How to start a small catering business at home

Countingup

If you have a passion for food and an entrepreneurial spirit, then you might want to start a small catering business at home. 

It’s a perfectly achievable goal, but there are a few crucial steps you need to take before you can start doing business. 

In this guide, we’ll cover everything you need to start your own catering business from home, including:

  • How to make a business plan.
  • How to register your business.
  • How to deal with taxes.
  • How to send professional invoices.
  • How to promote your home catering business.
  • Insurance for caterers.
  • Equipment for caterers.
  • Licenses and qualifications for caterers.
  • Food safety.
  • How to manage your finances.

How to make a business plan

The first step to starting any business is a robust business plan. You can break it down into seven parts.

1) Executive summary

An executive summary is an overview of your business idea. It should include:

  •  A basic definition of your business.
  • A list of business goals.
  • A product list.
  • Your target customers
  • Where and how you intend to sell your products.
  • Your financial strategy.

2) Business overview

A business overview should include:

  • Your official business name. 
  • A rundown of your brand identity. 
  • Your business structure. 

If you have a mission statement, this is the place for it. Describe your background and your vision for the future. 

3) Market analysis

Describe your competitors and any industry trends you’ve noticed. Write about your target consumers and explain what your catering business can offer them that others can’t.  

4) Products and services snapshot

Expand the product list from your executive summary. Explain, in detail, the features and benefits of the service you offer.

5) Marketing plan

Talk about how you plan to market your catering business. Work how much money you can devote to marketing, then break your budget down.

6) Operations plan

This is the most practical section. Describe your base of operations and your operational needs, including equipment, supplies, shipping options, funding, and other resources.

7) Financial plan

If you need outside funding, like a business loan, you’ll have to prove you can handle money. That’s where a written financial plan comes in handy. 

Most financial plans include:

  • An income statement: How much money your business brings in per week, month, quarter or year, minus your business-related expenses.
  • A balance sheet: A list of your business assets and liabilities.
  • A cash flow statement: A list of when your income and liabilities come in and go out every month. 

How to register your business

Before you register your catering business, you’ll need to decide your legal structure. For example, will you operate as a sole trader or a limited company?

A sole trader is a simple structure. You have complete control over profits and you’ll be responsible for any debts. 

A limited company can give a more professional image and gives you limited liability for debt. The main downside of a limited company is the more complicated admin. 

Next, choose your business name. If you’re going with a limited company, you’ll need to register it with Companies House. If you’re setting up as a sole trader, you can register your name when you complete a self-assessment tax return. 

Finally, you’ll have to apply for a food business registration with HMRC. You need to register at least 28 days before you begin operating your catering business. 

How to deal with taxes

If you choose to set up as a sole trader, you’ll need to register as self-employed with HMRC so you can manage your taxes. Sole traders pay income tax in the tax bands you’ll be familiar with already. 

  • Personal Allowance: Up to £12,570 (0%)
  • Basic rate: £12,571 to £50,270 (20%)
  • Higher rate: £50,271 to £150,000 (40%)
  • Additional rate: over £150,000 (45%)

When you register your catering business, you’ll receive a Unique Tax Reference (UTR). You’ll need this information for submitting your income tax return annually. 

If you register as a limited company, you’ll need to register with HMRC as an employer, not self-employed, because you’ll be acting as both a director and an employee.

After this, you’ll need to sign up to PAYE (pay as you earn) so you can pay yourself through the limited company. 

Instead of income tax, limited companies need to pay corporation tax on all their taxable income. Unlike income tax, it’s just a flat rate of 19%, so it can be more forgiving when you start seeing substantial cash flow. 

As an employee of your own company, the income you pay yourself will be taxed with the normal income tax rates. 

How to send professional invoices

Invoicing is one of the more tedious parts of running your own business. 

To keep you right, here’s a checklist of everything you need to include for a professional invoice.

  • A unique invoice number. They need to be different for each client. For example, John Smith’s invoices could be numbered JS1, JS2, JS3 etc.
  • Invoice Date.
  • Company or business name.
  • Limited Company Registration Number.
  • VAT Registration Number.
  • Limited Company Address.
  • Contact details – email, address, and phone number.
  • Client or agency’s name and address.
  • Description of the services you’re providing to the agency/client.
  • A breakdown of hours and rates. For example, 35 hours at £40 per hour.
  • Date when the services were supplied.
  • Amount charged for services.
  • VAT charged (at 20%).
  • The total amount charged (including VAT).
  • Your business bank account details (sort code and account number).
  • A client reference number or Purchase Order (PO) number.

A lot of invoices also include payment terms, including late payment information.

Businesses normally provide 30-day payment terms, but it’s entirely up to you. Just make sure you invoice as soon as possible so you get your payments on time. 

