Planning to start a restaurant? You probably have things like the location, theme, décor, menu, manpower requirement, and many other details figured out. However, this alone is not enough. Opening a restaurant entails tonnes of paperwork, legal formalities, and licenses and permits before you can finally realize your dream of opening a restaurant.
You sure are aware of liquor licenses and permits; however, there are a number of other licenses and permits required depending on the location and type of restaurant you wish to open. Failure to obtain these can result in hefty penalties and legal battles, and in some cases, your dream restaurant may never see the light of day. But don’t sweat; we have put together a list of licenses you must have for starting a restaurant in the US. Let’s dive in!
A business license refers to a permit issued by the US government. A business license enables an individual or a company to conduct business legally within a geographic jurisdiction (city or state). The process of obtaining a business license differs from one city to another. Make sure to apply for a permit for the city where you plan to open your restaurant business. Complete details on rules and regulations for obtaining a license state/city wise is available on the US Small Business Administration’s (SBA) website. Business license costs vary from one city/state to another. Obtaining a business license can cost you anywhere from $25 to $7,000, depending on the state/city you plan to open your restaurant business.
Employer Identification Number
The second most crucial license any business needs to acquire is an Employer Identification Number (EIN) to operate in the U.S. EIN is a nine-digit number or tax ID which enables a business owner to file taxes in a timely and proper manner. EIN is like your legal business identity. Regulatory bodies issue only one EIN per day so it’s best to apply for it well in advance as the waiting period is long. One can apply for an EIN online on the IRS website in three simple steps:
- Determine the eligibility by filling out the questionnaire
- Duly fill the online application
- Submit the application
Certificate of Occupancy
Safety of employees, self, and guests is the topmost priority for any restaurant owner. No wonder they put in so much effort in making sure that the food served to guests is not only tasty but safe for consumption. However, restaurant owners need to make sure that the building/premises they are operating from is safe too. A Certificate of Occupancy is a testimony to the fact that the building where a restaurant is located has passed its final inspection and is safe to operate in. It is mandatory for restaurant owners to obtain a certificate of occupancy before they start operations. The process to obtain a certificate of occupancy is as follows:
- Put the name of your state along with the term “certificate of occupancy” in the search bar of a search engine like Google.
- Set up or book an appointment with your local zoning/inspection officer.
- Arrange for an inspection of your premises by the local building or zoning department.
Most states include a city and fire permit in the certificate of occupancy. This certificate costs $100 approx.
Prominent signage is essential for people to locate and reach your restaurant. However, putting signage for your restaurant requires obtaining a permit from the concerned city authorities. Each city has their own set of standards with regards to the size, location and lighting of the signage. All outdoor signages in particular must be approved by the local governing city authorities. In case you are running your restaurant out of a rented or leased premises, then it is a good idea to get a written permission or approval from your landlord over and above the official government issued sign permit.
Food Service License
The core job of any restaurant, be it big or small is to serve food. Hence, as a restaurant business owner one license you must get is the food service license. The food service license will depend on the type of restaurant establishment you are setting up. For example someone setting up a food truck will need to obtain a food vendor’s license instead of a food service license. However, these regulations vary across states. The food service license is issued by the state health department, you can get complete details on state-specific requirements at the US Food and Drug Administration (USFDA) website. The process to obtain a food service license:
- Check your state-specific requirements and complete the application process.
- Post application, a health department personnel visit will be arranged. Prepare for the inspection.
- The personnel will check if your restaurant complies with the restaurant's food safety regulations.
- If all goes well and once he submits the report, a license will be issued.
The license cost will be determined based on your restaurant’s location, type, and size and typically costs anything between $100 to $1,000, depending on the state. The food Service license needs to be renewed periodically.
Food Handlers Permit/Employee Health Permit
Food handlers permit or the employee health permit is given to an individual on successful completion of a food safety certification program. The program familiarizes your staff about the regulations pertaining to food sanitation, storage, protection, and preparation. Each staff member needs to apply for the food handlers permit individually. Each state has different certification courses and validity periods. To get complete details on state specific requirements visit the Department of Health website. A food handler’s permit cost varies between $10 to $600 depending on the state where your restaurant is located.
Building Health Permit
A building health permit is typically required if you are opening your restaurant out of a newly built premises. However, some counties may require a building health permit for old buildings too. It is best to check about rules regarding building health permits specific for your area. The purpose of the permit is to ensure that the building out which your restaurant is operating complies with all the sanitation regulations. The permit is issued by the local government body of your county. Typically the building will be inspected from time to time to ensure there is no lapse which could lead to an unforeseen mishap. A business health permit typically costs anything between $50 and $1000 depending on a building’s age and location.
Other Licenses to consider
Apart from these mandatory licenses, there are a few additional licenses you may need to apply if you plan to serve alcohol or play live music, provide valet parking or a games room. Here’s a quick round up of other additional licenses which restaurants typically apply for:
- Liquor license
- Music license
- Resale permit
- Seller's permit
- Dumpster placement permit
- Pool table permit
- Valet parking permit
Starting your entrepreneur journey with law on your side is essential to your restaurant business success. Failure to comply with law can not only result in hefty penalties but possible closure of business.