If you've thought about opening a restaurant, you've probably got every detail of your customer's experience mapped out — from the location to the food to the music that will be playing in the background.
But there's a lot more to running a restaurant than creating a memorable experience for your customers.
To open and operate your restaurant legally and avoid fines and other penalties, you must have the proper restaurant licenses and permits. Every city, county and state has different regulations for restaurants, so it's important to check with your local government to get the details.
In this article, we'll review the licenses and permits you'll likely need no matter where your restaurant is located and several more that can help enhance your business.
Required restaurant licenses
Restaurant business license
Almost all businesses in the United States, including restaurants, need a business license to operate legally. Typically you can get a restaurant license from the city or county where you plan to open your eatery. If you sell alcohol, you need a federal license too.
The cost for a business license varies based on where you're located. Generally, it starts at around $50 and can be as much as a few hundred.
Depending on the state where your restaurant is located, your license may be good for as long as you own the restaurant. Or you may need to renew it periodically. And the rules may be different for restaurants that sell alcohol compared to those that don’t.
Employee identification number (EIN)
Filing your taxes may not be your favorite part of owning a restaurant, but unless you want the IRS knocking on your door, it's necessary. An EIN, or employee identification number, is a tax ID for your business issued by the IRS.
You can apply for free online or by faxing or mailing form SS-4 to the IRS.
Use and occupancy permit
Issued by the local zoning or building office, a use and occupancy permit shows your restaurant is up to code and meets the necessary safety requirements. You must wait until construction and building inspections, including an inspection from the fire marshal, are complete to apply for a permit.
You need a permit even if you're taking over an existing restaurant and not building a new one. Fees are usually around $100 but may be more depending on what city or county your restaurant is in.
Food service license
Before you can open a restaurant, your local health department must issue a food service license. This shows that your restaurant adheres to food safety guidelines that help keep patrons healthy. The cost typically ranges from $100 to $1,000 and can vary based on where you operate and the size of your business. Food licenses often need to be renewed annually.
Food manager certification
According to the Centers for Disease Control, there are approximately 48 million cases of foodborne illness every year. You don't want your restaurant to be responsible for contributing to the total.
To help prevent outbreaks of foodborne illness, most states require food service businesses to have at least one certified food manager on staff. To receive a food manager certification, you or one of your managers must take a food safety course and pass an exam.
After passing the exam, you can apply for a food manager certification with your local health department. The cost is typically around $100 to $500.
Dumpster placement permit
It's difficult to run a restaurant if you don't have a place where you can throw out food waste, napkins, paper towels and other trash that accumulates throughout the day. But you need a permit to put a dumpster outside your restaurant.
The cost varies depending on the size of the dumpster and what city or county you're in. Some permits start at less than $100, while others may be several hundred.
Other restaurant licenses to consider
You're open for business, and you want to shout it from the rooftop. But unless that's the only way you plan to let customers know you're ready to serve them, you'll need a sign. And a permit before you can hang it up.
You can get a sign permit from your local building and zoning office. The cost and requirements will vary based on the type of sign you want (e.g., awning, billboard, freestanding, etc.).
Restaurant liquor license
You don't have to serve alcohol at a restaurant, but if you do, you need two licenses — one from your local alcohol beverage control board and one from the federal Alcohol and Tobacco Tax and Trade Bureau.
The cost for these licenses varies widely based on which state your restaurant is located in and ranges from several hundred to several thousand dollars. And, if you’re operating in a state with a quota on the number of liquor licenses available, be prepared to pay top dollar for it.
Having music playing in the background can help create the "right" atmosphere for your restaurant. But music is subject to copyright and licensing laws. If you don't want to be stuck with thousands of dollars of fines, you need a license before you — and your customers — start rocking out to your favorite tunes.
To get a music license, you have two choices. You can get one from an organization that helps protect artists' rights, such as the American Society of Composers, Authors and Publishers, Broadcast Music Inc. or Global Music Rights. Or you can subscribe to a music service such Rockbot or Soundtrack Your Brand that takes care of the licensing requirements for you.
Plan on having live performances instead of setting up a speaker system to play music in the background? You'll need a separate live entertainment license for that.
Setting up an outdoor space where customers can enjoy a beautiful day in addition to their meal is a good way to increase the number of customers you can serve. But you need a permit for it.
Check with the building or zoning commission in your area to find out what you need to do to meet the permitting requirements. The cost for an outdoor seating area typically costs a few hundred dollars. But many states are currently waiving their fees due to COVID.
How NEXT helps you get the restaurant insurance you need
Many cities, counties and states require you to have adequate insurance coverage before you can apply for many of the restaurant licenses and permits you need to operate.
At NEXT, we can help you get the restaurant insurance you need to meet your local requirements. Our customized insurance packages let you mix and match policies to get the coverage you need.
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If you need help, our licensed, U.S.-based insurance professionals are available to answer your questions.
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