Starting a successful bar takes more than knowing how to mix a good drink.
The question, “what business license do I need to start my business” is a common one, but in reality, a business will often need multiple licenses, permits, and registrations from federal, state, and local agencies.
Let’s look at the licenses your bar needs to consider.
Related: Guide to starting a bar
To not miss any important licenses and permits, we recommend also checking with your local Chamber of Commerce, economic development agency, or use a business license service like Incfile or Corpnet.
What Licenses Do You Need to Start a Bar?
In order to operate a bar, every state requires a state-issued liquor license. In addition to the licensing, there are many requirements for a bar owner to follow in order to keep their license.
Bar licenses are divided into on-license and off-license. An on-license is for businesses selling alcohol that will be consumed on-site, such as a bar or restaurant. An off-license is for businesses selling alcohol that will be consumed somewhere else, like a packaged liquor store.
Depending on the state, they will also be several categories of liquor licenses to consider:
- A tavern license is meant for businesses that have most of their sales from beer, wine, or spirits.
- Beer and wine liquor license is for a business selling only alcohol and/or wine, but not spirits.
- Restaurant liquor license is for businesses that sell alcohol, but liquor sales do not make up a majority of the total sales.
Here are examples of a few states with licensing to sell alcohol:
In Arkansas, the Alcoholic Beverage Control (ABC) Division of the Arkansas Department of Finance and Administration licenses establishments selling alcohol.
The Indiana Alcohol and Tobacco Commission (ATC) issues liquor license applications in Indiana. Licenses are restricted based on the number of people in the local area where the bar will be located.
Liquor licenses in Maine are regulated through the Maine Bureau of Alcoholic Beverages & Lottery Operations.
In addition to a state liquor license, it is very common to also obtain a local license as well. In almost all situations, the state license will need to be approved before a local license will be considered. Depending on the location, it could be up to the city or county.
A few examples include:
The Business Affairs and Consumer Protection office in Chicago oversees licensing for bars in the city. There are several factors in obtaining a liquor license, such as a building inspection or proximity to other drinking establishments or schools, churches, hospitals, etc.
In Knoxville, Tennessee, the Knoxville Finance Department oversees the process of licensing for bars.
Orange County, Florida, regulates liquor licenses with the Alcoholic Beverage License Review. There are restrictions for licensing, such as being a certain distance away from schools, package liquor stores, and adult entertainment establishments.
Food Service License
To serve food at a bar, a food service license will be needed. This license is issued through the local health department and helps ensure food-service establishments are following health and safety requirements. Registration is different by location, and you may need a state license, county license, and sometimes both.
Licensing typically requires employees who prepare food to have a food handler certificate or food sanitation certification, in addition to the facility being randomly inspected.
If you plan to play music in the bar, whether it’s live, recorded, or streamed, a Public Performance License (PPL) will be needed. Fines from playing unlicensed music can be quite high.
In addition to liquor and bar-specific licenses, there will also be general licensing requirements for starting a business. Here are a few of the common licenses and permits that a bar may need:
General Business License or Permit
Depending on where the business is located, a general business license or permit may be required. A few states require a business license; however, they are more commonly found at the city level.
Instead of a general business license, many cities will require special licensing for bars.
Learn more: Business license requirements by state
Business Name Registration
While not necessarily a business license, it’s worth noting that in order to use a name for a business, many states require the registration of that name. Making matters more complicated, the process of name registration is different by state and the type of business entity.
For instance, sole proprietorships and partnerships generally need to register a business name (also referred to as a Doing Business As, DBA, fictitious name, or assumed name).
Learn: How to register a DBA
Corporations and LLCs register are a little easier in that their name is registered when forming the entity.
Related: What is the difference between a sole proprietorship, partnership, Corporation, or LLC?
Federal Employer Identification Number
The Federal Employer Identification Number (also referred to as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that identifies a business with the Internal Revenue Service (IRS).
Any business with employees or those that form as a partnership, Corporation, and in many cases an LLC, the business will need to get an EIN.
Sole proprietors and single-owner LLCs without employees can instead use the owner’s social security number.
Learn: How to get an EIN
Sales Tax Permit or Business Tax Number
To sell products and/or offer certain services, a state sales tax permit (business tax number or tax ID number) may be needed. This permit creates an account number with the state’s Department of Revenue or a similarly named state taxing agency.
Additionally, hiring employees will also likely require a state tax number.
Learn: How to get a sales tax permit
When buying beer, wine, and spirits to sell to customers, the business can purchase these items tax-free. A resale certificate (sometimes referred to as a seller’s permit) allows a business to purchase inventory, and instead of paying the sales tax to their vendor, they charge the sales tax to the end-user of the product.
A resale certificate only allows a business to not pay sales tax for items being resold, and sales tax will still need to be paid for supplies or equipment.
Learn: How to get a resale certificate
Certificate of Occupancy
In most communities, a bar will need to secure a Certificate of Occupancy (CO) before operating in a commercial building. This certificate is typically obtained from the city, but sometimes from the county, and allows a business to occupy and operate from a building provided the building complies with zoning regulations, building codes, and any other local requirements.
Before starting your bar, be sure to check with the local zoning department to ensure the business can legally operate out of the chosen location.