By: J. Clyde Gilfillan | Synergy Consultant
1. Business License
A business license is required to open and operate any business in the United States as well as every state. This is the first step to getting your permits and licenses in order and to register with your state. The business license establishes your new business as a legal entity and assists in tax filings and corporate structuring. Every county imposes different requirements and regulations, and failure to comply can have a lot of consequences, including fines, late fees, penalties, and denial of opening/operation. Therefore, it’s essential to identify which licenses and permits you need before opening your doors.
How to Get a Business License: Do an online search for your state and follow the application procedures laid out on your state government’s site; this is usually the state’s Department of Commerce. You must also renew your license annually or pay by a specific deadline. Most licenses are for one year only.
Business License Cost: There is a cost of registration that varies by county in your state. This fee can range from approximately $50 to several hundred dollars. The process can be cost- consuming as well.
2. Employer Identification Number (EIN)
Like a business license, all businesses must also obtain an employee identification number to operate in the U.S. Assigned by the Internal Revenue Service; an EIN is assigned to your entity; it is, in essence, your tax ID number. This process can also be time-consuming as the IRS only issues one EIN per day.
How to Get an Employee Identification Number: You can apply for an EIN through the IRS website or by phone/regular mail.
EIN Cost: Free
3. Certificate of Occupancy
You will discover there are numerous inspections that need to be done during and after the construction process. Once your construction is finished and has passed the final building inspection, your city’s local building or zoning department will issue a certificate of occupancy. The certificate of occupancy certifies that the building has been properly constructed and maintained.
How to Get a Certificate of Occupancy: The procedure for obtaining a certificate of occupancy varies widely from jurisdiction to jurisdiction and on the building’s structure. However, your General Contractor is usually responsible for this and any/all inspections.
Certificate of Occupancy Cost: Typically $100, but usually included in the cost of your General Contractor.
Note – in some municipalities, you will also need specific permits if you are install replacement equipment, lights, fire suppression, and other fixtures/equipment. These will come from each municipality, and the method and cost varies. Your General Contractor should pull these permits before the construction phase.
4. Food Service License
The city or county health department generally issues food service licenses. The health department will visit your restaurant in person to ensure that you comply with all restaurant food safety regulations. Once this license is obtained, the health department will continue to make regular visits to inspect your restaurant. If you fail an inspection at any point, you could risk suspension of your food service license and will need to go through rigorous re-inspections to pass and be able to operate again.
How to Get a Food Service License: You can obtain a food vendor’s license application from your local health department, either online or in person. You can apply for a temporary or mobile food service license as well. When applying, you’ll need the name of your restaurant, an address for a permanent kitchen facility (even for food trucks), and the owner’s personal information. Your food service license may expire automatically in certain locations, so ensure you read and understand all the parameters to renew your license.
Food Service License Cost: The fee can vary by location and number of employees but can range from $100 to $1000. Some are free.
5. Sign Permit
Before you put up any signs to market and/or announce your restaurant, you will need a sign permit from the city government. The specifications for what is acceptable regarding size, location, and lighting vary by city. If you rent or lease the building, you may also be required to get written approval from your landlord in addition to the official sign permit.
How to Get a Sign Permit: Outdoor signs often need to be approved by your local government. In many municipalities, you must hire a licensed contractor to design, install, and permit signage. Those plans often have to be approved prior to installation.
Sign Permit Cost: A sign permit can cost between $20 and $50.
6. Music License
If you want to play any music at the restaurant, you’ll need a music license to avoid copyright infringement. This includes live music and music from a CD or streaming service. The fines for playing copyrighted music without a license can range from $1,500 to $30,000. Often this is how musicians get paid in today’s music industry. To protect your business from these fines, ensure you’ve secured a music license before you host that DJ, hire a band, or have a karaoke night.
How to Get a Music License: You pay The American Society of Composers, Authors and Publishers (ASCAP) or Broadcast Music Inc. (BMI) directly on their sites or use a licensed music solution that pays these fees on your behalf, such as Spotify.
