Wednesday, July 13, 2011

Going Legit, Part 1: With the Underground Market Shut Down, How Do You Start a Food Business?

Posted By on Wed, Jul 13, 2011 at 1:59 PM

click to enlarge Scene's from the SF Underground Market (RIP, for now). - ALBERT LAW
  • Albert Law
  • Scene's from the SF Underground Market (RIP, for now).

After the Health Department shut down the ForageSF Underground Market last month, a victim of its own national-news-making success, SFoodie spoke to organizer Iso Rabins about the vendors who had debuted their jams, bibimbap bowls, and pies at his event. Many of them were baking in their home kitchens and testing out new ideas, with no barrier to entering the food business besides materials, labor, and a $50 entry fee. What would it take, we asked him, for your vendors to go legit?

SFoodie ended up asking a lot of people that question over the course of the next few weeks: S.F.'s environmental health division, directors of several organizations, and several Underground Market ex-vendors themselves. Some of these vendors are trying to go legit, but are mired in a morass of conflicting information. Others have already made it through and are operating aboveboard.

So over the course of this week, we're going to try and spell it out: Here's what the city, the state, and the country want you, o aspiring pickler or scone baker, to do if you want to start up a microbusiness. Hint: You're going to need to be committed, and you're going to need some seed money -- not a lot, but a lot more than $50 and a free Twitter account.

First up, you can cut short the obsessive Web-surfing for information by making an appointment with the Small Business Assistance Center.

Part of San Francisco's Office of Small Business, the agency gives one-on-one advice and information packets to entrepreneurs, including aspiring pierogi makers like you.

But if you really want to go it on your own, the first thing you have to do is register your business with the city of San Francisco. Since you don't have any employees yet, the registration fee will only cost you $25. Then, if you're going to call your business "PopSugar Sconz n Stuff," you have to register a fictitious business name with the county clerk (here's the form). That'll cost you $44; you'll also have to advertise the fictitious business name in a local paper, which one vendor estimated cost her $50.

If you won't need to charge sales tax on your products, you can move on to the next step: finding a commercial kitchen (that's part 2 of this series). However, if you're going to be charging sales tax, you'll need to get a California state seller's permit (here's the form), which lets the state know that you want it to tax you.

How do you know if you need to charge sales tax? La Cocina's executive director, explained it to SFoodie this way: "Tax is charged if you consume a food on site. Say, when you buy something to eat from the deli at Whole Foods, they ask you if it's for here or to go. The reason is that there's no sales tax if it's to go, but if you eat it on the premises, they have to charge you sales tax. If you're selling your food at an event, most large events will ask for for your seller's permit. At the SF Street Food Festival, we ask for it."

Speaking of which, La Cocina has a much-lauded incubator program that can take participants through the entire process. Another organization worth considering: The Renaissance Entrepreneurship Center, a nonprofit with two S.F. locations that offers a business planning class ($350-$750, sliding scale) to help new entrepreneurs write a business plan and figure out financing. Robin Knight, who launched her grandmother's salsa at an Underground Market and is now trying to turn Salsa Delfina into a business, is halfway through. "The Ren Center has so much experience -- a lot of food businesses have come out of there," she says, mentioning Pinkie's Bakery and American Grilled Cheese. In fact, Knight has another Underground Market alumna in her class.

The full "Going Legit" series:
 - Part 1: Getting a business license
 - Part 2: Working out of a commercial kitchen
 - Part 3: What's the minimum an Underground Market vendor would need to be legit?
 - Part 4: Selling at the traditional farmers markets
 - Part 5: Selling to grocery stores
 - Part 6: The future of the Underground Market

Follow us on Twitter: @sfoodie, and like us on Facebook.
Follow me at @JonKauffman.

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Jonathan Kauffman

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