Opening a restaurant is a dream of many. No wonder having your own place can be an amazing experience and a great income source. Among those people who have the independence and courage to start their own business, opening a restaurant is one of the most popular choices. However, the process itself is not as amazing as the outcome is. This is due to the fact that it is a lengthy and complicated process that involves a lot of planning and organizing. Apart from finding a location and a building, recruiting staff, and preparing a menu, you also have a long list of legal requirements to meet.
Most likely the legal procedures are the most complicated for people as the regulations are wide and they vary greatly based on the location. Therefore, it is highly suggested to dig into the topic and do your research before starting the big project. Generally speaking, it is worth planning every detail before starting to execute the plan. In this article, we will go through all the possible licenses and permits needed to open a restaurant. With this help, you might get a clear picture of the next steps.
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Basic information
As the list of licenses and permits needed to open a restaurant are really long, it can be confusing. Especially for someone who has no prior experience in the restaurant business. To make it a bit easier for you, there is a useful and simple way to categorize them into three different groups.
The first one would be the general licenses that are needed for all businesses in the US:
- Business License
- Employer Identification Number
The second group contains the licenses which are related to your services:
- Food Service License
- Food Handler’s Permit – also known as Employee Health Permit
- Liquor License
- Seller’s Permit – also known as Sales Tax License
- Resale Permit
- Live Entertainment and Music License
The third group is about the location and the premises of the restaurant itself:
- Certificate of Occupancy
- Building Health Permit
- Sign Permit
- Valet Parking Permit
- Dumpster Placement Permit
With this in mind, it will be a lot easier to understand the whole process and be able to navigate through the different licenses. Let’s see which licenses and permits you will need to open a restaurant.
Business License
This is step one on your list. A business license is needed regardless of your area of activity. All businesses in the United States require a business license before starting to operate. In the US, the application procedure is based on which state your restaurant will be located in. Just to help you get started, you should visit the US Small Business Administration’s website where you can find all the necessary information and steps you have to follow. Regarding fees, it will be somewhere between 25$ and 500$. Apart from that, you will also have to pay a registration fee but that is a very small cost.
Employer Identification Number (EIN)
Similarly to the business license, the employer identification number is also a basic requirement for all businesses. It will be issued by IRS so their website is the place where you can apply for it. Luckily, this one is free of charge.
Food Service License
The purpose of the food service license is to ensure that you follow all food safety regulations. This will include an initial personal visit, which will continue via regular visits during your operation. This is understandable, as the health department has to keep up strict food safety regulations and high standards. The application starts with your local health department, either in person or with an online application on the FDA website. The cost can vary greatly based on your facility, the location, and how many employees you’ll have. But you can expect an amount up to 1000$.
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Food Handler’s permit or Employee Health Permit
This permit is in connection with your employees who will work with food in your restaurant. Next to the Food Service Licence, this is also required when handling food. This permit will be granted after all your employees have completed a food safety course and obtained individual certification. Depending on the number of employees, the fee for getting this license is between 100-500$.
Liquor License
Apart from the food service license, you will also require to have a liquor license in case you plan on serving alcoholic beverages as well. This is a time-sensitive one, as it requires different levels of licenses so it’s worth applying for it as soon as you can. The application process will be handled by the state’s Alcohol Beverage Control Board and will be dependent on the type of alcohol you plan on serving. The reason behind it is that there are different licenses for beers, wines, liquors, and spirits. You will need on-license as you sell alcohol that will be consumed at your location. Regarding the application process, it can be very different from state to state so it is worth doing some research on the topic beforehand.
Live Entertainment and Music License
The licenses in connection with music are needed in order to play music and have live events without copyright issues. The process will go through either The American Society of Composers, Authors, and Publishers (ASCAP) or Broadcast Music Inc (BMI). How much you have to pay for the license depends on whether it will be live music or not, and if yes, how many live events per week. But to give you an estimate, it should be somewhere between 200-500$.
Certificate of Occupancy
This certificate is needed in order to get your location verified that it is in proper shape and well-maintained. The process will be dependent on the location, meaning that a newly built place will make it a lot easier than in the case of an older location. The place will be thoroughly inspected, involving detailed aspects of electrical and fire safety requirements. The process and the obtained certificate will cost around 100$.
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Building Health Permit
The building health permit is needed in case you build a new establishment for the opening. Because in these cases, you need to make sure that the building complies with all requirements for safety and sanitation. In case you need this, you will most likely have to contact your city’s health department in order to obtain it.
Sign Permit
In order to properly advertise your new restaurant, you will need a unique and visible sign. However, it is not as simple as it sounds. In the US, you will have to obtain a sign permit before you can actually put up your chosen sign. During the application procedure, they will assess whether your chosen sign meets the criteria regarding the size of the sign, as well as its place of it. As for the application, your local city’s zoning department will be responsible for handling it.
Valet Parking Permit
This is not relevant to all restaurants, only in case you would like to offer valet parking for your customers. In this case, however, you might need a permit for that. The requirement is based on which state you are in, as there are different regulations on the topic. Therefore, the process and the fees can also vary greatly. So make sure to look into it in case this service is also among your plans.
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Dumpster Placement Permit
This is not so hard to figure out, but it sure sounds a bit weird. But yes, you also need a permit to be able to place a dumpster next to your restaurant. This obviously can’t be avoided with the amount of waste a restaurant can and will generate. The price will depend on the location of the restaurant as well as the number and size of the chosen dumpster.
Resale Permit
A Resale Permit is really important if you want to spare some money in the form of taxes. This permit will allow your business to purchase ingredients and inventory without paying sales tax in case the purchased goods are used for preparing products for resale – in other words for your meals. This will basically make the tax process simpler as it eliminated double sales tax collection. The requirements and the process itself depend on the state you wish to open your restaurant.
Seller’s Permit or Sales Tax License
This permit will allow you to collect sales tax while selling to customers. This is also highly dependent on the state’s regulations so it’s advised to contact the tax authorities for more information on the application process.
All in all, you can see that the list of licenses and permits is rather long and complicated. The regulations can be subject to changes based on the location and on several features of your restaurant as well. However, by categorizing them into three main groups, the list becomes easier to understand. This can also help you get started without immediately getting lost.