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Got java on the brain? We don’t blame you. Coffee is one of life’s great gifts, and we salute coffee shop owners for their tireless work in providing our daily cup of energy.
If you’re thinking of opening up a coffee shop, you probably imagine a cozy spot for friends to gather over a cup of joe, complete with a top-of-the-line espresso machine and a gorgeous glass display case full of delicious baked goods.
However, when you get down to it, there are a ton of details that go along with opening and running a successful coffee shop. Not least among them are a killer marketing plan, a business plan, and a fabulous website.
But there’s one major hurdle that you’ll want to clear before you start drafting a menu and promoting your space on social media: coffee shop licenses and permits.
Every license and permit is unique and has its own application. And each one takes varying amounts of time to secure, so you’ll want to leave plenty of time to get the proper licenses and permits in place. While it’s a lot of information, don’t need to sweat it. We created this guide to cover all the coffee shop licenses and permits you’ll need.
What Do You Need to Open a Coffee Shop?
1. Business License
Like all other businesses, coffee shops need a business license to operate in the United States. Either the city or county you live in will dictate how to apply for a business license and what the requirements are to remain in compliance with local zoning ordinances.
How to Get a Business License
Check out your local city or county’s zoning office to find the business license application. If you Google “Your State + Business License Application” you should be able to find it along with any requirements.
How Much Does a Business License Cost?
Like many of the following licenses and permits in this guide, you’ll find that fees vary based on location. Business licenses require a flat fee; anywhere from $50 to thousands of dollars.
2. “Doing Business As” License (DBA)
If you plan to run your coffee shop under a different name than its legal name, you may need a Doing Business As (DBA) license.
How to Get a “Doing Business As” License
If you have your coffee shop’s DBA name picked out, you will most likely need to register it with the county clerk. Their office can help you locate and fill out the necessary paperwork and file it correctly. Depending on your state, you may need to register your DBA at the state level as well.
How Much Does a DBA License Cost?
DBA license fees can vary from $10 to $100 or more; it depends on your location and business structure.
3. Retail Food Service License
As a coffee shop, you’ll sell coffee and food products directly to the end buyer, which in this case, is the consumer. This means you’ll likely need a retail food service license as opposed to a wholesale food service license.
How to Get a Retail Food Service License
Oftentimes, either your state’s department of health or another local public health agency regulates the issuance of retail food service licenses. In Illinois, any business that wishes to operate a retail food sales establishment, including a coffee shop, must obtain a license from both the county and the city. The type of license you need will also depend on if you plan to open a sidewalk cafe, a street cafe, or a mobile coffee shop.
How Much Does a Retail Food Service License Cost?
These licenses cost anywhere from $100 to hundreds of dollars.
4. Resale License for Sales Tax
If your coffee shop is located in a state that charges sales tax to the end consumer, you may need a resale license for sales tax.
How to Get a Resale License for Sales Tax
Contact your state’s department of revenue for state-specific information. In Massachusetts, coffee shop owners can obtain a Sales Tax Resale Certificate by filing Form ST-4.
How Much Does a Resale License for Sales Tax Cost?
Good news: many states do not charge a fee for a resale license. However, you must keep it current by filing the necessary tax returns every year and submit sales tax to the state. Failure to do so could result in the state revoking the license.
5. Sign Permit
Once you’ve got the location established, you’ll need a sign to point customers the right way — which is through the entrance of your coffee shop! However, before you start plastering the neighborhood with flashing signs to show the way, you’ll need to get a sign permit approved by your local city government. Every city has its own requirements when it comes to regulating the sign’s size, location, lighting, and visibility.
How to Get a Sign Permit
Check your local city government’s website for sign permits and regulations. Oftentimes, larger cities with more businesses have more restrictions and requirements in place for sign permits. In Minneapolis, the city only issues sign permits to Sign Contractors licensed by the city.
How Much Does a Sign Permit Cost?
Sign permit fees vary based on the sign’s size and your location. Expect to pay at least $50 or more.
6. Coffee Shop Insurance
So, technically insurance isn’t a permit or a license. However, it’s critical to your coffee shop that you have the proper protections in place in the event of damage to the property or injury to an employee or patron. In fact, state law often requires many types of insurance for coffee shop owners to carry.
We recommend looking into the following policies for your coffee shop:
General Liability Insurance: General liability is a must-have for any business, but especially coffee shops that come into contact with guests daily. General liability covers you as the owner if you, your employees, your coffee, or other food products accidentally cause harm to a patron.
Business Property Insurance: Keep your coffee shop’s interior and exterior covered in case of accidental damage.
