How to Start a Catering Business: Licenses, Costs, Deposits
How to start a catering business in 2026: licenses, commercial kitchen options, startup costs, per-person pricing, and deposits that protect your cash flow.
Quick answer: To start a catering business, pick a niche and service style, secure a licensed commercial kitchen, get a business license, health department caterer permit, food safety certification and insurance, price menus per person from food cost, labor and rentals, and require a deposit with a written contract and a clear invoice for every event.
Catering can be more profitable than a restaurant because you cook to a confirmed guest count and get paid before the event. It also has strict food safety rules and heavy weekend labor. This guide on how to start a catering business covers licenses, kitchen options, costs, pricing, deposits and invoicing.
What Is a Catering Business?
A catering business prepares food for events and delivers it, sets it up or serves it on site. Common types:
- Drop-off catering: trays delivered to offices and parties. Lower labor, simpler logistics.
- Full-service event catering: weddings, galas and private parties with staff, rentals and service.
- Corporate catering: recurring breakfasts and lunches for offices, often invoiced on net terms.
- Specialty: grazing tables, desserts, barbecue, a cuisine or dietary niche.
- Mobile: a food truck that books private events (see how to start a food truck business).
Most new caterers start with drop-off or small events and add full service once they have reliable staff.
What Licenses Do You Need to Start a Catering Business?
Requirements vary by state, county and city, but a typical US checklist looks like this:
| Requirement | Who issues it | Notes |
|---|---|---|
| Business registration and license | State and city or county | See how to get a business license |
| Caterer or food service permit | Local health department | Usually tied to an inspected commercial kitchen |
| Food protection manager certification | Accredited exam provider | At least one certified person is commonly required |
| Food handler cards | State or county program | Required for staff in many areas |
| Sales tax permit | State revenue department | Catering is taxable in many states |
| Liquor license or licensed bar partner | State alcohol agency | Only if you sell or serve alcohol |
| EIN | IRS | Needed for employees and most bank accounts |
Local health codes are generally based on the FDA Food Code, which sets rules for cooking and holding temperatures, cooling, transport and handwashing. Your health department will explain which version your area uses and what an inspection checks.
Can you cater from home?
Usually not. Cottage food laws (covered in our home bakery guide) generally allow only shelf-stable foods made at home, sold directly to consumers. Perishable event food normally has to come from a licensed kitchen. Options include renting hours in a shared commissary kitchen, leasing a restaurant kitchen during closed hours, or building out your own space once volume justifies it.
How Much Does It Cost to Start a Catering Business?
Costs depend mostly on whether you rent kitchen time or lease space. These ranges are illustrative estimates, not survey data.
| Cost | Shared-kitchen start | Own-kitchen start |
|---|---|---|
| Kitchen | Hourly or monthly rental | Lease, build-out and equipment (often tens of thousands) |
| Smallwares, chafers, hotel pans, carriers | $1,500 to $5,000 | $3,000 to $10,000 |
| Licenses, permits, certifications | $300 to $2,000 | $500 to $3,000 |
| Insurance (first year) | Varies by coverage | Varies by coverage |
| Vehicle or cargo van | Use existing or rent | Purchase or lease |
| Website, tasting events, marketing | $300 to $2,000 | $1,000 to $5,000 |
Use our startup costs worksheet to plan, and put the numbers into a business plan template if you need a loan or lease approval.
How to Start a Catering Business Step by Step
- Choose your niche and service style (drop-off corporate lunches, weddings, a cuisine).
- Build and cost a starter menu of 10 to 15 dishes you can execute reliably at volume.
- Secure a licensed kitchen and confirm it satisfies your health department.
- Register the business and get permits, certifications and insurance.
- Write your contract: menu, guest count deadlines, deposit, cancellation, service charge, overtime, damage and rental terms.
- Set up suppliers and rentals: food distributor accounts, rental company for linens and tables.
- Hire or line up event staff and decide if they are employees or contractors.
- Market through venues, event planners, offices and tastings. Partnering with planners is covered in how to start an event planning business.
- Set up invoicing for deposits, final balances and post-event adjustments.
How to Price Catering
Most caterers quote per person for food and price staff, rentals and extras separately. A workable method:
- Calculate food cost per guest from your recipes.
- Set the menu price so food cost is a target share of it (many caterers aim for roughly 25 to 35 percent).
- Add staff at an hourly rate per server, chef and bartender, with a minimum number of hours.
- Add rentals at cost plus a handling markup.
- Add delivery, setup and a service charge if you use one.
Worked example: 80-guest buffet
Food cost is $11.50 per guest. At a 30% food cost target, the menu price is about $38 per guest ($11.50 / 0.30 = $38.33, rounded to $38).
| Line item | Qty | Rate | Amount |
|---|---|---|---|
| Buffet dinner menu (2 entrees, 3 sides, salad, rolls) | 80 | $38.00 | $3,040.00 |
| Servers (4 staff x 6 hours) | 24 | $35.00 | $840.00 |
| Chef on site (6 hours) | 6 | $55.00 | $330.00 |
| Linen and chafer rental | 1 | $420.00 | $420.00 |
| Delivery and setup | 1 | $150.00 | $150.00 |
| Subtotal | $4,780.00 | ||
| Service charge 18% on food ($3,040.00) | $547.20 | ||
| Sales tax 7% (example rate on taxable total $5,327.20) | $372.90 | ||
| Event total | $5,700.10 | ||
| Less deposit paid (30%) | -$1,710.03 | ||
| Balance due 7 days before event | $3,990.07 | ||
Which charges are taxable depends on your state, so check your rules and use the sales tax calculator to confirm the tax line. Our guide to sales tax on services by state is a useful starting point.
