Restaurant Licensing: Licenses and Permits Needed To Open a Restaurant
Opening a restaurant isn’t just about creating menus and investing capital. There are various licenses and permits needed to open a new restaurant legally. Before you can open a new restaurant, you’ll need to apply for and receive an assortment of state licenses and local permits.
Restaurant licensing differs state by state, so the process for getting restaurant licenses isn’t always the same. Depending on your location, the type of restaurant business you’re opening, and other factors, some restaurants need different permits than others. Many new restaurateurs work with experienced lawyers to help navigate licensing and the paperwork associated with it.
There are various licenses and permits you may need to open a restaurant, and some are the standard requirement in all 50 states. We’ll start by going over the most common and necessary licenses, and then cover some that may or may not apply based on your specific restaurant and location.
What Licenses Are Needed to Open a Restaurant?
Business License
What is a Business License?
A business license is a requirement for any new business venture, not just restaurants. Business licenses make it legal to operate a business in your given area. This is a government-issued license that is based on the location and address of your restaurant, making it legal to conduct business in that area.
How To Get a Business License
The process of obtaining a business license depends entirely on your location. In some cases, you may need to get a license from the state, while in others you’ll need a local business license. If your restaurant serves alcohol, you’ll need a federal business license as well.
The US Small Business Administration has state by state information on obtaining a business license, so it’s a great resource to learn how to get a business license in your location.
How Much Does a Business License Cost?
There is typically a registration fee of around $50 for a new business license, as well as filing fees that can range as high as $500. Costs vary by location. There may also be future costs for renewing the license.
Employer Identification Number (EIN)
What is an Employer Identification Number?
An EIN is your business’ tax ID. This tells the federal government that you own a business that pays employees, and makes it possible to legally hire your employees. Employer Identification Numbers are assigned by the IRS.
How To Get an Employer Identification Number
Getting an EIN is easy – just visit the IRS website and follow the procedures for applications. You can also apply via phone, fax, or mail. We recommend applying for this early, as the IRS only issues limited numbers per day.
How Much Does an Employer Identification Number Cost?
It is free to obtain an EIN for your business.
Certificate of Occupancy
What is a Certificate of Occupancy?
A Certificate of Occupancy confirms that the building your restaurant will operate in is properly constructed and maintained. You can acquire a Certificate of Occupancy after your commercial space has passed its final inspection.
How To Get a Certificate of Occupancy
These certificates vary by location, so we recommend searching for how to get one in your specific area. A government inspector from your local building or zoning department will have to come out and perform the inspection before you can receive your certificate.
How Much Does a Certificate of Occupancy Cost?
Costs range by location, but a Certificate of Occupancy typically costs around $100.
Food Service License
What is a Food Service License?
A food service license makes it legal for your restaurant to sell food. Your restaurant must meet all food prep, storage, and and food safety laws to receive this license. Depending on your type of restaurant, you may need a food handlers permit or a food vendors license as well.
How To Get a Food Service License
To get a food service license, apply through your local city or county health department, either online or in person. They will send someone to inspect your restaurant, and in some areas you may have to complete food safety training as well. Make sure your restaurant is up to code in terms of food safety before applying.
Once you obtain your food service license, your restaurant will be subject to visits from a health inspector to ensure that you’re maintaining food safety protocols.
How Much Does a Food Service License Cost?
As always, the cost of this license varies by state and locality. Prices typically range from $100 to $1000.
Food Handlers Permit or Employee Health Permit
What is a Food Handlers Permit?
A food handlers permit, also called an employee health permit, ensures that all staff has undergone food safety training. This permit shows that the restaurant staff adheres to proper food handling, food storage, and food sanitation regulations.
How To Get a Food Handlers Permit
To get a food handlers permit or employee health permit, the employee has to complete a state food handlers course. Search your state’s website to learn more about obtaining a permit in your area.
How Much Does an Employee Health Permit Cost?
Costs vary state by state, but this permit typically costs between $100 and $500.
Building Health Permit
What is a Building Health Permit?
A building health permit deals with the cleanliness and sanitation of the building where you plan to open a restaurant. This is typically covered by a health inspector when issuing a food service permit, but a building health permit is still required in certain states or sometimes when a restaurant is planned in a newly constructed building.
How To Get a Building Health Permit
First, do some research on your state’s licensing laws to see if you even need a building health permit. If you do need this permit, apply on your local or state government’s website. They will likely send an inspector, and your building will be subject to future routine inspections.
How Much Does a Building Health Permit Cost?
With all state or local permits, it depends on your location. Check to make sure you even need this permit before paying for anything. Costs can range from $50 to $1000.
Sign Permit
What is a Sign Permit?
In many areas, you need a permit to hang a sign on your building – even the main name of your restaurant sign. Different locations may have restrictions on the size, location, and brightness of your sign. Obtaining a sign permit ensures that your signage is legal and within regulations.
