Liquor license costs range anywhere from $300 to $14,000 and can take up to six months to process. Specific costs and timetables for approval depend on your state, county, local, and federal licensing requirements. In New York, for example, license and filing fees total $4,552 while California fees total $13,900.
If you plan to sell or serve alcoholic beverages, you’ll want liquor liability insurance to protect you against claims arising from alcohol-related damages or injury. Liquor liability coverage varies from business to business, so we recommend you contact the business insurance agents and brokers at Insurance321 to find the best policy and premiums for your business.
Here’s how to get a liquor license in six steps.
Determine What Kind of Liquor License You Need
Before applying to get a liquor license, you’ll need to identify exactly which types of licenses you will need. The exact requirements and prices vary slightly by state. Your state’s Alcohol Beverage Control (ABC) board will know exactly what is required for each business to sell liquor and be properly licensed. It will be able to tell you which licenses you need and how much they will cost.
While license types vary significantly among states, the type of license you’ll need typically depends on your answers to the following questions:
- What kind of establishment are you? (such as a bar, restaurant, hotel, and so on)
- Does drinking happen off-premises (retail) or on premises (bar or restaurant)?
- What kind of alcohol do you sell?
- Are customers bringing their own beverages (BYOB) or will you store and serve the alcohol?
- What hours do you sell? (generally, the later you stay open, the more expensive the permit)
- Will you sell on Sundays? (some states like Ohio charge an extra fee for Sunday sales)
- Do you manufacture, distribute, or sell alcohol or any combo of the three?
On-premise vs Off-premise Consumption
Broadly speaking, there are two main types of liquor licenses: for on-premise consumption and off-premise consumption, sometimes referred to as on-licenses and off-licenses. On-licenses are for businesses that plan to sell alcohol that will be consumed on the property, such as bars, breweries, and restaurants. Off-licenses are for businesses that plan to sell alcohol to-go, such as liquor stores or breweries that want to can and sell beer to-go.
Choose the Correct On-premise Liquor License
There are also different types of on-premise licenses designed for different types of establishments. So, you’ll need to get a little more specific on what type of business you are opening.
The different types of on-premise liquor licenses include:
- Tavern license: This license is for businesses whose primary revenue comes from alcohol sales, such as bars.
- Restaurant: This license permits restaurants to sell any type of alcohol, but limits what percentage of your revenue can come from alcohol.
- Beer and wine: This license is for businesses that wish to sell beer or wine (often to compliment food) but won’t be selling hard liquor.
Verify Your State’s Requirements for Liquor Licenses
Once you have a general idea of what licenses you need and what type of business you will be opening, contact your state’s local ABC board to determine specific costs, availability, and processes:
Determine Permit Availability
Many states and localities have a limited number of liquor licenses. In many cases, areas are already pushing their license limits and have few, if any, new liquor licenses available. You may have to check availability at the state, county, or city level depending on which state you are located in. This includes making sure the area you’re targeting is a “wet” location (alcohol sales are allowed) and not a “dry” location (alcohol sales are prohibited).
The ABC board or possibly your local county or city can give you information on availability limitations and whether or not there are any of your class of liquor licenses available. They can also explain how new requests are handled, which also varies by state. For example, California holds a lottery in some parts of the state if there are more applicants than available licenses.
Purchase a Liquor License From an Existing Business
Even if there are no new liquor licenses available in your area, there may be other ways to attain a liquor license. Existing businesses can sell their liquor licenses. This happens if a business is closing or changing what products they sell. Your state’s ABC often tracks this process and can inform you of those options. For instance, Illinois makes contact information available for all existing licensees.
When purchasing an existing liquor license, you may have the option of purchasing just the license or purchasing the entire business. Buying an existing liquor license or a business with an existing license requires many of the same steps as if you were buying a new liquor license. You still must go through the same application process as a new liquor license. However, you can apply for a temporary permit that allows for continued operation while your application is being processed, usually 120 days. Fees tend to be lower for a transfer than a brand new license.
Determine Liquor License Costs
The costs of liquor licenses can vary greatly by location. Below are the liquor licensing costs and license types for several example states. In an attempt to compare apples to apples, the license type represented below is a restaurant that wants to sell beer, wine, and liquor until approximately 2 a.m. in a major metropolitan area.
