Restaurant Permits and Licenses Overview
Disclaimer: This blog article is strictly for educational and informational purposes only and is not intended to provide tax, compliance, legal or other advice/counsel. Every restaurant owner/operator is ultimately responsible for its own compliance with federal, state, and local regulations in regard to licenses and permits. Please contact your attorney or other relevant legal counsel if you have any additional questions or concerns regarding restaurant licenses and permits.
If you own a restaurant, you’re aware of how hectic it was just getting up and running. And if you’ve already acquired food & beverage licenses and permits, you know how daunting the process can be.
Getting all of your restaurant permits and licenses in order is no easy task. Plus, it’s rarely a one-and-done scenario; thanks to ever-changing regulations, renewals (or, many times, entirely new licenses) which are required to keep your restaurant running at full capacity.
To assist your process in getting the licenses and permits needed to open and run a restaurant we put together this fact-filled guide to help your restaurant navigate the often tricky waters in acquiring them.
Getting Started: How to Leverage Pre-Operating Expenses
Still in the planning phase for your restaurant, but fully aware you’d like to acquire food and/or beverage restaurant permits and licenses? Well, here’s a great way to help make the process easier and more affordable (and possibly with less red tape, too): pre-operating expenses.
Opening a restaurant requires up-front purchases and expenditures that occur long before opening the doors and serving customers. These purchases are not accounted for the same way that post-opening purchases are.
Make sure that all pre-opening purchases are recorded on your balance sheet as a capital asset. With RASI’s accounting software and services at your disposal from day one, you’ll ensure that all restaurant expenses are recorded, reconciled and 100% accessible whenever you need the data.
Capturing your restaurant pre-opening expense from day one with RASI, will allow you to have greater accuracy with your cash flow and balance sheet liabilities and assets. Our supporting document shows that this can also include permits for eventual business expansion. Again, always consult with your attorney to ensure your food & beverage licenses and permits needed to open a restaurant can be included with these capital assets.
Different Restaurant Permits & Licenses Required to Run Your Business
Not sure how to get a restaurant license? Here’s a general rundown of some restaurant permits and licenses you need to know about. This list is not exhaustive; always check with state, county, and local jurisdictions to ensure full compliance with your restaurant licenses and permits.
The business license is the foundational permit for your new restaurant. Every U.S. restaurant, catering service, and related business requires a business license. And depending on where your business operates, you could pay a portion of your sales, or a flat annual fee.
Consult with your state & local resources to find the particulars on how to acquire a business license. The cost for this particular category of restaurant permits and licenses typically includes an application fee and ongoing expenses, usually less than $10,000.
Food Service License
Not all counties in the U.S. have health departments. But most do, and these agencies usually issue food service licenses. Check the U.S. Food & Drug Administration (FDA) website to learn more about how to apply in your state and county. Once processed, the local authorities will come out and inspect your facility and ensure you’re ready to open your doors. Keep in mind that regular inspections are included for any restaurant that obtains a food service license, as this is one of the licenses and permits needed to open a restaurant. Prepare to spend up to $1,000 or more for this restaurant permit & license.
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Employer Identification Number (EIN)
An Employer Identification Number (EIN), is a free to obtain, unique number that identifies a business to the Internal Revenue Service. Every restaurant must have an EIN. Processing times take a while; on average, the IRS issues about one EIN per day. If possible, get the ball rolling on this restaurant permit & license as early as possible. Apply here for your EIN.
Building Health Permit
This license is closely related to your food service license, since your establishment must meet certain state and local code requirements. Even if your food preparation procedures are spot-on, it doesn’t matter if your roof is leaking or you have mold issues.
An online search for building health permits should help you find the right application, but you can also consult your attorney for accurate information. Some building health permits are less than $100, while others could cost in excess of $1,000.
The ability to serve alcoholic beverages is a game changer for many restaurants; this is how many establishments can yield optimal ROI. A liquor license is required to do this. Some states and counties require separate restaurant liquor permits and liquor, wine, and beer licenses.
Like the EIN license application, start this one as early as possible, since most state agencies must process a significant backlog of licenses. Check with your state and local governments on how to apply. Costs vary considerably, depending on your location. Once you have a liquor license, check out our article on how to accurately track liquor costs for your restaurant or bar.
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