Opening a bar is an exciting prospect! Yet it’s not all fun and games behind the office door where one must do tumultuous amounts of paperwork shuffling and waiting in order to acquire all of the necessary licences and insurances, as well as complete checklists to ensure compliance with municipal and state authorities and regulations. And this is all before you are even allowed to open your doors and pour drinks for customers! These legal hoops are a necessity in our modern world and they’re there to ensure the safety of your employees, your customers and your new business. Here we’ll discuss licences, permits and insurance to prepare you for the road ahead.
Depending on where you’re located there will be different regulations, authorities and requirements which you need to meet, please and sustain in order to open and continue operating your business. There is no one size fits all for every location and we encourage you to reach out to your local authority whom will have material detailing exactly what you need to acquire to operate under their jurisdiction.
Licenses and Permits
To operate a bar or restaurant you’re going to need a myriad of licences and permits before you open your doors. Most of these are necessary but not all are applicable to your bar, restaurant or even your locality.
Business Licence - You’ll need to register your business with your local authority so that you have permission to operate your premises. There will be limitations included in this licence and this is where you’ll register the name of your business.
Tax Identification Number - The name of this will vary from country to country however this is the number which informs your government that you’re an employer. This is the number you’ll use to file your business taxes and the number which your suppliers will use to reference you to your government.
Food Service Licence - If you’re serving food this is a requirement for opening and requires a visit by local health department officials to ensure that you meet food safety regulations and laws. You will also receive multiple, often unannounced, inspections by your local health department to ensure continued compliance with food service laws and regulations. In some municipalities it’s a requirement that employees complete a local or state run food safety program and obtain a food handlers permit; check with your local health department on this.
Liquor Licence - Liquor laws vary from place to place but most authorities are pretty strict about who can serve beer, wine and liquor. You may need to get different licences for these categories and you may even need to get a special licence to allow your employees to free pour spirits. Your liquor licence should be one of the first licences you apply for as it can take a long time to receive, often up to a year.
Music Licence - Music is protected by copyright law so in order to play it for your guests pleasure you’re going to need a music licence. There are multiple levels of these available ranging from just allowing you to play background music for your guests, to live entertainment music licences, outdoor music licences, and special event licences.
Other Licences - These are less common than the above but still need to be looked into in order to operate your business. These less common licences include: sign licences, dumpster licences, pool table licences, game machine licences and so on and so forth. Check with your local authority as to which of these, and any others that may be applicable in your municipality.
Seller Permit (or Resellers Permit) - This allows you to purchase your raw materials for your food and beverages without having to fork out sales tax on these items. Then you’ll collect it from the consumer, by charging them sales tax, and pay it to the applicable local and government authorities.
Building Health Permit - This covers the safety of the building in which you’re located in. Acquiring one of these is not always necessary and is mainly needed when you’re building your restaurant from the ground up.
Certificate of Occupancy - This is needed before you open and often needs to be publicly posted. It states the maximum capacity of your location. It requires an inspection and is issued by a local authority which is often the fire department. The inspection is often done at the same time as the inspections in the point below.
Permit from the Fire Department - This will cover, along with the above, designated fire exits along with signage, fire extinguishers and their placement, along with the existence of smoke detectors and fire suppression systems. Such things can affect some of your insurance premiums detailed below.
Insurance is very necessary. In the unlikely event that something happens to your bar or to someone inside your bar, having insurance will help you absorb to inexorable costs of such a disaster and stop it from putting you out of business.
General Liability Insurance - Protects you from lawsuits submitted by those who sustain injuries on your property; these include slips, falls, and food-borne illnesses. Having games and allowing pets will affect the cost of this insurance, and it doesn’t cover everything; there are clauses which exclude some specific circumstances and you’ll need different insurances to cover those.
Property Insurance - Stuff breaks, we know this, and property insurance protects you from the costs that can arise from stuff breaking. There are different levels of property insurance and, at the very least, you’ll have to catalogue all the equipment in your location and its value in order to get the correct value of property insurance. Not only does it cover breakages but it also covers your property and business should the worst happen; like a fire or a flood.
Workers Compensation Insurance - This is necessary in many places but even in those where it’s not you will want to seriously consider having it. This covers employee “damage” much like property insurance covers property damage. It can cover medical bills, disability benefits, and other costs to your business that can arise from employees hurting themselves whilst at work. Providing a safe workplace for your employees is of paramount importance, but this helps in backing that up.
Liquor Liability Insurance - This is an extension of general liability insurance which often doesn’t cover incidents involving alcoholic beverages; and because we sell these this insurance is going to be paramount. It covers damages and incidences that arise from drunkenness or the use of alcohol.
Commercial Auto Insurance - If you cater food or bar material to outside events then you’re going to need to insure the vehicle that carries these items for you with commercial auto insurance. This is in case anything happens to the vehicle and your product whilst it’s out on the road.
You may also want to look into cyber liabilities insurance. We collect a lot of credit card data on a daily basis and this makes us an attractive target for hackers, especially because many of us can be underprotected online. This type of insurance covers any costs that arise from class action suits being brought against you for not exercising reasonable protection of your customers data.
Not always necessary or required but good food for thought, because you don’t want to exclude this market from your location if you don’t have to. Your entrance and exit will need to be in compliance with the local laws around disability access and you’ll need to ensure that they can actually sit in your location (no bolted down seats like some big fast food chains have), use your bathrooms, and move around your location with ease; this last one isn’t often necessary, it’s just nice, and it also means that your walkways are of a good size for when you’re very busy and your future employees are running around everywhere.
Don’t let this long list put you off! The restaurant industry is highly regulated and whilst this list is very comprehensive, it is by no means exhaustive as there are no blanket regulations the world over for bars and restaurants. Contact your local authority and state or federal government and talk to other bar and restaurant owners whom you know in order to gather information on exactly what you’re going to need, and how best to go about applying for and obtaining these licences and insurances. Once you’ve got your concept and found a location for your business, obtaining these licences and getting insurance are the first steps down the road to opening your own bar or restaurant.