Whether it’s beer, wine, liquor or spirits, selling alcohol boosts your bottom line. Alcoholic drinks are quick to prepare and pair well with tasty, profitable bar foods. Alcohol sales also have some of the highest profit margins.

But to keep the good times rolling, you need a valid liquor license.

A liquor license will be one of your fixed costs if you want to sell alcoholic beverages. And, as one Chicago bar learned, maintaining your license is as important as getting one. 

Learn how to renew or apply for a liquor license with this guide. If you’re opening a second location and just need a quick refresher, we can help with that, too. 

How to get a liquor license in 7 steps

The path to getting a liquor license will look different for every business owner. Three main factors will influence your application process:

  • Your business location
  • The kind of establishment you own
  • The type of liquor permit you’re requesting

Follow the 7 steps below to learn how to find your liquor license requirements. Then, prepare and submit the right application.

1. Check your state laws and other requirements.

Businesses have to comply with liquor laws at the federal, state and local levels. When it comes to getting a liquor license, however, you’ll mostly work with your state, city or county (or all three). 

Every state has its own Alcohol Beverage Control (ABC) authority. ABC boards make the rules around who qualifies for a license, how much a license costs, which days and times you can sell drinks, and more. 

The Alcohol and Tobacco Tax and Trade Bureau (TTB) lists all the ABC boards in the United States. First, find your state. Then, visit your board’s website to determine your exact application process. It’s easier to get licensed in some states than others.

Quota states vs. non-quota states

In quota states, the government sets limits on how many new licenses they will sell each year. Licenses go quickly. For example, Indiana’s website says the “quota is filled in 99% of areas that are inside city limits.”

Non-quota states still control the licensing process, but they don’t set a limit.

If there are no new licenses available, you aren’t totally out of luck. You can buy an existing liquor license from its owner. That might be a soon-to-be-closed business or private owner. Your ABC board can let you know what’s available and how to transfer ownership. You can also use online brokerage sites like LiquorLicense.com

Don’t forget to review your local-level liquor laws. Many areas have requirements and restrictions on top of national laws. 

2. Determine which type of license you need.

There are a few different types of liquor licenses that a business can acquire. First, figure out whether you need an on-premise or off-premise license. 

  • On-premise license: Will your customers consume alcohol at your business location? You need an on-premise license. (Example: Bar, restaurant, pub)
  • Off-premise license: Will your customers consume the alcohol you sell somewhere other than your business? You need an off-premise license. (Example: Liquor store, distillery, grocery store) 

Some businesses need both. A brewpub, for instance, pours drinks and sells cases of beer for patrons to take home.

Then, choose a type of on- or off-premise license. This depends on the type of alcohol you’ll sell and how much you expect to earn from the sale of alcohol.

Here are some common on-premise liquor licenses: 

  • Beer and wine license: For businesses that sell beer, wine and other malt beverages, but no hard liquor or spirits 
  • Tavern license: For businesses whose profits come from alcohol sales more than food sales, and want to sell all types of alcohol
  • Restaurant license: For businesses whose profits come from food sales more than alcohol sales, and want to sell all types of alcohol 

Retail businesses that sell alcoholic beverages, on the other hand, typically need off-premise licenses. A convenience store, for example, might apply for a liquor retail license to sell beer and wine coolers. 

3. Budget for your liquor license fees.

The average U.S. liquor license fee is about $1,400. But it’s a different story at the state level, according to a 2018-2019 survey. In Idaho, a liquor license was only $100. In California, however, the fee was a sky-high $13,800. 

Besides the base permit fee, you may have to pay the following: 

  • Application processing fees
  • Late hours fee 
  • Surcharges, like added costs for a license to sell liquor on Sundays 

Fees rack up quickly, especially if you need city or county licenses. Get your cash flowing before you apply. Here are some strategies to cover licensing costs: 

Speaking of fees, make sure you aren’t delinquent on taxes or other payments. This could cause your application to be denied. 

4. Gather your business documents and permits.

You’ll need to prepare some business materials for your liquor permit application. 

It’s a safe bet to have these documents ready to go before you apply:

  • Business license
  • Articles of organization
  • Employer Identification Number (EIN)
  • Certificate of good standing (depending on your business entity)
  • Building lease or building title
  • Zoning permit
  • Health permit
  • Sales tax permit
  • Alcohol tax permit
  • Music permit
  • Signage permit

Planning to serve bar snacks or entrees? Have your food handlers license ready. The application packet may also require a copy of your floor plan (current or proposed) with photos. 

Your servers and bartenders might need to pass beverage server training courses before you can be licensed. Some states require a background check for any potential alcohol seller. 

5. Apply for your liquor license. 

It’s time to file your liquor license application. Visit your state government’s website and choose the application form(s) you need. Gather and double-check any required documents.

Fill out the forms and submit them via snail mail. Often, this is when you’ll pay a nonrefundable application processing fee. 

Some states allow you to take care of the entire process online. Others are a little more analog. Wisconsin businesses, for example, are directed to contact their city clerk to begin applying. 

Get started as early as you can because the process may take months. 

Defending your license application

This is an important piece. In some states, you, the ABC board or city council may post a notice of your application. It could be in the local newspaper or right outside your current business. It’s usually up for at least 30 days

During this time, other citizens have a right to object to your application. They may claim that your bar is too close to a school or would create a public nuisance. You may need to defend your proposal at a public hearing, so be prepared. 

6. Pay and display. 

Once the state approves your alcoholic beverage permit—cheers to you—you’ll submit payment for your liquor license. 

Receive your new license in the mail (or online). Check your area laws to see if there’s a certain way you need to display your license, or if you need to post a community announcement. Your business is now licensed to sell alcohol.

Protect your license

After all this work, you don’t want to lose your new liquor license. Here are some ways to keep it safe: 

  • Check photo IDs for all customers
  • Establish serving guidelines for your bartenders and servers
  • Don’t serve visibly intoxicated customers
  • Make sure people aren’t drinking in unlicensed areas (e.g., your patio area or roof, if they aren’t included in your license)
  • Only let certified staff serve drinks

7. Renew your license on time. 

How long does a liquor license last? The answer varies. Generally speaking, liquor licenses last no longer than three years.

Renew your license as early as possible. This will keep you from paying penalty fees for operating without a license. In Indiana, for example, you can get a renewal up to 90 days before it expires, or 120 days after it expires.

If you’re in good standing with your ABC board, renewal is quick and easy. The process usually mirrors the new license application. Some states allow you to renew entirely online. 

More good news? Your renewal fees will likely be much lower than your first license fee. 

For instance, the fee to renew a Texas mixed beverage permit gets progressively lower after each renewal, according to the fee chart on the Texas Alcoholic Beverage Commission (TABC) website.

Cheers to your liquor license

Maybe you’re opening a second wine bar. Or, you could be running a special event, like a pop-up restaurant, and need a temporary license. 

Refer to this guide throughout your liquor licensing process. Your best resource will be your state and local alcohol authorities. Their website will have answers to licensing FAQs. They’ll also provide guidance for your specific situation.

Finally, consider talking with other local bar or restaurant owners to make sure everything sounds right.

¡Salud!

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