How To Get a Sign Permit
Sign permits are usually given by local government, not at the state level. Check out your local laws on your local government’s site to learn the process of receiving this permit. You may have to go through the zoning department. To get your permit, you’ll have to submit plans for your sign, including size, design, placement, and circuitry if it has lights in it.
How Much Does a Sign Permit Cost?
Again, it depends on your location and the size and complexity of your sign. It could be as cheap as $20.
Seller’s Permit
What is a Seller’s Permit?
A seller’s permit is also called a sales tax permit. This tells your state government that your business charges tax during customer transactions. Depending on your state, you may need a seller’s permit for tax reasons.
How To Get a Seller’s Permit
First check to see if you need a seller’s permit based on your location, type of restaurant sales, and tax identification. If you do need a sales tax permit, apply on your state or local government’s website.
How Much Does a Seller’s Permit Cost?
There is usually no cost for a seller’s permit, but you may have to put down a security deposit in case your restaurant closes and you have unpaid taxes leftover.
Resale Permit
What is a Resale Permit?
A resale permit is needed to prevent double taxation on products that you are collecting tax on. This allows your restaurant to make non-taxable purchases on items that will be resold with tax. For example, a resale permit could allow you to purchase food inventory without tax since it will be resold as meals with tax.
How To Get a Resale Permit
To get a resale permit, search for information on your location. Your local governments website should have an application.
How Much Does a Resale Permit Cost?
In some areas, a resale permit may be free. In others, it may cost a small fee of around $50.
Liquor License
What is a Liquor License?
A liquor license allows your restaurant to sell alcoholic beverages. For bars or restaurants serving alcohol, this license is a necessity. If you don’t plan on serving alcohol, you won’t need a liquor license.
How To Get a Liquor License
The process for getting a liquor license varies by state, and depending on your state it can be relatively easy or seriously difficult. Learn how to get a liquor license in your state to begin the process early.
How Much Does a Liquor License Cost?
Liquor licenses are often very expensive. Look into your state’s liquor laws to learn more about getting a license.
Music License or Live Music License
What is a Music License?
Restaurants cannot simply turn on a playlist and play background music – you need a permit to play any music to avoid copyright infringement. A music license makes it legal to play certain music included with the license.
If you want live music at your restaurant, you’ll also need a live entertainment license. This may require additional safety and zoning permits, and you’ll have to adhere to noise restrictions.
How To Get a Music License
To get a license to play background music, you can go through organizations like ASCAP or BMI. For live entertainment licenses, research information on your state or local government website.
How Much Does a Music Permit Cost?
A standard music permit usually costs between $250 and $500. While this may seem steep, it’s worth paying up front. Fines for playing copyrighted music without a license can range from $750 to $30,000.
Other Restaurant Permits to Consider
There are other, less essential permits that you may need for your restaurant as well. These can include a dumpster permit, allowing you to place a dumpster on your property, or even a pool table permit allowing pool to be played in your restaurant. If you offer valet parking, you may need a permit for that as well.
Any extra features of your restaurant such as these may need a permit, which is why it’s important to do thorough research of state and local laws or to work with a lawyer who can guide you through licensing.
Restaurant Licensing FAQ
Can I make food from home and sell it?
There are businesses that sell food made from home. You will still need proper licenses and inspections, however. Some home businesses may operate illegally, but it is not advisable as it can lead to serious fines.
Can you serve food without a permit?
No, in most states you cannot legally sell and serve food without a permit. If you fail to receive a food service permit and other necessary permits, you cannot legally serve food.
How much is a fine for serving food without a permit?
The fine depends on your state and local laws, but fines can range from $25 to thousands of dollars. In some states, selling food without a permit is a misdemeanor and can even result in jail time. No matter the cost, it is not worth losing your business – simply follow the laws and keep up with licenses as needed.
How much do restaurant licenses cost?
Restaurant licensing is different in each state and even in certain localities within state lines. If you add up all of the costs for each license and permit on our list, the cost can range from about $1000 to $5000, not including a liquor license. Not all restaurants need every license listed, however, so it depends largely on your location.
What training must food handlers have by law?
Generally speaking, food handlers should have a good understanding of food safety regulations and practices. Depending on your location, food handlers may all need individual food handler permits, or they may just need training from the owner. It is the responsibility of the restaurant owners to ensure that employees who handle food are properly trained.
What licenses are needed to start a food truck?
Food trucks operate under different laws and licensing, so most states have a separate food truck license that must meet certain health code standards. Food truck owners will need their specific food truck license as well as other required licenses like a business license, food service license, EIN, and so on.
Research Your Local Restaurant Licensing Laws
Be sure to research the specific laws and regulations for proper licensing in your area. Check at both the state and local level to make sure nothing is missed, or work with a lawyer to help guide you through licensing requirements.
Restaurants require thorough licensing – and for good reason. It’s the government’s job to ensure that restaurants operate with proper food safety, so licenses are in place to make sure that the public is safe to eat at your restaurant. While applying for multiple licenses can be a hassle, it’s a necessary step to ensure that your restaurant is legally operating.
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