Liquor License Fees by State
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Liquor License Funding Options
As you can see in the chart above, liquor licenses can be pricey. However, if you are starting a new business, applying for a liquor license will be just a fraction of your total costs. You’ll need to lease and outfit a storefront, purchase goods, hire and train your staff, and advertise your business. There are many small business funding options available, including bank loans, small business loans, business credit cards, and more alternative options.
OnDeck is a small business lending company that offers loans up to $500,000. Rates start as low as 9.99% assumed interest rate (AIR) with repayment terms of three to 36 months, and lines of credit up to $100,000 at rates as low as 13.99% APR. If your business has been operational for one full year, has $100,000 or more in annual revenues, and you have a personal credit score of 600 or higher, you can receive financing from OnDeck. Visit OnDeck to apply.
Prepare Your Liquor License Application
Regardless of whether you are getting a new license or buying one from another business, the next step is to make sure you have all your ducks in a row before filing your application. The approval process can take months, and it will take even longer if the application is submitted with missing pieces. Properly preparing for the application process can save you months in processing time.
Here are some examples of the elements you should have in order before you file for your liquor license:
- Employer identification number: Apply at IRS.gov
- Zoning permit: Check with your local zoning commission
- Business license: Check with local small business commission or chamber of commerce
- Sales tax permit: Apply online via your state’s website
- Alcohol tax permit (sometimes included in sales tax form): Contact your state’s business taxation department
- Food handler’s permit (if you are selling food): Check with your state’s health commission
- Building permit: Check with your local zoning commission
- Signage permit: Check with your local zoning commission
- Health permit: Check with your state health commission
- Music license (if you are going to be playing copyrighted music): Available from a variety of online companies, including License Suite
If all of the required licenses and permits are not included in your initial liquor license application, your application will be put on hold until each of these documents are ready. If you have been in business a while, you should also make sure you are up-to-date on all tax payments. If you are behind on your taxes, the state will not look favorably on your liquor license.
It’s also worth noting that a current lease agreement needs to be included with your liquor license application. If you’re a new business, the thought of signing a lease and securing a property before you have a liquor license seems scary and counterintuitive, but it’s a requirement. To minimize any risk, work with your landlord to put in an escape clause in the lease. This way, if you are denied a liquor license, you can back out of the lease.
“The application for a liquor license should be submitted as soon as is feasible since license approval takes two to three months or more. Also, since a fully executed lease agreement (or deed/proof of ownership of the real property where the license will be used) is also required, along with your license application (plus many other requirements), startup operators are faced with the stressful predicament of signing a lease before being approved for a license. Since this is a danger, startups should seek concessions from the landlord, if the landlord is agreeable (reduced or free-rent during building renovations—or until license approved—or an escape clause providing an exit for the leaseholder if license not approved).”
―James Henry Dunne, Professor of Hospitality Studies, New York Institute of Technology School of Management,
Is Your Business Registered?
Before applying for a liquor license, you will need to register your business as it will be a requirement in your liquor license application. There are several different business structures to choose from. For small liquor stores or restaurants, an LLC will probably be the best choice as it will give you a lot of flexibility, but still provide personal asset protection in the event of a lawsuit or bankruptcy.
If you plan on opening a larger brewery, several restaurants, or a larger nightclub, a corporation might be a better choice. Corporations provide the most personal asset protection and give you more options for startup funding.
If you opt to form an LLC, we recommend working with a solution like Incfile to save money while registering your business. With Incfile, you can register your business for just $49. Visit Incfile to learn more.
File Your Liquor License Application With the ABC
Once you have your prep work done, it’s time to file your application with your state’s ABC board. This is generally done via a mail-in form that you can print from your state government website. When we reviewed a sample of state government sites, none of them provided a way to apply online.
What to Include With Liquor License Application
In most cases, there are additional items that need to be included with your application in addition to the government-provided forms.
Other application requirements include but are not limited to:
- Processing fee: Nearly every state has a nonrefundable processing fee. Some are just deposits against the license fee. Ohio charges a $50 to $100 processing fee, depending on the type of permit you need.
- Background check forms: A background check will be performed at least on the business owner.
- Fingerprints: Some states like Ohio require fingerprints for the background check.
- Signed lease agreement: You will need to provide a signed lease agreement of your business location.
- Financial verification sheet: Some permits depend on how much expected alcohol income your business will have.
