What Permits and Licenses are Needed to Start a Restaurant?

Launching a restaurant is exciting! It's also extremely overwhelming. 

You must create a business plan, secure a good location, map out your menu, hire and train employees, and market your new venture—it's a lot. It's so much, in fact, you might forget about the various licenses and permits you need to obtain. We're here to help. 

In this article, we'll cover the important legal documents you need, from your restaurant business license to special events permits, how to get them, and more. 

What Permits and Licenses Are Needed to Start a Restaurant? 

Your restaurant needs a fleet of licenses and permits to operate legally in the United States. We're going to list them for you. But first, let's talk about why compliance is essential. 

Why Compliance Is a Must Before Opening Day 

Your restaurant should be fully compliant before it opens. This will help ensure safety for guests and build trust within your community. It will also keep you out of trouble with local authorities, help you avoid costly fines, and prevent potential delays and shutdowns.  

Lastly, permits and licenses are often required to hire employees, order goods from suppliers, and engage in marketing campaigns. So, you can't accomplish these tasks until you have the legal documents. In short, there's no legitimate reason to postpone compliance. 

7 Core Permits and Licenses You’ll Likely Need 

As mentioned, there are many restaurant licenses to obtain. Don’t let this discourage you from pursuing your new venture! Instead, start with these seven core documents. 

1. Business License: A restaurant business license is the first license to get. This document will allow you to operate a restaurant legally as a sole proprietorship, limited liability company (LLC), or other business structure. To get a business license, visit your city's license center. To learn more about the license you need before you apply, visit the Small Business Administration (SBA) website. Expect to spend approximately $50, although this may vary by location and other factors. 
2. Federal Employer Identification Number (EIN): Once you have a business license, apply for an EIN, which is a nine-digit number you'll use for tax purposes. To get your own EIN, visit the IRS website and complete the online application.  
3. Sales Tax Permit: A sales tax permit, sometimes referred to as a seller's permit or sales tax license, will allow your restaurant to legally collect sales tax in your state. You should be able to apply for a sales tax permit on your local municipality's website. 
4. Resale Permit: A resale permit will allow your restaurant to make nontaxable purchases. The catch? Each purchase must be used to create products for resale, like the food you use to make meals. When this happens, the end customer pays the sales tax rather than your restaurant. This could save your business a lot of money. As with the sales tax permit, apply for a resale permit on your local municipality's website. 
5. Certificate of Occupancy: A certificate of occupancy ensures that your restaurant's physical space is properly structured and well-maintained. Obtaining a certificate of occupancy varies based on location and building size. But you'll need to pass plumbing, electrical, fire safety, and general building inspections first. Contact a local government representative to learn more about the process and how to proceed. 
6. Food Service License: You can't serve food—a must for a restaurant—without a food service license. This document is usually issued by a local health department and certifies that your establishment meets all required food safety standards. To get a food service license, visit the FDA website or your county health department's local building. (Please note, food service licenses can expire and/or be revoked for noncompliance. So, it's important to maintain food safety standards at all times.) 
7. Fire Department Permit: To help guarantee the safety of diners, local government requires restaurants to obtain a fire department permit. This document certifies that your establishment has working fire alarms, sprinkler systems, and more. Contact your local government officials to learn more about requirements in your area, costs, and how to proceed. 

Restaurant Permits: The Essentials You Can’t Skip 

Let's dig deeper into restaurant-specific permits needed to operate legally. These six documents are non-negotiable. Make sure you have them before opening day. 

Health and Safety Restaurant Permits 

Many restaurant licenses and permits revolve around health and safety. It makes sense. Your new venture will serve food, after all, which can have a serious effect on guests' wellbeing. Here are the main health and safety restaurant permits you'll need to obtain. 

• Employee Health Permit: Also known as a food handler's permit, this license certifies that a specific employee has taken and passed an acceptable health and safety course. These courses teach workers how to handle and store food correctly and sanitize kitchens to avoid cross-contamination. Every employee who handles food for your restaurant needs this permit. Fortunately, obtaining this permit is easy: complete a state-approved food handling course. Unfortunately, these permits can represent a significant expense. Plan to spend between $100 and $500 per permit. 
• Waste Disposal Permits: Did you know you need a permit to dispose of waste? While the exact permits vary by location, most restaurants will need a dumpster placement permit, which will let you legally place a dumpster outside of your kitchen. That way your chefs can dispose of food waste when needed. You'll also need a grease trap permit to legally install a grease trap and dispose of grease from fatty foods in a compliant way. Contact your local authorities for all the necessary licenses related to waste. 
• Health Department Inspections: Your new restaurant will be subject to health department inspections. Fail them and your establishment will have to pay heavy fines, face lawsuits, or even permanently close. Fortunately, if you acquire the health-related permits in this article, educate yourself on revolving regulations, and work to maintain a healthy environment for both your employees and guests, you'll pass all inspections. 

