Maybe you’re opening an escape room business because you’re a fan of puzzles. Perhaps you’re opening an escape room business because you’ve done the research and identified a great opportunity in your community. Or maybe owning your own escape room business has been a dream for many years. However you got here, it’s time to get your paperwork in order, which means researching the licenses and permits needed to open a gym.
Here we’ll break down the different types of permits and licenses you may need, along with sharing some resources to help get you started.
Let’s get started and see which licenses to consider when starting an escape room 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 an Escape Room business?
One of the first registrations to complete when starting an escape room business is selecting a business entity (also referred to as a business structure or legal entity). A business entity refers to how a business is organized to operate. It should be at the top of your list because the other licenses your business will need will require the business’s legal name, which can’t be registered until the business entity is formed.
The four main types include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).
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 name, or assumed name).
Learn: How to register a DBA
Corporations and LLCs register the business name 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 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 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.
In many cities, there are regulations for the size and placement of signage. Some communities are much more restrictive than others on signage. Before choosing a location, be sure to check with city administrators to know the rules regarding signage.
Certificate of Occupancy
In most communities, an escape room 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.
Before the certificate is issued, the building must comply with local zoning restrictions, building codes, local zoning restrictions, building codes, and any other local requirements. Before obtaining clearance to operate, the fire department will typically need to escape the building to ensure all fire code regulations are being met.
Before signing a contract to purchase or rent a venue for your escape room business, be sure to check with the local zoning department first to ensure the business can legally operate out of the chosen location.
If you plan to play music in the building, a Public Performance License (PPL) is needed. A blanket license can be obtained through the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Inc. (BMI), and the Society of European Stage Authors and Composers (SESAC).
Fines from playing unlicensed music can be pretty high, so be sure to get the licensing before playing in your space.
While researching licenses and permits isn’t the most exciting thing when starting an escape room business, spending the time upfront on getting it right the first time is critical. Not getting the proper licensing can result in fines and even temporarily closing the business, so be sure to talk with city officials to ensure the correct licenses have been obtained.