- Business License
- Employer Identification Number
- Certificate of Occupancy
- Food Service License
- Food Handler’s Permit
- Liquor License
- Sign Permit
- Sales Tax License & Unemployment Tax
- Workers’ Compensation
- Make Your New Restaurant a Success
Most of us don’t get into business because we really love paperwork. For better or for worse, filling out forms and making sure that your papers are in order is a major part of being an entrepreneur. It might not be a fun part of the job – but it is absolutely necessary if you want to be successful.
If you are considering opening a restaurant, your main focus might be on things like the menu, décor, or location. During this exciting time, you should also be thinking about some of the logistical hurdles associated with opening a new restaurant – like obtaining the necessary licenses and permits. Depending on where you are located and the type of establishment you are opening, you will need multiple licenses and permits, from a business license to a liquor license.
This checklist will help you get started on the process of getting all of the licenses and permits that you need to open a new restaurant. When you are done wading through the bureaucracy, consider upping your marketing game with custom branded disposables from Budget Branders.
Before you can officially open up for business, you will need a business license. This gives you the authority to operate your restaurant in your town or city.
This license is typically issued by the city and/or state where you are located. The cost for a business license varies, from $25 to $500, plus a registration fee, depending on your business type, location, and expected profits. You will need to renew your business license periodically.
The best way to determine what the requirements are for a business license in your jurisdiction is to search your state plus the term “business license.” Most jurisdictions offer the ability to apply for a business license online, and outline the specific steps that you will need to take in order to apply for a business license.
Employer Identification Number
While it isn’t a permit or license, to operate your restaurant, you will need an employer identification number (EIN) in order to hire employees and have them on a legal payroll. An EIN is essentially a tax ID for employers. To open your restaurant, you will need an EIN from both the Internal Revenue Service (IRS) and your state.
There is no cost to get an EIN, but it may take some time to obtain one. To do so, visit the IRS website and follow the application process. At the same time, apply for a state EIN. Once you have both numbers, you will be able to start hiring staff for your new venture.
Certificate of Occupancy
In order to open up your restaurant to the public, you will need a certificate of occupancy. This permit is issued by a local building or zoning department. It indicates that the building where you are located is safe to operate in and meets all applicable codes. Depending on your location, this certificate of occupancy may also include a fire permit issued by the local fire marshal.
To obtain a certificate of occupancy, you will need to arrange an inspection by the local government agency responsible for issuing these permits. For example, if you plan to open a restaurant in Detroit, Michigan, you will need to request an inspection from the city’s Buildings, Safety Engineering and Environmental Department. As long as your building complies with all city codes, then you should receive a certificate of occupancy.
Food Service License
One of the most important licenses that any restaurant will need is a food service license. This license demonstrates that a restaurant has met all food preparation, safety, and storage regulations and is allowed to sell food. A food service license shows that your establishment is following restaurant food safety rules and regulations.
This type of license is issued by a city or county health department after an inspection. In some jurisdictions, you may need to complete a food safety training program or get a food handler’s permit in order to get a license. While your restaurant is operating, the health department will make random inspections to make sure that you are still meeting the standards to have a food service license.
To obtain a food service license, you will need to schedule an inspection and fill out paperwork with your local health department. The cost for this type of license depends on where you are located and the number of employees that you have. A food service license will need to be renewed on a regular basis.
Food Handler’s Permit
In addition to a food service license, you may also be required to obtain a food handler’s permit for one or more employees who handle food. It demonstrates that a food service employee has completed a state-approved course and has passed a test on how to handle food safety. Depending on your state’s regulations, you may be required to get a food handler’s permit for each employee who prepares and handles food or just one employee who is responsible for ensuring that standards.
As noted above, some jurisdictions require a restaurant to have a food handler’s permit before they will issue a food service license. In other states, failure to have an up-to-date food handler’s permit will result in steep fines and fees.
Most states require restaurants to have at least one staff member with a food handler’s permit. In states where these permits are not required, a city or county may require you to obtain one. Generally, an employee will have to take a course, pass an exam, and pay a fee to be issued a food handler’s permit from a state or local department of health.
If you plan to serve alcohol at your restaurant, then you will need a liquor license. Each state has an agency that regulates the sale of alcohol. These agencies issue permits to restaurants that will allow them to sell beer, wine, and liquor.
The rules for liquor licenses vary significantly from state-to-state. In some jurisdictions, liquor licenses are strictly limited – and can be both difficult and expensive to obtain. In other places, getting a liquor license is a relatively simple process. Budget Branders has created a full state-by-state liquor license guide on how to obtain a liquor license in each state.
Once you have a liquor license, you will want to be sure that you comply with all laws regarding the sale of alcohol (such as making sure that you aren’t selling to minors). Violations of these laws are treated harshly, and may result in a suspension or loss of your license or hefty fines and fees.
In some cities and counties, you will need a permit to display or change a permanent sign outside of your restaurant. Some localities even regulate the size, brightness and location of signs. In order to put up signage in these areas, you will need to obtain a sign permit, which shows that you have met the standards required for signs.
To apply for a sign permit, visit your local city or state government website. These permits are typically handled through zoning departments. You may be required to provide a scale drawing, circuit plans, and other information for your permit application to be approved.
Sales Tax License & Unemployment Tax
Not every state has a sales tax, but the states that do require businesses to obtain a sales tax license, or sales tax permit. The license or permit acts as an agreement with the state to collect or remit sales tax on items sold by your business. Food items and beverages sold to customers in a restaurant are subject to sales tax. Budget Branders has a restaurant tax guide that breaks down the rates by state. Restaurants in states with a sales tax will have to register for a sales tax license. The states that do not charge sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon.
Similar to sales tax, restaurants must also pay unemployment taxes. As a restaurant owner, you’ll need to file wage and tax reports and pay the appropriate amount for your unemployment taxes. The more employees collect from unemployment benefits, the more you’ll have to pay in unemployment taxes.
While workers’ compensation is a form of insurance and not a license or permit, it is something new restaurant owners need to plan for. Restaurants are legally required to have workers’ compensation insurance in every US state except Texas. Regardless of the legal requirement, workers’ comp is a smart thing for business owners to have coverage for. Workers’ compensation insurance protects owners from costly liabilities such as lost wages, physical therapy, and medical expenses for employees injured on the job. Owners can also usually deduct workers’ comp from their federal taxes.
The premium cost for comp insurance will vary depending on a few different factors. An insurance provider will consider location, payroll, job classifications, and state rates. You’ll want to shop around in your market to get the best coverage at the best price for your business.
Make Your New Restaurant a Success with Budget Branders
Opening a new restaurant comes with a lot of challenges, from finding funding to obtaining all of the necessary permits and licenses. If you are in the process of starting your own restaurant, Budget Branders can help. Our high quality custom disposable products are a no-brainer for anyone looking to boost their marketing and increase brand awareness.
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The information disclosed above does not constitute legal or financial advice. Use this information at your own discretion and consult a legal or financial professional for further guidance.