Are you looking to start up a café? As a café owner, your work will most likely involve serving food and beverages, organising supply and inventory records, managing financial accounts, ensuring high customer service and even training and hiring staff. But what are the legal considerations that would be involved? Starting up a café can be a costly exercise but with the help of this information, it is possible to decrease expenses and maximise revenue for your business.

Planning and research

About 50-80% of start-up businesses fail within three years of operation due to a lack of planning. Before setting up your café or coffee shop, it is important for you to do as much research and planning as possible before jumping into the deep end! The first step is to understand the café business industry and more specifically undertaking market research.

Generally, market research involves understanding the economic factors within the community you wish to set up the café. This includes the socioeconomic and demographic backgrounds of the local residents, the direct or indirect competitors (in this case, restaurants and bakeries), as well as the surrounding potential level of demand within the vicinity (for example, office buildings or universities close by). This vital information will provide significant insight into your projected budget, target market and marketing strategies. Understanding the café owning industry increases the chances of success in the future.

Business Structure

The next important step is to set up the best structure for your business. The most common business structures include:

  • Sole trader: one person controls the whole business and therefore acquires all the profits and is responsible for all debts accrued. It is the simplest and cheapest business structure.

Requirements: Australian Business Number, business name registration and trademark registration,

  • Partnership: is a relatively inexpensive and simple business structure, involving two or more co-owners setting up the business. Accordingly, the partners share the profits and act on behalf of each other for the business.

Requirements: Australian Business Number, business name registration and trademark registration,

  • Company: Under Australian Corporations Law, a company must be registered. Although companies usually incur higher start-up costs and fees, the liabilities of the company’s shareholders may be reduced to share capital.

Requirements: Registration of Australian company, Australian Business Number, business name registration and trademark registration.

  • Trust: involves an individual (a trustee) who operates the business for the benefit of another (beneficiary or beneficiaries).

Requirements: Australian Business Number and trademark registration.

As you can see, each business structure warrants different legal requirements. Therefore before making this very important decision, you should seek legal advice so as to ensure you choose the best structure for your café business. If you require assistance, LegalVision is delighted to help meet your business needs by selecting the best business structure.

Licenses and Qualifications required

Another important factor is to check the appropriate business licensing authority in your state and any permits/licenses required.

Food Service

As a café business, you are most likely to serve food to customers. Accordingly, you may be required to attain a Food Business License from the relevant local council. For example, if your café or coffee shop is in New South Wales please visit the local government directory (http://www.olg.nsw.gov.au) to find the contact details of your local council. Remember, each council involves different licence costs and processing times so it is best you check with your local council when applying.

Food Health and Safety Regulations

According to the Australian New Zealand Food Standards Code (FSANZ) and Food Act 2003 (NSW), café owners are legally required to comply with food health and safety regulations. A common storage requirement for cafes, for example, is storing dairy products like milk and yogurt, which require a cold chamber storing unit. You must ensure that you meet these food health and safety regulations in operating your café or coffee shop business.

Outdoor Dining

If you seek to enable customers to dine outside, you must provide appropriate tables and chairs on a footpath. Café owners may also be required to obtain an outdoor dining licence from the relevant local council.

Other

Other considerations, although unlikely, may need to be considered depending on your café. Such factors include Serving Alcohol and Picking up Meat to sell to your customers. Please refer to the relevant Office of Liquor and Gaming Regulation and Safe Food authority in your state.

Conclusion

Setting up your own café business is an exciting, yet daunting, task. It is crucial that you do as much research as you can into the market industry in order to select the best business structure for your café. There are also various legal considerations such as food health and safety requirements and licenses/permits that you may need in order to establish your café. All these considerations can be extremely difficult without the proper business and legal experience and it is strongly recommended that you speak to a lawyer after considering the above factors.

A lawyer at LegalVision will gladly assist you with the set up of your business, so do not hesitate to call us 1300 544 755.

Lachlan McKnight

Next Steps

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