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What Are Typical Licensing Requirements for New Restaurants?

What Are Typical Licensing Requirements for New Restaurants?

You’ve been working tirelessly on your new restaurant’s launch for months—and have possibly even been dreaming about it for years. Finally, everything is coming together: the executive and sous chefs are selected, the menu is crafted, and contractors are putting the finishing touches on the space. It’s understandable that in the hustle and bustle, a few of the more seemingly mundane business items—such as license and permit applications—could be pushed further down on the priority list. Yet, it’s critical that you apply for, obtain, and maintain the numerous licenses and permits that your new venture requires in a timely manner.

The following is a list of common licenses, registrations, and permits required to launch a new restaurant. Take note that the list below is not exhaustive. Because states and local jurisdictions provide greater oversight of these regulations than the federal government, the exact requirements will differ depending on the state, city, and sometimes even county or municipality of your restaurant.

Federal Employer Identification Number

The IRS uses your employer identification number (EIN) to keep track of and collect the relevant taxes from you and your employees.  You can easily apply online and immediately receive your EIN at IRS.gov. While it will take longer, you can also apply via phone or mail and receive your EIN within one to five weeks.

Basic Business License

A business license gives you the right to operate your restaurant, but only within a certain jurisdiction. If you already operate restaurants in different cities or states, you will still need to get a business license for your new restaurant.

To apply, contact the business license department of your new restaurant’s city. When filling out an application, you’ll pay an initial fee. Put a reminder on your calendar to remind you to renew your license. The city will send staff from the zoning department out to your space to ensure that it’s zoned for restaurant use and that parking is adequate (if applicable). If your restaurant will engage in activities regulated by the federal government—such as selling alcohol or preparing meat products—you’ll need to apply for a federal business license, too.

Alcoholic Beverages License

Planning to serve mimosas, old fashioneds, and mint juleps in your new business? Before you can offer alcoholic beverages at your establishment, you’ll first need to acquire a state-issued liquor license. While the requirements and cost of this license vary by state, you will typically be offered several options, such as a beer and wine license and a hard liquor license. If your restaurant is near residential areas, be prepared for the possibility of pushback from the local community. In some states, given the potentially negative effects that alcohol sales can have on the community, you may have to attend a hearing where local residents can voice their concerns and provide input on the granting of this permit to your restaurant.

Resale Permit and Seller’s Permit

Will your restaurant operate in a state that taxes sales? If the answer is “yes,” you will need to get a resale permit and a seller’s permit. The resale permit prevents double sales taxation on certain items. It allows your establishment to purchase specific items without tax—for instance, wholesale food inventory—as long as you are using the items to create products intended for resale. In the case of your restaurant, those resale products will be your deliciously prepared entrées. The seller’s permit is what allows your restaurant to charge and collect sales tax from your patrons.

Health Permit

In nearly every restaurant, you can find a paper displayed on the wall denoting a certain grade—such as an “A” or a “98%.” These grades are assigned by each restaurant’s local health department as part of the health permit process. Every new restaurant must obtain a health permit from its city or county health department. To maintain your permit, your restaurant will be subject to periodic inspections by the health department. Officials will check in from time-to-time to see whether you and your staff are complying with standard food management practices and keeping your facilities in tip-top shape. They may assign a letter or numerical grade based on your restaurant’s cleanliness, which you must then post in a conspicuous area of your restaurant. Failing these inspections could lead to a fine and potentially a loss of your restaurant’s health permit and ability to operate.  

Food Handler’s Permit

Sometimes called an employee health permit, this certification proves that you—the owner—and your staff have completed all the requisite food safety, storage, prep, and sanitation training required by the state. It is often mandatory for anyone who is storing, preparing, packaging, serving, or providing food for human consumption. Depending on your state, this may include dishwashers, servers, and bartenders.

Sign Permit

Before hanging up the attractive new sign announcing your establishment, contact your local city or county officials to determine whether a sign permit is required. To protect the character and safety of the local community, your government may have certain restrictions on the type of sign and its size, location, and lighting. 

Music License

Unfortunately, you're technically not allowed to just plug in your iPod to play music in your restaurant. If the music you want to play is copyrighted—even if you have purchased the albums or mp3s or paid for the streaming service—you still must first obtain a music license. Organizations exist—called performing rights organizations (PROs)—that work as liaisons between restaurants and songwriters to protect intellectual property. Your restaurant pays a fee to the PROs for a license granting you permission to use all the music represented by that PRO. If you play copyrighted music and fail to obtain a license from the proper PRO, you could be sued for copyright infringement, and this could get expensive. Federal penalties can range from $750 to $30,000 per song played.

An exemption exists for eligible restaurants that play music via certain sources such as radio, television, cable, or satellite if the restaurants do not charge patrons to hear the music. Music that is played via CDs, iPods, iPhones, mp3 devices, Spotify, Pandora, or live bands does not fit within the exemption. For more information about music licenses and the available exemptions, visit the National Restaurant Association’s website

Local Permits

Depending on the local and state regulations for your restaurant, you may also need to obtain the following:

  • zoning permit
  • land use permit
  • certificate of occupancy
  • building license for new or remodeled construction
  • place of assembly permit
  • certificate of inspection
  • catering license
  • site cleanliness permit
  • dumpster placement permit
  • sidewalk café permit
  • alarm permit
  • fire and police department permit
  • valet parking permit
  • live entertainment license
  • pool table license

Maintenance of Licenses and Permits

Of course, once you have obtained all the necessary licenses, your responsibilities do not end there. In addition to keeping up with the renewal of existing licenses and permits, your business may also experience changes—such as moving to a new location in town or changing its corporate structure—which could require new or amended licenses. Or, your state or local government could introduce new business requirements. Be sure to appoint someone to keep track of all renewals and events that trigger license amendments so that your restaurant can remain in compliance

Learn More

CT is dedicated to making starting a business easier so you can focus on doing what you love. For more information check out our Business License page or contact us today. at (855) 316-8948.

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