While nursing a cocktail at the end of a sluggish workweek, one bored office worker turns to her friend, another bored office worker, and says, “We should open a bar.” “Yes!” the friend replies. They’ve had this conversation before, but they’re serious this time. However, they soon realize that opening a bar isn’t so simple. In fact, they’ll have to navigate a costly maze of red tape before ever tapping into any kegs (and who wants to be the one to tell them about bar inventory). While specific regulations vary by state and municipalities, there are a few steps would-be bar owners must take on their journey to opening. Here are the key licenses and permits you need to open a bar.
The first absolutely fundamental certificate any prospective bar owner needs is a business permit. Very simply, this permit grants permission to operate a business. The second is a certificate of occupancy, which certifies that the building itself has been properly maintained and can safely host guests. The third is an Employer Identification Number (EIN,) which is necessary for taxation.
While the abovementioned licenses are a necessity for all businesses, there is a fundamental certificate unique to this industry—the liquor license. Procuring one, however, is much easier said than done. The first step is to consider exactly what you plan to serve, since beer and wine bars may require a different license than a fully stocked operation. It’s also critical to know that a food service license won’t necessarily cover the sale of liquor, so if the bar is food-centric, additional legwork will likely be required.
Signage isn’t all that’s required to get one’s name out there. In fact, once the bar name is decided, you should register it as an entity name for protection at the state level and as a trademark for protection at the federal level. This way, would-be copycats can’t steal your intellectual property. You may also need to register a DBA (Doing Business As), which allows entrepreneurs to conduct business under a different identity than their own. Lastly, in today’s business climate, a web presence is vital. Register your business’ domain name as well.
Music is a great way to create atmosphere in a bar. But, legally speaking, you can’t just plug your iPod into the PA system and play whatever they want. In fact, bars must acquire licenses from performance rights organizations, or PROs, such as BMI, ASCAP, or SESAC in order to legally play music. While this may not seem important, playing unlicensed music can cost a business six figures in fines. However, it’s not just playing recorded music that requires a license. Additional safety and zoning permits will likely be required for bars that wish to feature live music. It should be noted, too, that “entertainment” is a loose term—in some places, you may even need a pool table license.
Again, the necessary licenses and permits associated with opening a bar vary state-to-state and even town-to-town. So, for additional resources, be sure to consult the Small Business Administration. What other licensing hurdles have you run into in your own journey toward opening a bar? Let us know in the comments.
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