What Licenses Do You Need To Open A Coffee Shop

If you’ve ever asked what licenses do you need to open a coffee shop, here is your answer. We will discuss every single cafe license you may need, even the optional ones. For each license, we will tell you the benefits of getting it, or the problems if it’s avoided. 

When possible, we will point you directly to the authorities who will issue specific licenses. When that’s not possible, we will tell you how to find the issuer yourself. 

New to the coffee shop business? Maybe new to business in general? This guide is for you. We’ve kept it extremely simple and free of legal and technical jargon. 

Rest assured, if you go through this guide, it’s guaranteed you’ll know more about cafe licenses than your neighbor. 

Let’s get that coffee brewing then! 

Understanding Jurisdiction 

Jurisdiction means the location where you wish to open your coffee shop. This isn’t a license, why then is it mentioned at the top here? Because your jurisdiction will define all the licenses and legal requirements for you.

This guide is primarily for the U.S. jurisdiction. While your country may have similar licenses, the names or exact licenses will vary. 

Generally, a lot changes even within the states. I could advise you on the best places to open your coffee shop but I don’t suppose you’d move states just because an article said so. 

Most of you reading this probably already know where (at least the state) you’re going to set up, so I wouldn’t waste your time. 

Forming a Legal structure 

This is a good first step. Also, this isn’t a “license” but everything you do depends on the legal structure. 

The legal structure isn’t as complex as it sounds. You simply need to give your business an identity. It’s like applying for a social security number. You need the person to exist and have some characteristics, don’t you?

So, there are a few “types” of businesses you can establish. 

• Sole proprietorship: When you’re the only owner of the business, this is what you need to register as. You’ll solely be responsible for all taxation and legal purposes. While sole proprietorship brings in added responsibilities, it does reduce some license requirements.
• LLCs: A Limited Liability Company is one of the most common business structures. It’s when the individual’s assets are separate from the business’ losses and lawsuits. The primary benefit is this separation that you have from your business’ operations. Do note that even LLCs are of different types. You must decide the exact type you want. 
• Corporations: For a coffee shop, I doubt you’ll need to register as a corporation. Corporations generally have multiple owners or shareholders. In the case of corporations too, personal assets are protected from losses, debts, and lawsuits. 

There are some more structures you can register for. However, they probably aren’t applicable in the case of a coffee shop anyway (e.g. NGO).

How to file for an LLC/Corporation or any other type of company? 

The process isn’t complicated but it does have a few prerequisites. 

1. Decide on the exact organization type you’re about to file for.
2. Choose a business name. Verify that the name isn’t already trademarked. It’s wise to ensure that the domains/social handles for the business are available as well.
3. File articles of organization: This is the first time you’ll be interacting with the government directly.  You may be allowed to file entirely online, or an office visit may be required. The exact website that you need to use for the filing will depend on your state. Go to the official website of the SBA  and choose your state. You’ll directly get the link that will let you file your form.
4. Choose and specify your registered agent. He/she will be who receives all official and legal communications for the business. For your coffee shop, it can be you or any one of your partners.

You’re almost done. There are some other requirements such as posting a notice of formation/ drafting responsibilities etc. However, they mostly depend on specific states and can be optional.

10 Licences you need to open a coffee shop (Mandatory and optional)

Here are cafe licenses and permits you’ll need for a coffee shop:

• Employment Identification Number (EIN)
• General Business License
• Food Handler’s Licence
• Reseller’s License (Sales Tax Permit)
• Public Health and Building Permit 
• Sign Permit
• Certificate of Occupancy (Optional license)
• Doing Business As- DBA (optional)
• Liquor Licence 

Let us discuss what these licenses are, why you need them, and where to get them. 

1. The Employment Identification Number (EIN)

Why you need it: To be able to hire employees. 

The EIN is simply a number that the IRS assigns you for your business. You’ll need the EIN to obtain the business license if your business plans on hiring employees. 

Unless you’re a Super(wo)man, you’ll need to hire employees. This means you’ll need the EIN before you can file for a coffee shop license. 

In fact, some U.S. states may require EIN even if you do not have or intend to have employees. 

The EIN also helps with tax filing & benefits. You can also open a business bank account if you have an EIN (unless you own an LLC or a sole proprietorship). 

Where to get it: You can apply for EIN online here.

2. General Business License

Why you need it: It’s mandatory to be able to conduct commercial transactions. 

This is probably the first license you’ll need to obtain. It’s like your social security number. Something that tells the government that your business exists. 

In almost every country on the planet, including the U.S. you’ll need a business license. It’s simply a license to do commercial transactions. 

In fact, you can proceed with obtaining many other licenses and bank accounts only after you have a business license. 

The business license too differs for each state. Not just states, at times specific cities may require their own business licenses as well. 

Because this is state and city-specific, I can not give you an exact amount you’ll be paying for a license. However, as a general rule, it’ll be higher in the tier-1 cities as compared to tier-2 and tier-3. It’s not much though, anywhere. For California, the highest amount will generally not exceed $150. 

Where to get it: Google “Get your state general business license”. 

3. Food Handlers licence

Why you need it: To ensure your employees have proper food and hygiene training. 

I’m sure you know of this one. Almost the entire world considers coffee a “food”, at least in the legal context. Hence, your coffee shop must have a food handler’s license.