Since invoicing can be a pain, try downloading accounting software. It’ll automatically record all your transactions and let you easily produce professional invoices, on the go. 

How to promote your home catering business

Promoting your catering business is the best way to ensure a steady stream of business from new customers. To help you get the word out, we’ll share some simple marketing tips. 

Digital marketing

The internet is usually a person’s first port of call when looking for a service, so a strong digital marketing strategy is important. 

Build a website

Your website is the online face of your business, so it’s crucial that it makes a good first impression. Your website should include contact information, products, prices, and an “about me” page.  

A good website will make sure you appear when people search for caterers on search engines like Google. You can improve your search engines rankings by:

  • Paying for Google ads.
  • Making your site SEO (search engine optimisation) friendly.
  • Asking your customers to leave Google reviews.

You can ask a professional service to build your website to do it for you, but a cheaper option would be to use a website builder (CMS software). There are loads that are beginner-friendly, and they can guide you through the whole process to help you make a professional website. 

Social media

Social media platforms like Facebook, Twitter, Snapchat, LinkedIn, Instagram, TikTok, and YouTube are all thriving social media platforms that have millions of users. Getting noticed by those users should be your main goal. 

For the best results when promoting your catering business on social media platforms, you should follow these golden rules:

  • Follow other food channels, and engage with their content. 
  • Post content often and regularly. 
  • Make your content interesting to users, not just promotional messages for your business.
  • Engage with users by replying to their comments, taking polls, making quizzes, and running competitions. 
  • Switch up your content between written posts, videos, and photos. 
  • Always link back to your business website in your posts. 

You should try to stay active on more than one social media platform, if you can. That being said, you may need to adjust your content and tone of voice for each platform you use. 

For example, Instagram, Snapchat, and Facebook put an emphasis on images, whereas TikTok and YouTube focus on video content. 

Online directories

As we mentioned above, paying for Google ads is a great way to get your website at the top of search engine results. 

But you should also register with online directories, such as:

The Google service will make sure you appear on Google maps when people search for caterers, while Facebook’s service will automatically send information about your business to social media feeds of anybody in your area .

Traditional marketing

Alongside digital marketing, some more traditional forms of marketing can also be effective. You should consider:

  • Making business cards to hand out.
  • Printing flyers and posting them locally.
  • Teaming up with other local businesses to promote each other.
  • Encouraging customers to spread the word.
  • Encouraging friends and family to recommend your business.

Insurance for caterers

As a home catering business, you’ll have a lot of expensive equipment that needs to travel with you most of the time. Insurance will cover you in case anything happens to your equipment. 

But it’s not just the equipment you should consider covering. There are quite a few insurance policies that you should consider. 

First of all, if you have staff, you’re legally required to have employers’ liability insurance. It covers legal costs and compensation payments if an employee takes you to court. 

Aside from that, these insurance policies are also worth considering:

  • Public liability insurance
  • Professional indemnity insurance
  • Employers’ liability insurance 
  • Business contents insurance
  • Stock insurance 
  • Product liability insurance 
  • Personal accident insurance 
  • Business interruption insurance
  • Business legal protection insurance

There are also a number of insurance companies that can provide specialised cover for caterers. Just search for caterer insurance and you should find what you need. 

Equipment for caterers

Running your catering business from home means you should already have a lot of the equipment you need in your kitchen already. Most of the new equipment you’ll need to find is for storage, transportation, and presentation. 

Here are some essential bits of kit you’ll need:

  • Holding Cabinets 
  • Chafing dishes 
  • Food pan carriers 
  • Hot food tables and accessories 
  • Catering carts
  • Catering service trays 
  • Drinks coolers
  • Punch bowls or jugs
  • Buffet serving utensils
  • Tabletop and buffet displays 
  • Food and drink fountains 

The last two, displays and fountains, aren’t necessary. But they can add a bit of flare to the table, if you don’t mind spending a little extra. 

Qualifications for caterers

To legally sell food you’ve prepared in your home, you and your staff need a second level food safety qualification. 

You can get this qualification from a number of places, including:

It’s worth repeating, this is not an optional qualification. Operating without one is illegal. 

Food safety

Food safety is your number one concern as a catering business, as one mistake could spell disaster. 

To be safe, you should contact a local environmental health officer through the Government’s food safety website. They can send an official to help you by:

  • Inspecting your home kitchen.
  • Advise you on any upgrades you need.
  • Check your walls and countertops are in good condition and easy to clean.
  • Assess your kitchen hygiene knowledge and ability. 

Aside from general hygiene, your other biggest food safety concern will be allergies. Again, there are specific rules you need to follow as a caterer. 

For more information, check out our article, “Allergen advice for caterers to consider for events”.

How to manage your finances

Financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.

Receive actionable business tips weekly