Opening a new restaurant and turning it into a success requires more than just hard work and dedication. It requires a lot of paperwork, too. There are a number of licenses and permits that restaurant owners need to obtain before they can open their doors. The required permits and prices vary per state, but all usually need to be renewed on a yearly basis.
Permits You Will Need
Listed below are the main permits that all new restaurants will need to obtain:
- Business license. In order to operate within the United States, all new restaurants must obtain a business license. This will recognize your restaurant as a legal business, subject to all the laws and regulations of the city, county and state in which you operate. To obtain a business license you will want to contact your county government or go to city hall to obtain the necessary paperwork. You can also hire a business lawyer to help you put together the necessary forms.
- Certificate of occupancy. The city building inspector will issue a certificate of occupancy that will allow you to open your doors for business. A certificate of occupancy is only issued after you have passed your final building inspection.
- Employer Identification Number (EIN). An EIN or Tax ID number registers all businesses in the IRS database and is required in order to do business in the United States. Register for an EIN online
- Flammable materials permit. If your food service establishment uses and stores flammable materials, you will need to obtain a permit from your fire department. Depending on your location, you may also have to obtain a permit from the fire department simply because you are open to the public. In order to obtain this permit, you will need to contact your local fire department or chamber of commerce. The general contractor in charge of building or renovating your new restaurant may also be able to help you schedule a fire inspection, because it is a necessary step for their construction project to get signed off on as well.
- Health department permit. Food service establishments must obtain a permit from their county health department that authorizes them as a retail food handler that is qualified in safe food handling practices.
- Liquor license. Food service establishments that want to serve liquor must acquire a liquor license. Depending on your state and city laws, you may need to purchase separate licenses for beer and hard liquor. To gain a liquor license, you will want to contact your local liquor control board, fill out the necessary paperwork and pay the fees.
- Legal name. It is important to register your business name with your local and state business bureau. This is both to protect your trademarked name for your trade area and to assure that you are not infringing upon someone else’s business name.
- Retail sales license. This is also referred to as a resale certificate. In order to charge sales tax, you must obtain a retail sales license from your state. Only certain products are subject to sales tax and the tax rates vary per state. To apply for a retail sales license, you will want to contact your individual state’s department of revenue for the appropriate forms.
- Sign permit. Local ordinances and building landlords may set restrictions on the size and location of your restaurant’s sign. Sign restrictions are especially strict in malls. You will need to contact your local Chamber of Commerce, city zoning board or building landlord to see if a sign permit is required.
- Music license. In order to play music in your restaurant, you must obtain a music license. A music license grants you the rights to play certain forms of music and avoid copyright infringement.
- Other permits. Depending on the city and township in which you want to operate, you may have additional licensing and permit requirements not listed. Be sure to check with your local business bureau to be sure you cover all of your licensing bases.
Penalties and Consequences
If you fail to obtain the necessary licenses or permits required by your county, state and local governments, you may face the following consequences:
- Unable to open. If you do not have all of the necessary licenses and permits for your new restaurant, you will be unable to open for business.
- Fines. If, after opening, you start to sell a new item, like liquor, without obtaining the necessary licensing, you could face steep fines.
- Close your doors. After being fined for operating without the appropriate licenses and permits, a restaurant may be forced to close its doors until the proper paperwork is obtained.
- Go to jail. In extreme cases of operating without a license and repeat violations, owners and/or managers can face jail time for their violations.