If you are planning to start a restaurant in the US, you will typically focus on things like the menu, location, décor, POS system, etc., which are within your control. However, certain aspects, such as obtaining the necessary licenses and permits, maybe a logistical hurdle.
The number of licenses and permits required depends on the type of establishment you are opening and its location. The task of obtaining the permits and licenses can be taxing, but the good news is that this blog will help you know the process of acquiring some of the most important ones you will require to start a restaurant in the US.
Business License
It is a permit issued by the US government to allow companies to conduct their business legally within a particular geographic jurisdiction, which could either be a city or a state. In the US, obtaining a business license differs depending on your restaurant’s location. You must obtain a permit in the city where your restaurant is located. The state- or city-specific rules for getting a business license can be retrieved from the US Small Business Administration’s (SBA) website. This document is crucial because it signifies that your business is legally authorized to operate in its designated area. Without it, your restaurant cannot open its doors to customers or generate revenue legally.
In the US, obtaining a business license differs depending on your restaurant’s location. You must obtain a permit in the city where your restaurant is located. This ensures that you adhere to that jurisdiction’s specific regulations and standards. Additionally, the state- or city-specific rules for acquiring this license help local authorities enforce compliance and maintain orderly business practices in their regions.
The business license cost varies widely depending on the city and state. Typically, the application fee is around $50, but additional costs can range from $25 to $7,000, depending on factors like the size and scope of your restaurant. These costs may include filing fees, inspection charges, or renewal fees. While these expenses may seem daunting, they are necessary investments to secure your restaurant’s legal standing and ensure smooth operations.
Food Service License
A restaurant’s core business is serving food, so that it will need a food service license. In many US states, the type of food license is determined by the kind of establishment you will be operating. For instance, in some states, a food truck may require a food vendor’s license instead of a food service license. So, you need to check precisely what type of food license you require based on your restaurant type.
A food service license ensures your restaurant meets food safety and public health standards. It signifies that your establishment has been inspected and meets state and local food preparation, storage, and handling requirements. This is vital for preventing foodborne illnesses, ensuring the safety of your customers, and maintaining your restaurant’s reputation.
The state health department typically issues this license, making it a critical regulatory requirement for restaurants. So, check the state-specific requirements at the US Food and Drug Administration (USFDA) and complete the food license application accordingly. The license validates that your restaurant operates within the framework of food safety laws and that your practices align with public health objectives. Non-compliance can result in hefty fines, forced closures, and legal challenges.
The cost of obtaining a food service license varies based on your restaurant’s location, type, and size. On average, the price ranges from $100 to $1,000. Larger establishments or those offering complex menus may incur higher fees.
Liquor License
The food service license doesn’t include the liquor service. So, if you intend to serve alcohol, you need to obtain a liquor license, or otherwise, you will be burdened with fines, penalties, and the risk of permanent closure. Typically, a liquor license requires some time as it involves different levels of licenses. So, start the processing as soon as possible if you intend to serve alcohol at your restaurant from the very first day.
There are various liquor licenses, depending on the kind of liquor you intend to serve (beer and wine only, full bar, etc.) and the location. The sale of alcohol in a state is regulated by its Alcohol Beverage Control (ABC) Board, and this is where the process starts.
Industry Insight
Liquor can greatly enhance dining experiences, attract a diverse clientele, and increase restaurant revenue. However, understanding the complex liquor laws is essential to avoid fines, penalties, or license revocation. FSR Magazine provides valuable insights on this topic in its article:
“While liquor laws might seem burdensome initially, they can help you protect your brand. Ensuring compliance with every transaction can keep your reputation solid, prevent costly and potentially damaging legal problems, and create a positive atmosphere for your staff and guests. Going into the process alone might seem like a more budget-friendly option, but it can leave you vulnerable to legal issues. Working with an experienced alcohol attorney will ensure you have access to the up-to-date information you need and pertinent advice to help you comply no matter how the laws change”.
