Opening a restaurant is easier than you think, but if you follow the right steps!
If you're planning to launch your own restaurant in the U.S., congratulations! The food industry is an exciting and rewarding space, full of opportunities for success. But before you start serving your first customers, you need to take care of the legal side of things.
Getting the right permits and licenses is an important step in making sure your restaurant runs smoothly without any legal hiccups.
In this guide, I'll walk you through the essential permits and licenses you need to open a restaurant in the United States. Let’s have a look.
1) Employer Identifier Number (EIN) Number
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses operating in the United States. It functions similarly to an individual's Social Security Number but is used to identify a business entity for tax filing and reporting purposes. Obtaining an EIN is essential for tasks such as paying employees, filing business tax returns, and opening business bank accounts.
How to Apply for an EIN?
The IRS offers several methods to apply for an EIN:
- Online Application: This is the preferred and fastest method. The online application is available to entities whose principal business, office, or agency is located in the United States or U.S. Territories. Once the application is completed and validated, an EIN is issued immediately.
- Fax Application: You can fax a completed Form SS-4 to the appropriate IRS fax number. If the form contains all the required information, an EIN is assigned, and a confirmation is sent back via fax within four business days.
- Mail Application: Mail the completed Form SS-4 to the IRS. Processing times for EIN applications received by mail are approximately four weeks.
- Telephone (for International Applicants): International applicants may call 267-941-1099 (not a toll-free number) between 6 a.m. and 11 p.m. (Eastern Time) Monday through Friday to obtain an EIN. The person making the call must be authorized to receive the EIN and answer questions concerning the Form SS-4.
Official Fee
Applying for an EIN is free of charge when done directly through the IRS.
Note: Be cautious of third-party services that charge a fee to obtain an EIN on your behalf, as the application process is straightforward and does not require any payment.
2) Business License
A business license grants you legal permission to operate your restaurant within a specific jurisdiction, such as a city or county. This license ensures your business complies with local regulations and standards.
How to Apply for a Business License?
Contact your city or county government’s business licensing department or visit their official website to obtain the necessary application forms. Submit the completed forms along with any required documentation, which may include proof of occupancy, health permits, and identification.
Official Fee
The cost varies widely depending on your state and the size of your establishment. Typically, application fees range from $15 to several hundred dollars, with additional costs possible based on specific local requirements.
3) Seller’s Permit
A seller’s permit allows your restaurant to collect sales tax from customers on taxable goods and services, which you then remit to the state.
How to Apply for a Seller’s Permit?
Apply through your state’s Department of Revenue or equivalent agency. Many states offer online registration for this permit.
Official Fee
In many states, there is no fee to obtain a seller’s permit. However, some states may require a security deposit or have nominal fees, so it's essential to verify with your specific state's regulations.
4) Resale Permit
A resale permit allows your restaurant to purchase goods, like ingredients or supplies, without paying sales tax, under the premise that these goods will be resold to customers.
How to Apply for a Resale Permit?
This permit is often obtained through your state’s taxation or revenue department, sometimes in conjunction with the seller’s permit.
Official Fee
Typically, there is no fee for a resale permit, but this can vary by state.
5) Certificate of Occupancy
This certificate verifies that your restaurant's building complies with local building codes and is safe for public occupancy.
How to Apply for a Certificate of Occupancy?
After completing any necessary construction or renovations, schedule an inspection with your local building or zoning department. Upon passing the inspection, you'll be issued the certificate.
Official Fee
Costs vary by location but typically range from $100 to $400.
6) Food Handler’s Permit
Also known as an employee health permit, this certifies that your staff has been trained in safe food handling practices to prevent foodborne illnesses.
How to Apply for a Food Handler’s Permit?
Staff members must complete a state-approved food safety course and pass the associated exam. Many of these courses are available online.
Official Fee
The cost for training and the permit can range from $100 to $500, depending on the course provider and state requirements.
