The Financial Considerations: How Much Money You Need to Start a Catering Business

Your financial capability will determine the kind of catering business you are able to put up and maintain in the long run. When checking out your finances for the business, you have to consider the capital and startup costs as well as the required taxes. Startup Capital and Cost The cost of starting a catering business depends on how large you want to start. Would you like to be home based at first as a self-operated caterer or go for contract catering even at the onset? Either way, the initial costs include the fees for licensing, insurances, and promotions. The capital needed also depends on your preferred corporate structure. Of course, if it is sole proprietorship, less or small capital is needed. On the other hand, if you will register as a corporation, then more capital investment is required.of tax payable depends on the business organization, whether sole proprietorship or corporation. Nonetheless, it is best to get a certified accountant to handle all your money flows in and out. Financing the Operation Today, there are a lot of ways you can finance your business operation. First is your savings. There are people who diligently save money before actually starting so they can avoid incurring debts. If you can do this, then that would be best since in the first 5 years, you will be focused on building the business and not really about making high profits. Second option is getting bank loans where assets will be used as collateral. If you do not own any business assets, your personal assets can suffice. Third is microloans. These are loans provided by private individuals or group of private individuals rather than banking institutions. This is good for people having a hard time getting an approval from other lending companies. Fourth is through factoring. This is considered to be one of the most innovative ways to finance a business these days. It is very flexible too. How it works is that you buy the debts owed to another at a discounted rate. This has been referred to by many as cash flow finance or invoice discount.