If you’re preparing to open a restaurant, bar, or liquor store, obtaining a liquor license is likely high on your priority list. This is a sensible focus, as the Small Business Chronicle highlights that liquor sales often boast some of the highest profit margins in the industry, typically ranging from 75% to 80%.
However, before you start dreaming up your happy hour offerings, it’s crucial to understand and comply with various regulations, including licensing, to legally operate a business that sells alcohol.
In this guide, we’ll outline the necessary steps to acquire a liquor license in your specific state. Additionally, we’ll shed light on the typical costs involved in securing a license. Let’s begin by examining the challenges you may encounter in the process of obtaining your liquor license.
The primary challenges in obtaining a liquor license are bureaucratic in nature. You need to collaborate with your state’s regulatory agency to identify the specific type of license required for your business and check if it’s available.
The license type depends on various details that you’ll present to your state’s Alcoholic Beverage Control (ABC) board. These include the nature of your establishment (such as a restaurant, bar, or hotel), policies on customers bringing their own alcohol (BYOB), the operating hours and days for alcohol sales, and whether you plan to produce alcohol on-site.
Your state’s ABC board will determine the appropriate license type based on your responses. Since many states limit the number of liquor licenses, obtaining a new one can be challenging. In such cases, you might need to buy a license from an existing business.
When applying for a liquor license, you must provide several documents, including your employer identification number (EIN), business license, sales tax permit, health permit, building permit, and zoning permit. Building and zoning permits verify whether your location is legally permissible for alcohol sales, like ensuring it’s not too close to a school.
Incomplete applications are put on hold until all required information is submitted. After completing the application, it must be sent, along with any necessary forms and permits, to your state ABC board, either by mail or online.
The approval process can take up to six months. During this period, the ABC board collaborates with local agencies to verify your application’s information and address any concerns. For instance, local businesses have the right to object to your application, which the ABC board will consider.
How much does a liquor license cost?
The expense of obtaining a liquor license includes both the license fee and an application processing fee. These costs vary widely by state, ranging from $300 to $14,000 for the license fee. Additionally, your local municipality may require an extra fee. Application processing fees are generally a few hundred dollars.
License renewal, which is necessary every one to three years depending on the state, also incurs a fee. This renewal fee might be equal to, less than, or more than the initial licensing fee. Utilizing an online service like liquorlicense.com for obtaining your license will add an extra few hundred dollars to your expenses.
You should also budget for other related costs while applying, such as obtaining a zoning permit, building permit, signage permit, and an alcohol tax permit. The cost of these permits varies, potentially ranging from a few hundred to several thousand dollars, depending on your location.
How much time does it take to obtain a liquor license?
The duration to acquire a liquor license varies from a few weeks to several months, and this largely depends on the state where you’re applying. In many cities and towns, there’s a cap on the number of liquor licenses issued. If all licenses are currently held, you’ll need to wait for a business to close or for a lapse in license renewal before you can secure one. In such scenarios, obtaining a license could take considerably longer, sometimes even years.
Given the unpredictable timeframe for securing a liquor license, it’s crucial to factor this into your planning phase before opening your establishment. To avoid delays, it’s advisable not to leave the liquor license application until the last moment.