7) Worker’s Compensation Insurance
This insurance provides coverage for employees who may suffer work-related injuries or illnesses, ensuring they receive medical care and compensation for lost wages.
How to Apply for a Worker’s Compensation Insurance?
Purchase a policy from a state-licensed insurance provider. Some states have specific agencies or funds that provide this insurance.
Official Fee
Premiums vary based on factors like the number of employees, payroll size, and the risk associated with the job duties. It's best to obtain quotes from multiple insurers to determine exact costs.
8) Health Operational Permit
This permit ensures your restaurant meets all local health and safety regulations, including sanitation standards and food safety protocols.
How to Apply for a Health Operational Permit?
Contact your local health department to schedule an inspection. An inspector will assess your facility, and upon meeting all requirements, you'll be issued the permit.
Official Fee
Fees can range from $50 to $1,000, depending on your location and the size of your establishment.
9) Sign Permit
A sign permit allows you to legally display signage for your restaurant, ensuring it complies with local regulations regarding size, lighting, and placement.
How to Apply for a Sign Permit?
Submit your sign design and specifications to your local zoning or planning department for approval.
Official Fee
Costs typically range from $50 to $350, depending on your location and the specifics of the sign.
10) Music License
If your restaurant plays copyrighted music, whether live or recorded, you need licenses from performance rights organizations (PROs) to legally broadcast the music.
How to Apply for a Music License?
Contact PROs such as ASCAP, BMI, or SESAC to obtain the necessary licenses. Often, restaurants secure licenses from all major PROs to cover a broad range of music.
Official Fee
Fees vary based on factors like the size of your establishment and the manner in which music is played. Typically, annual fees range from a few hundred to several thousand dollars.
11) Liquor License
If you plan to serve alcoholic beverages, a liquor license is mandatory. This license regulates the sale of alcohol and ensures compliance with state and local laws.
How to Apply for the Liquor License?
Application processes vary by state but generally involve submitting detailed forms to your state's alcohol beverage control board, undergoing background checks, and possibly attending hearings.
Official Fee
The cost varies significantly by state and the type of alcohol you plan to serve. Fees can range from $300 to $14,000 annually.
Conclusion
Starting a restaurant requires several important licenses and permits to ensure legal compliance. From a basic Business License to a Health Operational Permit and even a Liquor License if you plan to serve alcohol, each document plays a crucial role in running your business smoothly. While the application process and fees vary by state, getting these permits in order from the start will save you from legal trouble later.
Make sure to check with your local authorities for specific requirements, and don’t hesitate to seek professional help if needed. Once you have everything in place, you can focus on what truly matters—serving great food and creating a successful restaurant!
Frequently Asked Questions (FAQs)
What permits and licenses are required to open a restaurant in the US?
Opening a restaurant in the US requires a combination of federal, state, and local permits. At a minimum, most restaurants need an EIN, business license, seller’s permit, health operational permit, food handler permits for staff, and workers’ compensation insurance. Depending on your concept, you may also need a liquor license, music license, sign permit, and certificate of occupancy. These permits ensure your restaurant is legally registered, tax-compliant, safe for customers, and compliant with health regulations.
Why is an EIN important for restaurant owners?
An Employer Identification Number (EIN) is essential because it identifies your restaurant as a legal business entity for tax purposes. You need it to hire employees, file federal and state taxes, open a business bank account, and apply for other licenses. Even sole proprietors often need an EIN to avoid using their personal Social Security Number for business activities, which helps with both security and professionalism.
Can I open a restaurant without an EIN?
In very limited cases, a sole proprietor with no employees may operate temporarily without an EIN. However, this is not recommended. The moment you hire staff, apply for permits, or open a business bank account, an EIN becomes mandatory. Most restaurant owners obtain it early to avoid delays later in the licensing process.
What does a business license actually allow me to do?
A business license gives you legal permission to operate your restaurant within a specific city or county. It confirms that your business complies with local zoning laws, operational rules, and municipal regulations. Without a business license, your restaurant can be fined, shut down, or denied other essential permits.
