses to serve food indicate that the food has been prepared as per safety regulations and the company is certified to sell food. The licenses are issued by the Health Department of the city or country after inspecting the restaurant. The licenses generally cost between $100-$1000 and need periodical renewal.
Depending on the locality and region of your food delivery app business, you would need a food handling permit, food-vending license as well as a general business license. The Food Handler Certification is recognized nationally as a food safety course that can be taken with an instructor or online. You may also be required to have a ServSafe Manager Certification if you are the primary operator of your business.
It is essential that you register your business as a legal business entity so as to avoid personal liability in case of your business being sued and to protect your finances.. Business owners usually choose from LLC’s, Corporations, DBA’s to register their business.
LLC is the most commonly used business structure for which you would be required to file Articles f Incorporation and open a bank account under the business’s name. Obtaining a business license from the city or county office requires filing an application and paying a licensing fee which costs about $50-$500 for LLC. You would also have to register your business with the state or local government to get a federal tax identification number and other legal as well as tax benefits.
To register your business, you would also be required to open a bank account on the name of the business so as to protect your personal assets. A separate bank account for the business also facilitates easy account and tax filing besides separating the company’s assets from your personal assets.
It is also advised for you to get a credit card for the business to build up the credit history of the company for future investments.
Tax Identification Number
You will have to obtain an Employer Identification Number EIN, in order to register for state and federal taxes. The EIN implies that you are an employer as per the Federal government and you then receive a tax ID. An EIN is provided free of cost however it takes time to obtain it. It can be applied on the IRS website or by submitting an application to the IRS.
It is also essential to buy an insurance policy for general liability as per your state requirements. You can consult any insurance company in order to buy general liability insurance that complies with your state’s guidelines. Apart from that, you may also be required to get workers’ compensation insurance for the employees.
Commercial Vehicle Operator Registration
Your food delivery app business must also register for a Commercial Vehicle Operator so as to comply with road safety rules and be monitored for commercial carrier safety.
As per the list provided above, you can check with registration agents or even with insurance providers in regards to what documents are necessary for your business in order to comply with the laws of your state. Hopefully, this information would have outlined what all legal formalities are needed to start a food delivery app in the USA, and would get you started on the right track.