How to Handle Catering Deposits and Invoices
Cash flow in catering depends on getting paid before you buy food. A typical payment schedule:
- Booking: signed contract plus a non-refundable deposit (often 25 to 50 percent) to hold the date. Send a deposit invoice that names the event date and states the deposit is applied to the final bill.
- Final count: 7 to 14 days before the event, the client confirms the guest count and you issue the balance invoice.
- Final payment: due before the event, not after.
- After the event: invoice extra hours, extra guests or damage within a day or two.
The catering invoice template has the fields you need, and you can fill it in with our free invoice generator. If a client cancels late, the contract and a cancellation fee invoice let you recover costs you have already paid. Corporate clients may want net terms; agree on them in writing and use clear invoice payment terms.
What Equipment Does a Catering Business Need?
If you rent a shared kitchen, the big cooking equipment is usually included. What you still need is the gear that moves and holds food safely:
- Transport: insulated food pan carriers, beverage dispensers, coolers, and a vehicle with enough cargo space.
- Holding and service: chafing dishes with fuel, hotel pans in several depths, serving utensils, sneeze guards for buffets.
- Food safety: probe thermometers, a temperature log, gloves, sanitizer test strips and a portable handwashing station if the venue lacks one.
- Presentation: platters, risers, tablecloths and signage with dish names and allergen notes.
- Admin: a booking calendar, contract template, invoice template and a card reader for tastings and add-ons.
Rent rather than buy items you use rarely, such as tables, chairs and glassware, and pass the cost through on the invoice with a handling markup.
How to Market a Catering Business
Most catering work comes from relationships, not ads. Get on the preferred vendor lists of local venues, introduce yourself to wedding and event planners, and drop off sample boxes at offices that order lunch regularly. Host small tastings for booked couples and planners. Ask every happy client for a review and photos, and follow up with corporate clients before holiday party season, which books months in advance. A simple website with sample menus, starting prices per person and a quote request form saves you time on inquiries that do not fit your budget range.
Common Mistakes When Starting a Catering Business
- Cooking at home for paid events without a licensed kitchen.
- Underestimating labor. Prep, loading, travel, cleanup and returns often double the event hours.
- No minimums. Set a minimum guest count or order value, especially on weekends.
- Vague service charges. Say clearly what the charge covers and whether it is a gratuity.
- Taking final payment after the event. Collect the balance beforehand.
- Ignoring sales tax on extras. Staff, rentals and service charges may be taxable.
- Menus too large. A long menu increases waste and mistakes.
Catering Business Launch Checklist
- Niche, service style and costed starter menu
- Licensed kitchen access confirmed by the health department
- Business license, caterer permit, food safety certifications
- Insurance, including liability and auto
- Contract with deposit, count deadline and cancellation terms
- Supplier and rental accounts
- Deposit and balance invoice templates
The core of how to start a catering business is simple: cook in a licensed kitchen, price every component, and collect money before the event. When you book your first client, send the deposit invoice from the invoice generator on this site. It is free, needs no sign-up, and creates a downloadable PDF in your browser.
Frequently asked questions
Can I start a catering business from my home kitchen?
In most US states, no. Catering is usually regulated as a food service operation, and health departments generally require food to be prepared in a licensed commercial kitchen. Cottage food laws often allow some low-risk foods made at home, but they typically exclude perishable meals served at events. Many new caterers rent time in a shared commercial kitchen or a restaurant kitchen after hours.
What licenses do I need to start a catering business?
Common requirements include a business license, a food service or caterer permit from the local health department, food manager certification for at least one person, food handler cards for staff, a sales tax permit and, if you serve alcohol, a liquor license or a licensed bartending partner. Venues often require proof of liability insurance. Requirements differ by state, county and city, so check with your local health department first.
How much deposit should a caterer charge?
Many caterers take a non-refundable deposit of around 25 to 50 percent to reserve the date, with the balance due several days to two weeks before the event. The deposit covers your lost opportunity if the client cancels and helps buy ingredients and rentals. Put the deposit amount, refund rules and final payment date in the contract, and send a separate deposit invoice.
How do caterers price per person?
Start with food cost per guest, then add labor, rentals, transport and overhead, and a profit margin. Many caterers aim for food cost to be roughly a quarter to a third of the menu price, but this varies by menu and service style. Price staff, rentals and bar service as separate lines so clients understand what they are paying for and you can adjust each one.
Should I charge a service charge or expect tips?
Many caterers add a service charge, often a percentage of the food and beverage total, to cover staff and event coordination. Be clear about whether it goes to staff as a gratuity, because clients often assume it does. In many states a mandatory service charge is also taxable for sales tax. State on the invoice whether a gratuity is included so clients do not tip twice or feel misled.
Is catering subject to sales tax?
In many states, prepared food and catering services are taxable, and charges for staff, rentals, delivery and service charges may also be taxable when they are part of a catered meal. Rules vary widely, and some states treat these charges differently. Check your state revenue department's guidance on caterers, register for a sales tax permit and show the tax as a separate line on each invoice.
What insurance does a catering business need?
General liability with product liability for foodborne illness claims is the basic policy, and many venues require it with a certificate naming the venue. Add commercial auto if you transport food in a vehicle, workers' compensation once you have employees, and liquor liability if you serve alcohol. Equipment and inland marine coverage can protect chafers and gear you carry to events.
How far in advance should catering clients pay in full?
A common policy is final payment five to fourteen days before the event, along with the final guest count. Collecting before the event avoids chasing money after the party is over, when clients are less motivated to pay. If the final count goes up on the day, invoice the difference promptly with a short due date.
Invoice Creator Editorial Team
Guides on invoicing, cash flow and small-business finance from Invoice Creator, operated by Next Software Development Company. Content is reviewed for accuracy against the fields our own invoice generator produces.
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