Writing. Get everything in writing and make sure he has his city license before handing over the deposit. If taco guy doesn't want to do that, walk away quickly. I always made sure I showed my license and insurance up-front to potential customers so they would know I was legit and not some fly-by-nighter who would take the money and run, which sadly happens often in this kind of business.
This sounds prudent. When you say "get everything in writing" are you basically saying he should have a contract ready that we would sign? Or just an outline of everything he is committing to include, no signatures necessary?
On the business license application, which is available online, I noticed this:
"EMPLOYERS MUST HAVE WORKERS' COMPENSATION INSURANCE
I understand that under California law, I am required to carry workers' compensation insurance for my employees at all times.
I further understand that my failure to have the appropriate coverage will subject me to civil penalties of $10,000 per employee who is not covered by workers' compensation and criminal penalties of up to one (1) year in jail and/or a fine of up to $10,000.
I know that even if I don't have employees right now, I will be required to get workers' compensation coverage as soon as I have one or more employees."
I'm not sure if that's the same as insurance for liability (in case of damages, etc) but it seems that workers' comp insurance is mandatory if he wants a business license.