What Legal Aspects Should You Know Before Opening a Coffee Shop?

Opening a coffee shop is one of the businesses with the highest turnover, with many opening and closing over the years, even before the “café era.” In addition to income, expenses, and business factors, there are also legal considerations to be aware of before starting a shop. Today, we’ll break it down into sections to help you review what you may or may not have considered yet.

Table of Contents

• Legal Requirements Regarding the Shop’s Structure

• Licensing for Beverages and Food

• Hiring Employees and Labor Laws

• Partnership Law (For Business Partners)

• Copyright and Intellectual Property

• Basic Tax Considerations

Legal Requirements Regarding the Shop’s Structure

When opening a coffee shop, you may not always have your own space and might need to rent a location. If so, you’ll need to understand the basic legal aspects of rental agreements:

Rental Agreement. You should be familiar with the basic principles of lease agreements. Under the Civil and Commercial Code, rental agreements with a term longer than 3 years must be registered with the land office.

The lease should specify whether you plan to renew. If you want to extend the lease, the tenant must notify the landlord in writing at least 2 months before the original contract ends.

Clearly define terms for terminating or breaching the contract, as vague clauses can cause future issues.

If you plan to build your own shop, you’ll need to request construction permits from local authorities. This involves submitting documents like the building design, architect’s certification, and land ownership proof.

Licensing for Beverages and Food

• Beverages If you sell alcoholic beverages, you must apply for an alcohol sales license. This process includes submitting your application to the local excise department and paying a fee. Be aware that the license is valid for one year and must be renewed 90 days before expiration.

• Food For food establishments, you must apply for a food sales permit, which involves submitting your shop’s details to the public health department. You must also ensure that at least one staff member has a food handling certificate.

Hiring Employees and Labor Laws

In Thailand, labor laws ensure employee rights and protection. Key considerations include:

• Wages Employers must pay wages that meet or exceed the minimum wage set by the Ministry of Labor. Payments should be made on time, whether weekly or monthly.
• Termination If you wish to dismiss an employee, you must have a valid reason and provide advance notice or compensation as required by law.
• Workplace Safety Employers must ensure a safe working environment to protect employees from accidents, including those caused by machinery or chemicals.

Partnership Law (For Business Partners)

If you have business partners, clear partnership agreements are essential.These should outline profit-sharing, responsibilities, and the procedure for dissolving the partnership.

• Partnership Agreement Clearly define each partner’s role, investment, and share of profits and losses. The agreement should also cover the process for ending the partnership.

• Share Distribution The proportion of ownership determines profit-sharing, tax liabilities, and decision-making authority.

Copyright and Intellectual Property

Your coffee shop may use intellectual property such as logos or music, which requires attention to copyright laws:

• Music If you play music in your shop, you must obtain permission from the copyright holder or relevant organizations to avoid legal issues.

• Logo Your shop’s logo is intellectual property and should be registered to prevent others from using it without permission.

• Self-Created Work If you create original works like music or logos, consider registering the copyright to protect your creations from unauthorized use.

Basic Tax Considerations

Understanding taxes is crucial for managing the financial side of your business:

Income Tax This is calculated based on your revenue, minus business expenses like rent, wages, and supplies. The tax rate depends on your business structure (sole proprietorship, partnership, or limited company).

Property Tax If you own the property, you must pay property tax. If you’re renting, the contract should specify who is responsible for this tax.

VAT (Value Added Tax) If your business generates more than 1.8 million Baht annually, you must register for VAT and charge your customers VAT. This also allows you to claim back VAT on business expenses.

Withholding Tax This applies to payments made to external service providers or employees and must be deducted and paid to the tax authorities.

Conclusion

Running a coffee shop involves many legal aspects beyond just selling coffee. Among the most important is partnership law, as conflicts with partners can significantly impact the business. Therefore, having clear legal agreements from the start is key to ensuring smooth operations and avoiding future complications.

 

Content by Jasmin lawyer  / Compiled by Champ lawyer