Restaurant Permits and Licenses: Complete Legal Checklist

Opening a restaurant requires navigating a complex web of permits, licenses, and regulations. Missing even one can delay your opening or result in costly fines. This guide covers everything you need to operate legally.

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Timeline for Permits and Licenses

Start the permitting process 6-12 months before your planned opening. Many permits have long lead times.

Typical Timeline

| Permit Type | Lead Time |

|-------------|----------|

| Business entity formation | 1-4 weeks |

| Federal EIN | Same day - 2 weeks |

| State tax registration | 1-4 weeks |

| Business license | 1-4 weeks |

| Building permits | 4-12 weeks |

| Health permit | 2-6 weeks |

| Liquor license | 1-6 months |

| Fire inspection | 1-2 weeks |

| Certificate of occupancy | 1-2 weeks (after build-out) |

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Business Formation and Registration

Step 1: Choose Your Business Structure

| Structure | Pros | Cons | Best For |

|-----------|------|------|----------|

| Sole Proprietorship | Simple, cheap | Personal liability | Not recommended for restaurants |

| LLC | Liability protection, flexible | State fees, some complexity | Most restaurants |

| S-Corp | Tax advantages, liability protection | More complex, restrictions | Profitable restaurants |

| C-Corp | Unlimited investors | Double taxation, complex | Large operations |

Recommendation: Most restaurants should form an LLC for liability protection and tax flexibility.

Step 2: Register Your Business

• Articles of Organization (LLC) or Articles of Incorporation (Corp)
• Operating Agreement (internal document for LLC)
• State registration (Secretary of State office)

Step 3: Get Your EIN

Apply online at IRS.gov - free and instant.

You need an EIN to:

• Open a business bank account
• Hire employees
• File taxes
• Apply for permits

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Federal Requirements

Required for All Restaurants

| Requirement | Agency | Cost |

|-------------|--------|------|

| Employer Identification Number (EIN) | IRS | Free |

| Alcohol permit (if selling liquor) | TTB | $0 (retailers exempt in most cases) |

Industry-Specific Federal Requirements

• Meat/Poultry Processing: USDA inspection required
• Interstate Food Sales: FDA registration
• Importing Food: FDA and Customs compliance

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State Requirements

State Business License

| Requirement | Details |

|-------------|--------|

| Business license | Required in most states |

| Sales tax permit | If your state has sales tax |

| Employer registration | For payroll taxes |

| State income tax registration | For business income |

State Liquor License

This is often the most complex and expensive permit.

Liquor License Types

| Type | Description | Typical Cost |

|------|-------------|-------------|

| Beer & Wine | Sale of beer and wine only | $300 - $5,000 |

| Full Liquor | All alcohol sales | $3,000 - $100,000+ |

| On-Premises | Consumption on-site | Varies |

| Off-Premises | Package/takeout sales | Often separate license |

Factors Affecting Liquor License Cost

• State quotas: Some states limit licenses by population
• License type: Full liquor costs more than beer/wine
• Location: Urban areas often cost more
• Transfer vs. new: Buying existing license may cost more but be faster

Application Process

Submit application with fees

Background check (all owners and managers)

Fingerprinting

Public notice period (30-60 days)

Hearing (if contested)

Inspection

Approval and issuance

Timeline: 30 days to 6 months depending on state

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Local Requirements

Business License

Almost every city/county requires a business license.

| Requirement | Cost Range | Renewal |

|-------------|------------|--------|

| City business license | $50 - $500 | Annual |

| County license | $50 - $300 | Annual |

| DBA/Fictitious name | $25 - $100 | Varies |

Building and Construction Permits

Required for any construction or renovation:

| Permit Type | When Required | Cost |

|-------------|---------------|------|

| Building permit | Any construction | 1-3% of project cost |

| Electrical permit | Electrical work | $50 - $500 |

| Plumbing permit | Plumbing work | $50 - $500 |

| Mechanical permit | HVAC work | $50 - $500 |

| Fire suppression permit | Hood system, sprinklers | $100 - $500 |

Zoning Approval

Before signing your lease, verify:

• Property is zoned for restaurant use
• Liquor sales are permitted (if applicable)
• Your hours of operation are allowed
• Outdoor seating is permitted (if planned)
• Parking requirements can be met

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Health Department Requirements

Food Service Permit

The most critical permit for operations.

Application Process

Submit application with menu and floor plan

Plan review (health department reviews your layout)

Obtain building permits for any required modifications

Complete construction/renovation

Schedule pre-opening inspection

Pass inspection

Receive permit

Inspection Focus Areas

| Area | What They Check |

|------|----------------|

| Food storage | Temperature, labeling, FIFO |

| Preparation | Cross-contamination prevention |

| Cooking | Proper temperatures, thermometers |

| Holding | Hot/cold holding temperatures |

| Employee hygiene | Handwashing, illness policy |

| Facilities | Clean, proper equipment, pest control |

| Water | Potable water, backflow prevention |

| Waste | Proper disposal, grease trap |

Food Handler Certifications

Most states require food handler training:

| Certification | Who Needs It | Cost | Validity |

|---------------|-------------|------|----------|

| Food Handler Card | All food employees | $10 - $25 | 2-3 years |

| ServSafe Manager | At least one manager | $150 - $200 | 5 years |

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Fire Department Requirements

