A Complete Guide to Food Service Licenses You Need to Know Before Launching Your Restaurant

PointofSale outside restaurant food service licenses

 

Starting a new business – especially as a food vendor or restaurant – isn’t an overnight achievement. Acquiring all the necessary food safety and general operational licenses can quickly turn into a bureaucratic nightmare, but we’re here to make it a little easier.

Take a deep breath and get a notepad ready. Below you’ll find a comprehensive guide to all of the food service licenses you’ll need before launching your restaurant or food and beverage business.

What is a Food Service License?

A food service license grants you legal permission to serve food and drinks to customers. Depending on your specific type of food service establishment, you’ll likely need a few different types of licenses.

For example, a food truck would need a different type of food vendor license than a fine dining restaurant – and if you serve alcohol that adds another layer of licensing protocol.

Remember that you’ll also need general business licenses on top of any licenses directly relating to food and drinks. Licenses aren’t a one-and-done process – you’ll need to renew each license periodically.

General Business Licenses and Permits

First, you’ll need to secure all the general business licenses and permits that allow you to operate as a legal company. These licenses are required for all types of business – big and small – and don’t relate to food directly.

Business License

Businesses of all kinds will need a state license and in some cases a federal license to operate under applicable tax laws.

If you don’t plan to serve alcohol of any kind, you can get away with a state business license. However, if you want to serve spirits of any kind, you’ll need to obtain a business license through both your local state and the federal government’s ATF (Bureau of Alcohol, Tobacco, Firearms, and Explosives).

Employee Identification Number (EIN)

Your EIN is necessary for conducting tax business with the IRS. Keep in mind that the IRS only issues one EIN per day so you’ll want to plan this paperwork far ahead of time. The good news, though, is that it’s free and you can get started online.

Employee Disability Coverage and Workers’ Compensation

Disability coverage and workers’ comp protect your workers in the event they’re hurt on the job. Labor laws vary by state. Familiarize yourself with federal labor laws as well.

Certificate of Occupancy

After going through a building inspection, your local jurisdiction will grant you a certificate of occupancy. Your certificate of occupancy ensures that your building is physically safe to occupy.

Sign Permit

Every city – and possibly every landlord – have unique, and often particular rules about the types of signage you can display in front of your business. The rules may apply to size, lighting, materials, and placement of the sign. Check with your landlord first and then the local jurisdiction before you start the design process to ensure your sign adheres to imposed regulations.

Resale Permit

While you’ll need to collect sales tax on prepared food you sell, you’re also eligible to purchase unprepared tax-free food. Your resale permit, also known as a resale license or resellers permit grants you permission to do this and make other special nontaxable purchases. Unless your restaurant operates in one of the five states that don’t impose a sales tax, you’ll need a resale permit.

Seller’s Permit, Sales Tax Vendor Registration, or Certificate of Authority

A seller’s permit is another name for a sales tax vendor registration or certificate of authority, all of which permit you to collect tax on prepared food. The name of the license depends on your state’s local regulations.

While a resale permit gives you the ability to purchase unprepared wholesale food, your seller’s permit permits you to collect tax on the food. Depending on the state, both applications could be lumped together into one form.

PointofSale business owner stamping contract food service licenses

Operational Licenses and Permits for Food Service Establishments

In addition to general business sanctions, you’ll also need special licenses and permits that pertain specifically to the food service industry. These licenses grant you legal permission to serve food or drink and alcohol to customers.

Food Service License

Your food service license is your ticket to serving – you guessed it – food and non-alcoholic beverages. You’ll apply for this license with your local health department to ensure your business complies with food safety regulations. You’ll also need to undergo regular visits from the health department. If you fail an inspection, expect to have your license immediately revoked.

Building Health Permit

Your state may require a specific building health permit from the local health department – especially if you’re constructing the establishment from scratch. Your building health permit verifies that the physical building is fit to make and serve food.

Employee Health Permit

In most cities and states, all or some employees of an establishment are required to complete a food handler certification or licensing course. A food handler is someone who is involved in the production and preparation of unpackaged food at any point of the operation until it reaches the consumer.

