These Are the Permits and Licenses You'll Need to Open a Restaurant
Restaurant permits and licenses are not the motivating reason to get into the industry. But if you want to bring your cuisine, your crafted cocktail or beer menu, your unique take on hospitality into the world, you’re going to need the right permits.
You need specific permits to serve food and drink. A missing or lost permit could mean big trouble for your newly opened operation. A liquor license might be the first hurdle that comes to mind, but there are several tricky regulations involved in running a restaurant.
This handy checklist will help you prep for needed licenses and permits (and related fees), you’ll need to get your restaurant business open and in the world.
1. Business License
Before you become a restaurant owner, you need to obtain this government-issued license. In the U.S., every business must have a license in order to operate legally. Often this includes a registration fee of around $50 and a filing fee for the license, which ranges from $25 to $500. The process differs depending on where you live. The license cost and regulations are based on the address of your restaurant, so every city has a database that you can search for addresses that fall within its’ municipality.
To find out where to get your business license, google your city’s name and business license and check the US Small Business Administration (SBA)’s website for details. Often you can simply follow the application procedures laid out on your state government’s website or go to city hall and pick them up in person. You’ll need to renew this license annually, so tack the deadlines up in the back office or put a reminder in your phone.
2. Liquor License
If you intend to serve alcohol at your establishment, you will need a liquor license. As with most permits and licenses, the rules for obtaining and keeping a liquor license vary by state. But one thing is certain: they are notoriously difficult to acquire and very easy to lose. So, be stringent in knowing and abiding by your state’s ABC laws—the Alcohol Beverage Control board regulates the sale of alcohol in each state.
You can lose your liquor license for a variety of reasons, such as selling to minors, over serving, disorderly conduct, untrained service staff, selling at unauthorized times, and the list can be long.
All it takes is one instance to lose this pretty piece of paper for several days and, in some instances, indefinitely. Even a day without a liquor license could mean a large loss of sales for your restaurant, and perhaps even worse, a loss of good reputation in the community’s eye.
It is also worth noting that, in your restaurant startup costs, you should account for permit prices on top of the cost of food and drink, as the price tags can get shockingly high. In New Mexico, for instance, there is a quota on the number of liquor licenses available in the state, so obtaining one usually means buying one from someone else. In 2016, an average cost for a liquor license in New Mexico was about $381,000, and in a few notable instances the price rose as high as $900,000. In other states, full liquor licenses can range from $12,000 to $400,000, while beer and wine liquor licenses can cost as little as $3,000.
3. Foodservice License
Foodservice licenses are issued by your city’s health department, which means they’ll also vary by location. This is the paperwork that requires the anxiety-provoking in-person visit from the health department. They ensure that your restaurant is operating in accordance with restaurant food safety regulations, and they’ll be back to check on that from time to time, too.
The process for a foodservice license is pretty simple: apply online with the name and location of your restaurant. Foodservice license fees are often based on the classification and size (number of seats or units) of the restaurant, as well as where it is located. It may also vary based on the number of employees as well. But often the costs range from $100 to $1,000.
4. Employee Identification Number (EIN)
While we’re on the subject of employees, you’ll also need an employee identification number. This is assigned by the IRS. It’s basically a tax ID number.
Fun fact: the IRS only issues one EIN per day. You can apply online to get an EIN and, for once, it’s free.
5. Food Handler’s Permit
Another legal necessity is an employee health permit. This permit guarantees that your restaurant meets food sanitation, storage, protection, and preparation regulations. Your workers need to complete a state-approved food handler’s course and purchase a food handler’s permit. The cost of an Employee Health Permit varies from state to state but can be from $100 to $500. Again, this will expire, usually after 3 to 5 years.
6. Sign Permit
Putting up an artfully designed restaurant sign? Yup. You’ll need a permit for that. Sizing, location, and cost is determined by your city.
7. Paperwork is Part of the Process
Now that you know the costs and process involved with some of the permits required to open and operate a restaurant, as well as the potential detriments that can occur as a result of a missing or lost permit, you know opening a restaurant is not something to do on a whim. And beyond permits and licenses, there are many more questions to ask and consider before pursuing a restaurateur career. Having a menu idea does not a restaurant make; the legal paperwork is as much a part of the business as the cuisine.