Fire Safety Permit

| Requirement | Details |

|-------------|--------|

| Fire inspection | Required before opening |

| Occupancy permit | Maximum capacity posted |

| Fire suppression | Hood system for cooking |

| Fire extinguishers | Type and placement specified |

| Emergency exits | Clearly marked and unobstructed |

| Alarm system | May be required |

| Sprinklers | Required in many jurisdictions |

Hood and Suppression System

Commercial kitchens require:

• Type I hood over cooking equipment
• Automatic fire suppression system
• Ansul or similar system
• Regular inspections (semi-annual)

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Signage Permits

| Sign Type | Permit Required | Cost |

|-----------|-----------------|------|

| Building-mounted sign | Usually yes | $50 - $300 |

| Freestanding sign | Usually yes | $100 - $500 |

| Window signs | Sometimes | Varies |

| A-frame/sandwich boards | Often yes | $25 - $100 |

| Digital/LED signs | Usually yes (with restrictions) | $100 - $500 |

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Music and Entertainment Licenses

If you play music (even background), you need licenses:

| Organization | What It Covers | Annual Cost |

|--------------|---------------|-------------|

| ASCAP | ASCAP members' music | $300 - $800 |

| BMI | BMI members' music | $300 - $800 |

| SESAC | SESAC members' music | $200 - $500 |

| GMR | GMR members' music | $200 - $500 |

Tip: Many restaurants use licensed music services (Rockbot, Soundtrack Your Brand) that include all licensing fees.

Live Entertainment

Additional permits may be required for:

• Live music
• DJ performances
• Dancing
• Karaoke
• Trivia nights (sometimes)

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Outdoor Seating Permits

| Permit Type | Typical Requirements |

|-------------|---------------------|

| Sidewalk cafe permit | Clear pedestrian path, barriers |

| Parklet permit | For street parking conversions |

| Liquor license extension | Often requires separate approval |

| Health permit modification | May need separate inspection |

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Employment Compliance

Required Postings

Display these in employee areas:

| Poster | Source |

|--------|--------|

| Federal minimum wage | DOL |

| OSHA safety | OSHA |

| Equal Employment Opportunity | EEOC |

| Family Medical Leave Act | DOL |

| State minimum wage | State labor dept |

| State workers compensation | State |

| Anti-discrimination | State |

| Tip pooling (if applicable) | State |

Workers Compensation Insurance

Required in almost every state. Covers:

• Medical expenses for work injuries
• Lost wages
• Disability benefits
• Death benefits

Cost: $2,000 - $10,000+ annually depending on payroll

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Ongoing Compliance Requirements

Annual Renewals

| License/Permit | Renewal Period |

|----------------|---------------|

| Business license | Annual |

| Health permit | Annual |

| Liquor license | Annual |

| Fire inspection | Annual |

| Music licenses | Annual |

| Insurance policies | Annual |

Regular Inspections

| Inspection Type | Frequency |

|-----------------|----------|

| Health inspection | 1-3 times per year (unannounced) |

| Fire inspection | Annual (scheduled) |

| Liquor compliance | Random |

| Building inspection | As needed |

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Common Permit Mistakes to Avoid

Starting construction before permits - Can result in stop-work orders and fines

Ignoring zoning - May not be able to get permits at all

Underestimating liquor license time - Start this first

Missing renewal deadlines - Can shut you down

Not budgeting for fees - Permits can total $10,000-50,000

Skipping professional help - Permit expeditors can save months

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Working with Permit Expeditors

Consider hiring a permit expeditor if:

• Your timeline is tight
• You are unfamiliar with local requirements
• Your project is complex
• You value your time over the cost ($2,000-10,000)

A good expediter knows:

• Which office handles what
• Who to talk to
• Common pitfalls
• How to resolve issues quickly

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Complete Permit Checklist

Federal:

• [ ] EIN from IRS
• [ ] TTB permit (if applicable)

State:

• [ ] Business registration
• [ ] Sales tax permit
• [ ] Employer registration
• [ ] Liquor license

Local:

• [ ] Business license
• [ ] Zoning approval
• [ ] Building permits
• [ ] Health permit
• [ ] Fire permit
• [ ] Sign permit
• [ ] Certificate of Occupancy

Other:

• [ ] Music licenses (ASCAP, BMI, etc.)
• [ ] Workers compensation insurance
• [ ] General liability insurance
• [ ] Food handler certifications
• [ ] ServSafe manager certification

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Key Takeaways

Navigating permits is complex but essential:

Start early - Many permits take months

Budget adequately - $10,000-50,000 for permits is normal

Build relationships - Inspectors and officials can be helpful

Stay compliant - One violation can close you down

Consider help - Expeditors and attorneys can save time and headaches

Keep records - Maintain all permits, renewals, and inspections

Operating without proper permits puts your investment at risk. Take the time to do it right.

Use our Opening Checklist tool to track every permit and deadline for your restaurant opening.