Food Handler’s Permit
This permit validates that your restaurant’s staff has completed the food safety certification, which indicates that the staff knows about the regulations pertaining to food sanitation, storage, protection, and preparation. You can obtain it quickly, but each staff member must apply for it individually. This permit is also popularly known as the Employee Health Permit.
The requirements and validity of this permit and the courses for the associated certification vary across states. You must check with the Department of Health to determine the state-specific requirements. Depending on your restaurant’s location, a Food Handler’s License can vary between $10 to $600.
Employer Identification Number (EIN)
Although EIN isn’t a license or permit per se, it is required if you want to apply for any permit or license or file any other paperwork within the state. The Internal Revenue Service (IRS) assigns the EIN, which is a tax ID number or a restaurant’s social security number.
The EIN allows your restaurant to legally hire employees, open a business bank account, and file federal taxes. It’s also required to secure various state-level licenses and permits. The EIN ensures that your business operates transparently within the federal tax framework and helps establish credibility with partners, suppliers, and financial institutions. Without it, your restaurant would struggle to manage essential functions like payroll and tax compliance, which are vital to its long-term success.
Live Entertainment And Music License
If you plan to play music in your restaurant, you must apply for a license from performance rights organizations, such as ASCAP, BMI, or SESAC. This license helps in avoiding copyright infringement. This license can cost somewhere between $250 to $500. The rates may vary depending on factors like whether the music is played live or recorded, the number of music nights per week, etc. If you are caught playing copyrighted music without a license, it may cost $750 to $30,000 in the form of penalties.
Other Permits To Start A Restaurant
Apart from the six critical permits and licenses discussed above, you must also obtain other licenses to help you run the restaurant legally. The additional restaurant licenses include:
Sign Permit
Your restaurant’s signage is vital in attracting customers, but many cities regulate signs’ size, placement, and illumination. A sign permit ensures your signage complies with local zoning laws and is not a safety hazard. It reflects professionalism and helps your restaurant avoid legal disputes related to advertising. Properly permitted signage can enhance visibility and contribute significantly to your restaurant’s branding efforts.
Certificate of Occupancy
A certificate of occupancy verifies that your restaurant’s building meets local zoning and building codes. This document ensures your building is safe for employees and patrons. It confirms that your restaurant complies with structural, electrical, and plumbing standards, providing peace of mind to all stakeholders. Without it, you cannot legally operate your restaurant.
Resale Permit
A resale permit allows your restaurant to purchase goods, such as food and supplies, without paying sales tax, provided these items are resold to customers. This permit helps manage costs effectively by ensuring you are not twice-taxed on selling items. It is essential for maintaining accurate tax records and staying compliant with state sales tax laws.
Pool Table License
Some states and cities require a specific license for restaurants with recreational features like a pool table. This license ensures compliance with local entertainment regulations and involves safety checks to ensure that recreational areas are adequately maintained and safe for customer use.
Dumpster Placement Permit
Restaurants produce significant waste, and having a designated dumpster is necessary. Some jurisdictions require a dumpster placement permit. This permit ensures that dumpsters are placed in approved locations to avoid obstructing public pathways or violating zoning laws. It also helps maintain cleanliness and prevent health hazards.
Sales Tax Permit
A sales tax permit is required to collect and remit sales tax to the state for taxable goods and services. This permit is essential for compliance with state tax regulations. It ensures your restaurant operates transparently and contributes its fair share of taxes to the local economy.
Building Health Permit
In addition to a health department permit, a building health permit focuses specifically on your restaurant’s structural and infrastructural compliance. This permit ensures your building meets health-related standards, including ventilation, pest control, and waste disposal systems. It’s essential for safeguarding public health and avoiding legal issues.
Valet Parking Permit
If your restaurant offers valet parking services, you may need a legal permit to operate this service. This permit ensures that valet services are conducted safely and without disrupting traffic. It also signifies that your business complies with local transportation and parking regulations.