- Certificate of Good Standing from the Secretary of State: This is a certificate that your corporation or LLC is complying with state regulations such as taxes and corporate filings. Partnerships and sole proprietorships normally don’t have certificates of good standing, but you’ll have a Doing Business As (d/b/a) certificate if you operate under a name that’s different from your legal name.
- Copy of food handler’s permit or license: This certifies that your food operations are in good standing with the state, county, or city.
Liquor License Approval Process
Once you send in your form, the approval process varies for each state. As we discuss further below, it can take five to six months to get your license.
For reference, here is an example of what happens in Ohio once you submit your application:
- The application is logged into the system and sent to local legislative bodies and authorities.
- The ABC board will work with local officials to determine wet/dry status and whether or not any new licenses are available.
- The ABC board works with the Ohio Bureau of Investigation to process background checks (generally looking for a criminal record).
- A Division Compliance Officer will come to do a physical check of your premises, also noting what schools, churches, and similar entities are within 500 feet of your location (they will then be notified and have 30 days to object). If your business is not in operation or does not pass inspection, you’ll need to rectify the issue, assuming you can, and then request that the compliance officer recheck your establishment.
- A public hearing is conducted if any complaints were filed.
- If no complaints were filed or complaints were resolved, then your application should be accepted, and the permit issued to you within four to eight months.
Other Considerations for Applying for a Liquor License
There are already many moving parts involved in applying for a liquor license, but there are even more variables to consider. For example, local zoning laws and foodservice license applications should be taken into consideration.
Of course, your building needs to be zoned commercially, but there are other zoning considerations at play, depending on where your business is located. There are often other restrictions, such as proximity to local schools, churches, and other similar establishments.
For example, to obtain a California liquor license, you need to contact a city or county zoning department to see if a zoning permit is needed. If so, you’ll need to prepare and file a zoning application locally, which includes specialized maps, research, notification of residents of your application, and preparation of a written application. You may need a public hearing to answer any questions raised by local community groups or neighbors. Only after you’ve got the appropriate zoning permit can you apply for a California liquor license. Other states have similar processes.
Liquor License Availability
Liquor licenses are highly regulated. Each county has license quotas, many of which are already maxed out. In Indiana, for example, 98% of residential areas are at their liquor license capacities. Before starting the process of opening a new business that requires liquor sales, see what kind of licenses are available.
It seems intuitive that BYOB businesses do not require liquor licensing. That is simply false. Although there may be a different class of license since you’re not storing the liquor on premises, a license is still required because you’re serving the liquor, and it’s being consumed at your location.
Foodservice licenses are usually faster to acquire than liquor licenses, but, you will need your foodservice license in place before applying for a liquor license. So, it is important to plan ahead and consider all the licenses you may need for your business, how long they will take, and which ones are required with your liquor license application.
Obstacles for Getting a Liquor License
Local businesses within a certain distance of your proposed location often have the right to file an objection. Schools and churches within a certain location of your business will often be notified of your liquor license application and will be given the opportunity to object.
To apply for a liquor license, you often need to be of a certain age and/or a United States citizen. For many states, liquor licenses are accompanied with very specific restrictions on when you can sell alcohol such as time of day, which days, or the required food percentage of volume that you sell in addition to alcohol.
Renewing Your Liquor License
Generally, the term or length of your liquor license is one to three years, but it depends on your state and local regulations. There is no automatic guarantee that your license will be renewed, particularly if you have had issues or been reported for serving to minors. However, if you have operated reputably and have not had any major complaints, then you should be able to renew your license easily. Depending on your state, the renewal fee may be similar to or significantly less than your original fee. For example, in California, a new license is around $14,000, but the annual renewal fee is $876.
Navigating the process of how to get a liquor license is tricky, and liquor license costs vary depending on your state and city. If you don’t see the answer to your specific question, ask our community members and experts here.
Ask The Community Ask the Experts
Getting a liquor license is a pretty extensive process. It will take months, and often require back-and-forth questioning and verifying of information. The best way to ensure a smooth process is by taking the time to verify all of the application requirements for your state and city before submitting.
Another important step of getting a liquor license is protecting yourself from alcohol-related damage and injury claims with liquor liability insurance. Insurance321 provides fast quotes for commercial insurance. Find the best policies and premiums with the insurance brokers at Insurance321.