Workers’ Compensation: If you plan to have employees help run your coffee shop, there’s a high likelihood that state law requires workers’ compensation insurance on your part to keep your employees protected.
Commercial Auto Coverage: Planning on taking your coffee shop mobile? Or, will you have a company vehicle to transport supplies when necessary? If either of these situations applies to you, you will need a commercial auto policy that covers your company vehicle in case of a car accident.
7. Food Handler’s Permit
To allow your employees to serve food to paying guests, they’ll need to have a food handler’s permit. This permit shows they have the necessary qualifications and training needed to safely serve food to the public.
How to Get a Food Handler’s Permit
Typically, either your state’s department of health or your county’s health safety office will issue food handler permits. Oftentimes, those who wish to obtain this permit will need to complete a food safety course.
How Much Does a Food Handler’s Permit Cost?
A food handler’s permit could cost around $100 or more. Check your local requirements to find out the exact fee.
8.Building Health Permit
Wait a minute. Not only do your employees need a health permit but the building does too? Yep, that’s right! Restaurants typically need an inspection to prove to the public and the state that it is in sanitary condition and fit to serve food to customers. Cities and counties have different requirements for building health permits.
How to Get a Building Health Permit
Google “Your State + Building Health Permit” to find out what your state requires when it comes to obtaining and holding a building health permit.
How Much Does a Building Health Permit Cost?
Building health permit costs vary by location. However, they can run anywhere from $50 to $1000 so make sure you double check your requirements to know what the cost will be upfront.
Restaurant inspections can be time-consuming and frightening. Learn how to prepare and avoid the fear of failing an inspection.
9. Liquor License
Liquor? In a coffee shop? Sign us up! While most coffee shops stick to lattes and cold brews, some expand their offerings to include alcoholic beverages. Check out Rosella Coffee & Wine Bar for tips to perfect the coffee shop by day, wine bar by night concept.
How to Get a Liquor License
Due to the consequences that can go along with serving alcohol, liquor licenses often come with the most stringent requirements out of all of the coffee shop permits and licenses you’ll need. Your liquor license requirements will depend on your state’s regulatory laws. A good place to start is to contact your state’s Alcohol Beverage Control (ACB) Board.
How Much Does a Liquor License Cost?
Plan to invest at least a few hundred dollars in your coffee shop’s liquor license.
10. Live Entertainment License
Coffee shops striving to liven up their atmosphere often offer live entertainment on select days. Whether you plan to host a solo guitarist, a slam poetry event, or a spoken word artist, you’ll need a live entertainment license first.
How to Get a Live Entertainment License
Check your city’s entertainment commission for regulations on live entertainment. In San Diego, brick-and-mortar establishments, including coffee shops, need a limited live performance permit.
How Much Does a Live Entertainment License Cost?
Live entertainment licenses vary based on city and state. However, they can also vary based on the size of your coffee shop, whether you have performances indoors or outdoors, and whether the entertainment will go on late into the night.
Coffee Shop Licensing and Permit Laws in the United States
As you can see from the permits and licenses in this guide, there are many hoops to jump through to open up a coffee shop. However, all of them help keep you, your customers, and your employees safe and your business in compliance with state laws.
Fortunately, there are very few, if any, federal regulations for your coffee shop that you’ll have to worry about since coffee shops aren’t regulated by any federal agency (beyond the IRS for taxes). According to the Small Business Administration (SBA), “States tend to regulate a broader range of activities than the federal government.” It’s critical that you’re aware of licenses and permits needed at the city, county, and state levels to keep your coffee shop in good standing.
Claiming ignorance is never a defense when it comes to following local laws and regulations. Double check your local city government’s websites to ensure you know which permits and licenses you need and how to apply for them.
One more thing. Make sure you keep all insurance policies, permits, and licenses current and up-to-date — otherwise you could face a huge fine or even possibly lose the right to hold that license! It’s always easier to renew something than it is to have to start from scratch and apply all over again.
Next Steps to Open Up Your Coffee Shop
If you have the drive, dream, and determination, all you need is to follow through with the plan. Think of the amazing memories your customers will create in your coffee shop — just follow the right rules, obtain the permits and licenses you need, and you’re set to open your doors!
There’s no doubt that the cost of licenses and permits alone is enough to put a dent in your coffee shop’s budget. However, if you’re aware of all the costs of opening a cafe from the beginning, you’ll be able to plan accordingly to make the numbers work.
Ready to hit the ground running?
Download your free coffee shop business plan template today. With a solid business plan, the necessary permits and licenses, and the right amount of caffeine, you’ll be ready to seize the day and get your dream coffee shop ready to go.
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