How is a seller’s permit used in a restaurant?
A seller’s permit allows your restaurant to collect sales tax from customers on taxable food and beverages. You are responsible for collecting this tax at checkout and submitting it to the state on a regular basis. Without a seller’s permit, collecting sales tax is illegal and can lead to penalties or audits.
What is the benefit of having a resale permit?
A resale permit allows your restaurant to purchase ingredients, beverages, and supplies without paying sales tax at the time of purchase. Since these items are resold to customers, the tax is collected at the point of sale instead. This helps improve cash flow and prevents double taxation.
What is a certificate of occupancy and why is it required?
A certificate of occupancy confirms that your restaurant building meets local building codes, fire safety standards, and zoning requirements. It ensures the space is safe for public use. Even if your kitchen and dining area are fully set up, you cannot legally open to customers without this certificate.
How long does it take to get a certificate of occupancy?
The timeline depends on inspections and whether your space passes on the first attempt. If renovations are complete and there are no violations, approval can take a few days to a couple of weeks. Delays usually happen if electrical, plumbing, or fire safety issues are found during inspection.
Are food handler permits required for all restaurant staff?
In most states, anyone who handles food—including cooks, prep staff, and often servers—must have a food handler permit. This ensures employees understand food safety, hygiene, temperature control, and contamination prevention. Some states also require at least one certified food protection manager on-site.
How often do food handler permits need renewal?
Food handler permits typically need to be renewed every two to five years, depending on local laws. Renewal often requires retaking a short food safety course to ensure staff stays updated on health regulations and best practices.
Why is workers’ compensation insurance mandatory for restaurants?
Restaurants are considered high-risk workplaces due to sharp tools, hot surfaces, and long working hours. Workers’ compensation insurance protects employees by covering medical expenses and lost wages if they get injured on the job. It also protects restaurant owners from lawsuits and financial liability.
What happens if I don’t carry workers’ compensation insurance?
Operating without workers’ compensation insurance can result in heavy fines, legal penalties, and even forced business closure. In case of an injury, the owner may be personally responsible for medical costs and damages, which can be financially devastating.
What is a health operational permit?
A health operational permit certifies that your restaurant meets sanitation, food storage, cleanliness, and safety standards set by the local health department. Inspectors assess your kitchen layout, equipment, food handling processes, and cleanliness before approving the permit.
How often will my restaurant be inspected by health authorities?
Health inspections are typically conducted annually or semi-annually, but surprise inspections can also occur. Restaurants with past violations may be inspected more frequently. Maintaining consistent hygiene standards helps avoid fines and closures.
Do I need a sign permit for my restaurant’s outdoor sign?
Yes, most cities require a sign permit to regulate the size, lighting, placement, and design of restaurant signage. Installing a sign without approval can result in fines or forced removal, even if the sign is professionally made.
When is a music license required for restaurants?
If your restaurant plays background music, live music, or television broadcasts with sound, you need a music license. This applies even if the music is played through a streaming service or radio, as copyrighted music requires permission for public performance.
Do I need more than one music license?
Many restaurants obtain licenses from multiple performance rights organizations to cover a wide range of music catalogs. This ensures legal coverage regardless of which artist or song is played in your establishment.
What is a liquor license and when is it required?
A liquor license is required if your restaurant plans to sell beer, wine, or spirits. The type of license depends on what alcohol you serve and whether it’s consumed on-site. Alcohol sales are heavily regulated, making this one of the most complex permits to obtain.
How long does it take to get a liquor license?
Liquor licenses can take anywhere from a few weeks to several months to be approved. The process often includes background checks, public notices, and inspections. Because of this, many restaurant owners apply for a liquor license early in the planning phase.
What are the risks of opening a restaurant without proper permits?
Opening without required permits can lead to fines, shutdowns, revoked licenses, and long-term legal issues. In some cases, reopening after violations is costly and time-consuming. Securing all permits before opening protects your investment and ensures smooth operations from day one.
Region: United States