Estimated Costs and Timelines for Restaurant Permits
The cost of acquiring permits for a restaurant varies widely depending on the state, city, and the type of permits required. For example, a business license typically costs between $50 and $500, while health department permits range from $50 to $1,000, depending on the size of the establishment and local regulations. Liquor licenses are among the most expensive, with fees ranging from $300 in some states to over $14,000 in others. Zoning and signage permits can add another $200 to $1,000. To manage costs effectively, research the specific fees in your area and budget for additional expenses like inspections or resubmission fees if applications are initially denied.
The timeframes for obtaining permits also vary based on complexity and the efficiency of local regulatory bodies. A business license might take 1 to 2 weeks, while a health permit could require up to 30 days due to inspections and revisions. Liquor licenses often take the longest, ranging from 3 to 12 months, because of background checks and public hearings. To expedite the process, ensure all required documentation is complete and accurate before submission. Engaging with local government offices early and hiring professionals to handle applications can further reduce delays.
Operating without proper permits can lead to severe penalties, including hefty fines, forced closures, or permanent loss of specific licenses. For instance, running a restaurant without a health permit could result in immediate shutdowns and penalties of $500 to $5,000. Selling alcohol without a liquor license can lead to criminal charges and fines exceeding $10,000. To avoid such risks, prioritize compliance and establish a system to track renewal deadlines for all permits. This proactive approach will save you from unnecessary legal and financial troubles.
Conclusion
Securing the necessary permits to open a restaurant is not just a legal obligation but a critical step in building a successful and sustainable business. Each permit ensures that your establishment meets the health, safety, and operational standards required by law, safeguarding your customers and business. By conducting thorough research, adhering to local regulations, and maintaining organized documentation, you can confidently navigate the complexities of the permitting process.
So, you need to ensure that either you have the licenses mentioned above in place or apply for them before/while starting your restaurant. If you have the licenses, you can run the restaurant business in the US with ease. If the process feels overwhelming, don’t hesitate to seek professional assistance from consultants, attorneys, or licensing experts who can guide you through the intricacies. Investing in expert help can save time, minimize stress, and ensure your restaurant is set up for smooth operations and growth. Once all the licenses and permits are obtained, you know you are on the right track to realize your dream of a thriving restaurant business.
In Texas, you’ll need a Food Establishment Permit, health inspection approval, a Sales Tax Permit, and possibly a Liquor License if you plan to serve alcohol.
The cost of a food service permit in Georgia varies by county and establishment type, but it typically ranges from $100 to $300 annually.
Depending on the type of food service, you need a Food Permit from the Department of Agriculture or the Department of Business and Professional Regulation to sell food in Florida.
Successful restaurant opening requires a clear business plan, appropriate licenses, and health and safety regulations compliance.
A Texas Food Establishment Permit typically costs between $300 and $800, depending on the type and size of the establishment.
Licensing involves granting permission to use intellectual property, while franchising is a business model where a franchisee operates a business using the franchisor’s brand and system.
The cost of a food license in Florida ranges from $50 to $500, depending on the type of food service operation and its size.
To open a restaurant in New York, you need a Food Service Establishment Permit, health inspection clearance, and a Sales Tax Certificate.
To obtain a food license in Florida, apply through the Department of Agriculture or DBPR, complete the necessary training, and pass a health inspection.
You need a Health Department Food Permit, a business license, and a Sales Tax Permit in Virginia.
In Michigan, you’ll need a Food Establishment License, Sales Tax License, and potentially a Liquor License if you plan to serve alcohol.
Selling food in Texas requires a Food Establishment Permit and, if applicable, a Temporary Food Establishment Permit for events.
You need a Retail Food Facility Permit in California to meet local health department requirements.
In North Carolina, any establishment serving or selling food to the public requires a food permit from the local health department.
The cost of a food permit in California varies by county but typically ranges from $100 to $1,000, depending on the type and size of the food facility.
