Starting a successful coffee roasting business takes more than knowing how to give a good haircut. Starting a new business requires completing several steps, and obtaining licensing is an important one as it may impact your ability to operate legally.
The question, “what business license do I need to start my coffee roasting business” is a common one, but in reality, your business will likely need multiple licenses, permits, and registrations from federal, state, and local agencies.
Let’s look at which licenses to consider when starting a coffee roasting business.
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 Coffee Roasting Business?
Coffee roasting and grinding businesses are required to follow multiple local, state, and federal regulations. For starters, the Environmental Protection Agency (EPA) has restrictions on air quality and odors due to the emissions of volatile organic compounds (VOC) and harmful particulate matter (PM) that are released during the roasting process.
EPA regulations are typically enforced with the state’s environmental agency. In Vermont, for instance, coffee roasters are not required to have an Air Permit for operations roasting less than 1 million pounds of beans annually.
Coffee roasters are required to register through the FDA Food Facility Registration page. Created through the Food Safety Modernization Act (FSMA), facilities that manufacture, process, package, or hold food for consumption must register with the FDA and allow the agency to inspect the food facility.
State & Local Requirements
Most states have laws overseeing the sale of any food product. Though most states have these regulations, typically, it’s the local health department that enforces them. Each state has different regulations and making matters more confusing, these rules can vary depending on where the product will be sold or how much is sold.
Some states permit the roasting and sale of coffee beans from any location with minimal (if any) oversight from the local health department. if production falls under a certain volume or if only selling to local customers or farmer’s markets under home cottage laws. Note that cottage laws typically prohibit online sales.
In Texas, for instance, a coffee roaster can qualify as a cottage food production operation provided the business has an annual gross income of $50,000 or less and sells directly to the consumer.
Other states require roasting from a commercial-grade kitchen outfitted with equipment such as a 3-compartment sink, hand wash station, washable floors and walls, and more. The local health department tends to be more watchful and will randomly inspect the facility to ensure all regulations are being met. Additionally, employees may also be required to have a food handler certificate or food sanitation certification.
The Missouri Department of Health and Senior Services (DHSS) Manufactured Food Program oversees coffee roasters in the state. While there is no licensing, roasters are regulated by DHSS and must follow guidelines.
In addition to coffee roasting-specific requirements, there are also several licensing requirements for starting a business. While licensing requirements vary by location, here are a few of the common licenses and permits that a coffee roasting business may need:
When starting a business, the legal entity needs to be selected. A legal entity refers to how a business is organized to operate. There are four main types of entities; sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).
Each type of entity has its own pros and cons, such as liability protection, costs, and administrative requirements.
Business Name Registration
While not necessarily a business license, it’s worth noting that 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 business name, or assumed name).
Learn: How to register a DBA
Corporations and LLCs register are a little easier because the name is registered when the entity is formed with the state.
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.
Learn more: Business license requirements by state
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 one that forms as a partnership, Corporation, and in many cases, an LLC 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 Number
In order to sell products and/or offer certain services, a state sales tax permit (also referred to as a business tax number or tax ID number) may be needed. This permit creates an account number with the state’s Department of Revenue (or similarly named state taxing agency) to collect and remit sales tax.
When buying inventory that is being resold to customers, such as the beans, packaging, and other items, 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.
Certificate of Occupancy
In most communities, a coffee roasting business will likely need to secure a Certificate of Occupancy (CO) before operating in a commercial building. This certificate is typically obtained from the city and/or the county and allows a business to occupy and operate from a building. Before the certificate is issued, the building will need to comply with zoning regulations, building codes, and any other local requirements.
If the coffee roasting business will be operated as a home-based business, a home occupation permit may be required.
Before purchasing or leasing a location for your coffee roasting business, be sure to check with the local zoning department first to ensure the business can legally operate out of the chosen location.
The process of identifying all of the licenses and permits necessary to start a coffee roasting business may feel confusing and overwhelming. It is critical to do this right the first time, otherwise, your business may be temporarily shut down until all licenses are obtained.To make sure your bases are covered, you can do it yourself and contact the city or local economic development office and request assistance. Additionally, there are companies that specialize in business license research, such as Incfile or Corpnet.