Typically, this is something the restaurant owner and managers will complete. However, even if it’s not a requirement for all employees, we highly recommend certifying all employees. Educating your entire staff aware of proper food handling techniques and storage procedures to help avoid foodborne illness not only makes them accountable but leads to better business practices.

Liquor License

Obtaining a liquor license can take quite some time, so start your bar plan review early. You may need one license to serve liquor, and another to serve beer and wine, but you may also need two separate licenses: one for liquor and another for beer and wine. In some cases, it’s easier to get a license for only beer and wine. You’ll need approval from the local government’s liquor control board rather than the ATF as mentioned previously.

Recycling and Waste Removal

Yes, you need a special permit for a permanent garbage receptacle on your business premises. Recycling and waste removal licenses give you permission to place a dumpster outside of your business. Your state will need to issue specific waste licenses to dispose of food, oil, and other materials at the business.

See Also: Startup Money for Small Business: 5 Places to Find Funding

Specialized Food Service Licenses

Every food vendor or restaurant is unique. Depending on the specific nature of your business, you may need additional licenses or permits.

  • Temporary service license for food safety: For festivals, pop-ups, promotional events, carnivals, and anything away from your permanent business location.
  • Fixed food service licenses: For your permanent location
  • Mobile food vendor licenses: For food trucks or ice cream trucks

Entertainment Licenses and Permits

Many aspiring restaurant owners don’t realize that you may need additional permits for certain types of entertainment and events.

Music License to Avoid Copyright Infringement

Typically, you will need to pay a licensing fee for music played in your restaurant. However, there are exceptions made for both TV and radio, under federal copyright law as long as you are not charging customers to hear the music, it can be played.

Cabaret or Live Entertainment License for Concerts and Plays

If you are planning on having live music and shows in your place of business, this will also require a license. Public Performance Licenses are usually given by BMI, ASCAP, GMR, and SESAC.

Special Event Permit

Selling your goods at a special event is a great way to bring in new customers. However, you don’t want to do it without a permit. Depending on the state that you operate in, the requirements and application will vary. Contact your local health department for more information.

Pool Table License

If you would like a pool table in your establishment, a license may be needed for this as well. Now, this is only true for specific counties and states, so check the regulations in your local area to find out if this is something you need.

How to Get Your Licenses and Permits

Start by heading over to the Food and Drug Administration and browsing the regulations for your specific state. You should also contact your local health department to receive your applications and learn about the ongoing process. Although the procedure will vary depending on your state laws and type of business, you can expect the following in general.

  1. Register your general business licenses with the state and the federal government. Fill out the required applications with your local health department. Get most of your business information in order like your business name, physical address, and personal information.
  2. Pay all of the applicable fees.
  3. Schedule your on-site visit from the health department to verify that everything is up to code for food safety regulations.
  4. Wait for your approval and food service licenses. Prepare for ongoing visits and stay on top of regulations.

How Much Will Everything Cost?

Costs vary depending on many factors including:

  • Your physical location
  • The number of employees
  • The number of seats inside your food service establishments

Fees for everything can range anywhere from $100 to $1,000+ so, prepare yourself ahead of time.

How Long Will It Take to Become Approved?

The entire approval process can take between two and three months if everything runs smoothly. If problems arise, this can draw out the process so budget yourself plenty of time before launching.

How Often Do You Need to Renew Everything?

It’s complicated. It really depends on your location and specific food service licenses. In many cases, your service license will expire automatically on a certain date. Maintain solid bookkeeping practices to renew each applicable license before it expires.
You’ll also need to submit a new application if anything about your business changes, including:

  • Opening new locations, pop-ups, or mobile trucks
  • Changing owners
  • Moving your food service establishment to a new location or making changes to your building
  • Deciding to serve alcohol or change the type of business

The Bottom Line

Sorting through operational licenses and applying for food service licenses is a process for new businesses, and it won’t happen overnight. To make your life a little less stressful, budget yourself plenty of money and time to get the necessary licenses in order before opening your food or drink business. Consider talking to people who own similar food service establishments in your area or chat with a professional.

About the Author

Nicole Walters

As Managing Editor at PointofSale.com, Nicole Walters leverages her extensive experience in the payment and POS industry and her background in communications to create valuable content that addresses real problems and solutions for small business owners.