Music License Cost: There are numerous factors that go into license pricing. Rates for restaurants, nightclubs, and bars depend on whether the music is live or recorded, whether it’s audio only or audio-visual, the number of nights per week music is offered, whether admission is charged, and numerous other factors ASCAP or BMI will go over with you. Background music and/or TV-only sound can cost between $250 and $500.
7. Building Health Permit
Though not often the case, your building might also have to be inspected for the building health permit if your state requires it, especially if you’re building an establishment from the ground up. Normally, a restaurant obtains a health permit from the city or county health department when applying for a business license. The location will be subject to periodic health inspections to ensure the location is sanitary.
How to Get a Building Health Permit: Only some states require a building health permit. Search online using your state and building health permit to see your state’s procedures and policies regarding the building health permit.
Building Health Permit Cost: A building health permit costs depend on your state’s jurisdiction but can be $50 to $1000.
8. Employee Health Permit
The building needs a health permit; the employees handling food and beverages need one too. Local authorities usually have specific training resources for employee health and foot protection; Serv-Safe is an example of this. Usually, employees must complete a state-approved food handler’s course and purchase a food handler’s permit. The food handler’s course teaches employees about proper sanitation practices, food storage, and food handling, to avoid spreading food-borne diseases.
How to Get an Employee Health Permit: Again, do an online search for your state and employee health permit to learn more about your state’s specific requirements.
Employee Health Permit Cost: The cost varies from state to state but can be $100 to $500.
9. Sales Tax License
A sales seller’s permit allows a state to identify a business as a collector of sales tax. Some states may call this permit a “sales tax” permit or license. Most businesses, especially in the food and beverage industry, need to obtain a sales tax license and a resale certificate.
How to Get a Sales Tax License: Register online for a seller’s permit by visiting your local government’s website. Online registration, phone assistance, and in-person assistance are often available.
Sales Tax License Cost: There is no cost to apply for the sales tax license, but you may have to leave a security deposit in the event that the restaurant closes, and you have unpaid taxes. The amount of this deposit will be determined when you apply.
Additional Permits Your Bar or Restaurant May or May Not Need
Depending on your setup, especially as a bar or nightclub, you may also need to apply for a few extra licenses. Here are some things that you should keep in mind.
If you plan to serve alcoholic beverages, you must apply for a liquor license. In certain states, you may be required to apply for a liquor license and beer and wine licenses. Start this process as early as possible. Depending on the location, it can take months to complete the application process and receive a liquor license from the city government’s liquor control board.
Valet Parking Permit
If you plan on opening a fine dining or full-service restaurant, you may consider offering valet parking to guests. However, in many states, you must apply for a valet parking permit to do so. To apply, you will need to present the state with a detailed plan of the proposed pick-up/drop-off area that shows the number of spaces required as well as a letter of agreement between your chosen valet operator and the restaurant stating financial arrangements, including how and when a guest pays for the service.
Dumpster Placement Permit
Not often considered but often needed, the dumpster placement permit allows your restaurant to situate a state dumpster outside your kitchen, where chefs can dispose of food waste. The stipulations and cost of the dumpster placement permit depend on the size of the dumpster, its exact placement, and the restaurant’s location.
Live Entertainment License
If you plan to host live events in your restaurant or bar, you must apply for a live entertainment license. The licensing authority in your state approves annual entertainment licenses where food or drink is served on the location’s premises. This can apply to a concert, dance, exhibition, cabaret, or public show conducted on your restaurant premises.
Pool Table License
Some states and counties require restaurants and bars to apply for a pool table license to offer a pool table to customers. The applicant will be considered based on location (is there a high amount of pedestrian traffic or parking traffic) and can limit the hours of operation of the pool table and the number of pool tables allowed. It can cost an annual fee of $10 to $15.
More nuanced permits may be required in your area. We recommend doing diligent research to ensure you are aware if all the required licenses and permits for your establishment.