Building, Zoning, and Signage Restaurant Permits 

Unless you plan to run a ghost kitchen out of your home, you'll need building, zoning, and signage permits. Focus on these five things, as they're required in most states:

• Local Zoning Compliance: The term "zoning" refers to the way different properties can be used in different areas. For example, some municipalities limit the number of fast food establishments in specific neighborhoods. Before you rent a building for your restaurant, contact your local zoning department to ensure you can legally operate there.  
• Building Permits: Planning to build a new structure for your food business? Maybe you want to renovate your existing restaurant. Either way, you'll likely need building permits. Though, the permits you need will vary widely based on your restaurant's location. Research local laws or hire a restaurant consultant to help you through this process. Then apply for each necessary permit with the proper authorities. 
• Building Health Permit: A building health permit certifies that your restaurant meets sanitation standards. Not all states require this permit. We suggest online research to determine the related requirements in your local city and how to apply for this license. (Note: if you already have a building when you apply for your restaurant business license, you should be able to get a building health permit at the same time.) 
• Sign Permit: Restaurants use a variety of signs to promote their establishment and elevate the guest experience. You can't legally hang these signs until you acquire a sign permit. The thing is that every local government has different requirements in this regard. To get a sign permit, contact your local government and follow their guidelines.  
• Valet Parking Permit: Many fine dining restaurants—and even some casual full-service restaurants—offer valet parking to guests. If you plan to do the same, you will need a permit. To apply, share pick up and drop off areas, the number of parking spaces you need, and the letter of agreement between your food establishment and your chosen valet operator. Then supply these details to your state government. 

Restaurant Permits and Licenses for Alcohol and Entertainment 

You can drive a lot of revenue with alcohol and entertainment. But before you stock the bar and/or book a band, make sure you have your restaurant licenses and permits in order. 

Liquor License Types and Requirements 

You need a liquor license to serve alcohol in your restaurant. To get one, contact the Alcohol Beverage Control (ABC) Board in your state and learn how to apply. Before you do that, though, you should decide what type of liquor license you need. Here are the options: 

• Restaurant Liquor License: Allows you to sell every kind of alcohol 
• Beer and Wine Liquor License: Allows you to sell beer and wine, but not hard liquor 
• Tavern Liquor License: For restaurants that sell food, but 50% of sales are from liquor 

Keep in mind that it can take several months to receive a liquor license. So, we suggest applying for yours as soon as possible. Also, understand that liquor licenses can be revoked. You need to maintain compliance so you don't lose yours, which could lead to costly fines and a drop in revenue. 

Music, Entertainment, and Live Events 

Walk into any restaurant in the United States and you'll hear music. It makes sense. The right melodies can set the appropriate mood and enhance the guest experience. Guess what—you need a special license to play other peoples' songs in your establishment. You need one to host live events, too. Let's cover the entertainment-related permits you should apply for. 

• Music Licensing: Most musicians work with performing rights organizations to help protect their creative works. To legally play their music in your restaurant, you'll need a license from one of these organizations. The main ones are BMI, ASCAP, and SESAC. Visit each organization's website for more information. Tip: Avoid the music licensing process and use Soundtrack to access pre-licensed playlists for a low monthly fee. 
• Special Event Permits: Do you plan to host live events in your restaurant? Then you'll need to apply for a live entertainment license with your municipality. Contact them for more information on the process and cost, as it varies by location. 
• Noise Ordinances: While not an actual license or permit, most municipalities have noise ordinances, AKA laws that govern how loud an establishment can be at any given time. Make sure your restaurant follows these laws to avoid fines. Learn more about noise ordinances in your area by contacting the local authorities. 

How to Get Restaurant Permits and Licenses Efficiently 

Your restaurant needs a lot of licenses and permits to operate legally in the United States. How do you get all of them in a timely manner? These tips will help you make it happen. 

