Starting a restaurant can be an exciting endeavor, whether you’ve been toying with a concept for the past 20 years or have just developed an idea for a space that diners will flock to. However, this excitement is often accompanied by the stress, nerves, and learning curves that come with obtaining necessary licenses and permits.
While getting your paperwork in order isn’t the most glamorous part of opening a restaurant, it is undeniably important. We’re going to cover some of the necessary licenses and permits for starting a restaurant so you can begin the process of obtaining them.**
Business Permits and Licenses Needed to Start a Restaurant
While it would be nice if you could open a restaurant with a snap of your fingers, you’ll need to obtain multiple licenses and permits for a restaurant to properly start your business.
Determine Your Business Structure and Form Your Business
Before you can begin applying for various business permits and licenses, you’ll need to officially create your business. This entails determining its legal structure and registering the business name.
When it comes to deciding on a structure, you have multiple options. A limited liability company (LLC) allows the business to split profits any way it would like and may also help protect personal assets if the restaurant faces legal action–like a lawsuit or bankruptcy.
If you’re opening a small restaurant with few employees, you can also opt for a sole proprietorship. This is the easiest business structure to form and provides the owner with complete control, but it also leaves personal assets like homes and cars vulnerable in the instance of financial default or lawsuits.
After you choose a name, you can protect it in multiple ways. While many restaurants skip trademarking their name at a federal level, most are required to register their business entity name with the state at a minimum.
Once you’ve determined the business structure and name, you can register your restaurant with either the local county clerk or the secretary of state, depending on your local regulations.
Register for a Federal Tax ID Number
Next, you’ll need to obtain a federal tax ID number, also known as an employer identification number (EIN). You’ll use this number when you pay employees, file tax returns, and apply for other licenses and permits. An EIN is free to obtain through the IRS.
Depending on which state you are located in, you may also be required to obtain a state sales tax ID.
Obtain a Business License
One of the first licenses you’ll need to obtain is a business license. This license allows you to report income and pay the proper amount of business tax. Depending on where your restaurant is located, you may need to obtain a business license at the state, county, and/or city level. These licenses generally come with an application fee, as well as additional costs that can range from hundreds to thousands of dollars.
Before you open your restaurant, take note of licenses required in your specific area.
Certificate of Occupancy
Once you’ve acquired and remodeled a restaurant space so it’s ready for guests, you will need to obtain a certificate of occupancy. This certificate states that the building is up to code, is located in an area that is zoned for restaurants, and is safe for guests. Since multiple types of inspections are required to receive this certificate, it’s best to get started on obtaining it as soon as construction is complete.
The process for obtaining a certificate of occupancy varies depending on location, but your local building codes office is often a good place to start.
Sign Permit
Before you hang the sign that welcomes customers into your restaurant, you’ll likely need to obtain a sign permit from your local government. Many towns and cities have sign ordinances with regulations involving the size and placement of exterior signs, so your sign will need to meet these.
Resale Certificate
A resale certificate allows you to purchase taxed goods tax-free and then collect tax on the goods when you resell them. As a restaurant, you’ll be purchasing ingredients wholesale, transforming them into dishes, and then reselling the transformed product. Therefore, you may need a resale certificate, also known as a reseller permit.
Whether or not you need this certificate depends on the state you’re located in as well as your annual sales.
Plan to spend a significant amount of time contacting offices and obtaining necessary permits.
Seller’s License
Also known as a sales tax permit, this document ensures that you can collect sales tax from customers.
Health and Safety Permits and Licenses
Along with making sure your business operations are in order, you will also need to prove that your restaurant is set up to serve food that is compliant with food safety regulations.
Food Service License
Before you can sell food at your restaurant, you’ll need to get a license that lets customers know your space is safe and compliant with the health codes. To obtain this license, you’ll apply through your city or county health department. Depending on your location, the department may issue you a permit and inspect later, or conduct an inspection before issuing you a permit.
As long as items like refrigerator temperatures, plumbing, and handwashing stations are up to code, you can continue to operate. You can expect to be reinspected by the health department on a regular basis, and you may need to make changes in order to keep your license.
A food handler’s license ensures all employees are knowledgeable about food safety.
Food Handler’s License
This document can ensure that employees who prepare and handle food have the knowledge to do so safely. Employees including cooks, servers, and bartenders must obtain this certificate, generally within 30 days of being hired.
ServSafe® is a popular testing and certification company, but you can also acquire these licenses through local health departments or extension offices. Even after employees obtain their certificates, it’s a good idea to train them on food safety issues that are specific to your restaurant.
Other Potentially Necessary Licenses
While these licenses and permits for a restaurant aren’t necessarily required, they may apply to your operation.
Liquor License
If you hope to sell alcohol of any kind, you’ll need to obtain a liquor license from the state alcohol beverage control board (ABC). Liquor licenses may vary in cost depending on the number of seats.
Different states have different types of liquor licenses, so ensure you are obtaining the one that applies to your situation. For example, if you will be selling only wine and beer, you can obtain a different type of license than if you will also be offering liquor.
Music License
While you can choose to fill your restaurant with stock tunes, sometimes you want to play specific songs. If that’s the case, you’ll need to obtain a music license to avoid issues with copyright infringement. While you could contact each artist individually, it’s best to leave this work up to licensing companies such as the American Society of Composers, Authors, and Publishers (ASCAP) and BMI.
Dumpster Placement Permit
Even if you wish your restaurant was waste-free, your establishment will produce waste…and that trash needs to go somewhere. Depending on your location, you may need to obtain a particular permit that allows you to place a dumpster on site.
“Anybody can say they are a chef. As far as the management portion, that is where Escoffier is really helping me actually run a restaurant, run a café, or run a business. And that’s what I want. I want my own restaurant.”*
Tiffany Moore, Culinary Arts Graduate
“Anybody can say they are a chef. As far as the management portion, that is where Escoffier is really helping me actually run a restaurant, run a café, or run a business. And that’s what I want. I want my own restaurant.”*Learn More About Opening a Restaurant
When it comes to opening a restaurant, there seems to be an endless list of tasks to complete. Along with obtaining the necessary permits, licenses, and certificates, you may also need to be in the know about hiring, business planning, and cost analysis.
While you can learn this information on your own, spending some time in a food entrepreneurship program can make opening a restaurant or other food business much easier. To learn more about this program and what it entails, contact Escoffier today.
To learn more about starting a food business, check these out next:
- Ghost Kitchens & Ghost Restaurants: What Are They and How Do You Start One?
- How Much Does It Cost to Start a Restaurant?
- How Many Employees Does It Take to Run a Restaurant?
*Information may not reflect every student’s experience. Results and outcomes may be based on several factors, such as geographical region or previous experience.
**Figures included in this article are for informational purposes only and are estimates based on industry trends or a range of costs/expenses. Please research costs for your geographic location and individual situation.