Research Local, State, and Federal Requirements 

Different areas have different local governments, each with their own laws and regulations. Thoroughly research the requirements for each license and permit you need in your area. That way you aren't surprised by anything and can supply necessary documents. The SBA, Chamber of Commerce, and National Restaurant Association are great resources. 

Plan for Costs and Application Timelines 

Restaurant licenses and permits cost money. You can speed up the application and approval process by budgeting for these expenses, paying the required security deposits, and tackling other financial hurdles.  

We also suggest taking a strategic approach to timelines. For example, liquor licenses can take months to receive. Prioritize budgeting for this license first so that you can start the application process at the beginning of your licensing journey. Doing so will help avoid delays. 

Consider Working with a Restaurant Consultant 

Finally, if you have the funds, work with a qualified professional to help you obtain all the licenses you need. A legal expert, permitting guru, or even a local restauranteur who's been through the process can be invaluable.  

They'll help you avoid application mistakes, poor budgeting plans, and other issues. The federal government has a lot of regulations for restaurants. Then there are city-specific rules to follow. A guide will help ease the burden of applying for common licenses, locking down additional permits, and passing final inspections. 

Keeping Your Restaurant Permits and Licenses Up to Date 

Congratulations, you have the licenses and permits you need to operate your restaurant legally in the United States! Now what? Well, besides actually running a profitable business, you need to update your licenses and permits when needed. Here are a couple of tips to help. 

Renewal Cycles and Reporting Requirements 

Most licenses and permits need to be renewed annually or semi-annually. You might need to pass periodic inspections as well, to make sure your restaurant meets local requirements. It's your job to know which licenses and permits need to be renewed and when. Make sure you don't forget, or you could be subject to fines, temporary closures, or worse. 

What Happens If You Let a Permit Expire? 

As mentioned, you might have to pay a heavy fine. Worse, the government has the power to shut your restaurant down. At the very least, you'll lose trust with your target customers. Customers are unlikely to return to a restaurant with a failed health inspection. You'll probably lose revenue, too. If you let your liquor license expire, for example, your restaurant won't be able to sell alcohol anymore.  

Since alcohol usually has 70-80% profit margins, this could seriously hurt your bottom line. Good news: you can often fix expired license issues quickly by being proactive and contacting your local authorities. Then follow their directions. 

Frequently Asked Questions About Restaurant Permits and Licenses 

There's a lot to know about restaurant licenses and permits. Here are more common questions. 

Do you need an LLC to open a restaurant? 

No, you don't need an LLC to open a restaurant, though this business structure is common because of the legal protections it affords the restaurant owner. Other business structures to consider include sole proprietorship, partnerships, cooperatives, and corporations. The structure you choose will depend on your restaurant's city and unique situation. 

How profitable is owning a restaurant? 

It depends on many factors. Where is the establishment located? Does the restaurant's building receive a lot of foot traffic or is it off the beaten path? What's the plan for marketing? How good is the food and service? Is the eatery selling alcohol? Does the owner know how to run a successful business? Each of these things can impact profitability. 

How much money do you need to start a restaurant business? 

It depends on your exact location and the kind of establishment you want to start. For example, it will be cheaper to start a food truck business in Alabama than a fine dining restaurant in California. The requirements for each are wildly different. Do in-depth research to learn about food vendor application requirements and costs, how much your rent will likely be, and what you'll need to spend on ingredients and staff. But plan on $200k or more. 

How do ghost kitchens work? 

Ghost kitchens, sometimes referred to as virtual restaurants, operate digital storefronts. Customers order food online, which is then prepared in a private commercial kitchen and delivered to the customer's home. Ghost kitchens are perfect for entrepreneurs who need to minimize startup costs and want to focus on cooking, not providing a full customer experience.  

How do I open up a small restaurant? 

The general process of opening a small restaurant looks something like this: 

• Pick a restaurant type 
• Build a business plan 
• Acquire funding 
• Choose a location 
• Apply for licenses and permits 
• Create your menu 
• Hire necessary staff 
• Engage in marketing 
• Launch your restaurant! 

Stay Compliant, Stay Open, and Focus on Growth 

You need restaurant licenses and permits to legally operate a food establishment in the US. Fortunately, after reading this article, you know which ones to get and how to get them. 

One more thing: we suggest building a checklist and timeline for these permits and licenses before you sign a lease or hire staff. That way you don't lose money while you wait for approval. 

Now that you're equipped with the essentials, explore digital tools and guest engagement strategies with Paytronix. Book your demo today.