The license is provided after passing an exam where a 70% score is the minimum passing mark. The training includes hygiene, safety, food handling techniques, etc.

The license isn’t issued for your cafe but for your employees. Depending on your exact state and region, you may be required to obtain a license either for each employee or only a certain number of employees. 

E.g. California, New York, and Texas require all employees to get a license. While in Florida or Arizona, only 1 employee license suffices. 

The food handler’s license not only is a legal requirement, but also a moral and ethical one. I’m sure you wish to ensure your customers are getting the best and healthiest coffee, don’t you?

Where to get it: The local health department. Google “Get your state food handler’s license”. 

4. Reseller’s license (Sales Tax Permit)

Why you need it: So you can avoid paying sales tax, and charge sales tax to your customers.

This one may or may not be mandatory for you depending on your jurisdiction, but it’s always wise to get it. I say that because it helps you avoid taxes.

So, the reseller’s license is primarily required when you “resale” items you purchase from a third party. 

For E.g. the products you put in your coffee, the syrup, flavours, and everything else are generally taxed. You pay the tax when you buy these for your coffee shop. But, if you get a reseller’s license, you’re allowed to skip the tax during purchase and rather charge the sales tax to your customers. 

Basically, the government is allowing you to shift the burden of tax from yourself to your customers if you have a sales tax permit.

Where to get it: The dept. Revenue generally issues the license. Google “Get your state sales tax permit”.

5. Permit from the dept. Of Health 

Why you need it: To tell the govt. that your products, ingredients, and equipment meet the required health and safety requirements. 

This is probably the hardest nut to crack. Not because the application is hard, it’s not. But because this involves a physical check of your facilities, equipment, and basically everything else.

The health department checks your menu, items, source of products, and a lot more. The goal here is to ensure your products and their sources are spotless and not harmful to the consumers.

In fact, depending on the menu or shop type, the things you’ll need to provide differ. E.g. for a drive-thru establishment, the window size, traffic lane, disposal area/methods, etc. matter. However, these requirements are nullified if you have a normal, dine-in coffee cafe. 

Where to get it: The local health dept. Issues the permit. Google “Get health permit for coffee shop + your state”. (You need to mention the coffee shop. That’s because depending on the business type, different agencies offer the permit).

6. Public Health and Building permit 

Why you need it: To ensure the building follows safety regulations.

A building permit is almost the same thing as your health permit, but for the building. 

It checks and verifies that your building is “healthy”, or, in other words, safe. It needs to be safe not only for food but also in case of disasters.

Hence, you get a building permit if you have proper insulation, fire safety measures, and of course hygiene requirements.

Where to get it: Same as the health permit discussed above. 

7. Sign Permit

Why you need it: Some govt. need to ensure safety, fair space for everyone, and even neighborhood aesthetics. 

Your coffee shop will need marketing, or at least directions for your customers, won’t it? That’s where the sign permit comes in.

Yes, you can not just put signs wherever you want. In smaller towns it may be a rare possibility, but not in bigger towns. Nevada is one town that’s pretty lenient with its sign laws. 

However, almost everywhere, a legal requirement for a sign permit exists. The permit defines how the sign looks, its size, materials, duration of the sign, and a lot more.

Again, there’s no central place to get it. The planning department generally provides the sign permit for businesses. 

Where to get it: Google “Get sign permit + your county. Yes, the state govt. Generally doesn’t issue statewide sign permits. 

8. Certificate of Occupancy (Optional)

Why you need it: To make major building changes.

This isn’t a mandatory license/certificate for your coffee shop and hence it’s mentioned on the lower end here.

So the CoO checks your zone, safety precautions, etc. But, it’s only required if you’re making major changes to the infrastructure or if you’re converting a residential property into a commercial area.

Once you start with your licensing, you can get it cleared with various licensing authorities if the CoO is required.

Where to get it: The building dept. Issues it. Google “certificate of occupancy + your county”.

9. DBA (Doing Business As) license

Why you need it: To use a different name for your cafe than your registered name. 

This is a license that mostly impacts the technicalities of your business and not its actual functioning.

So, DBA is optional and only required in one specific case. It’s needed if you register your business under a different name but wish to name your cafe something else.

E.g. your company may be registered as “Updateland” but your coffee shop may be called “Sunshine”. On paper and in court, they’ll mean the same things but without you having to use your actual name when you don’t want to. It’s basically like a cafe license to name your shop whatever you want. 

Do note that you aren’t creating a separate entity as in the case of LLCs. The company will still follow the same legal structure that it’s registered as. The DBA is purely a “name” and provides no separate legal benefits. 

Although, you may get a few trademark benefits if it ever comes to that. Very tiny benefits. 

Where to get it: Google “ Get DBA license + your state”.

10. Liquor Licence (optional)

This is completely optional and in my opinion, coffee and alcohol don’t exactly go hand in hand. However, if you intend to serve alcohol, you’ll need a liquor license as well.

Do note that the Liquor license may be one of the hardest, strictest, and probably the most expensive licenses of all.

The only reason we’re including this is because we’ve seen cafes such as the “Beach + Vine” or “The Roasted Record” or “VI Coffee Bar” and hundreds of others serve both coffee and alcohol. 

Conclusion

These were the primary coffee shop licenses and permits you will need in the U.S. Yes, the exact number and type will vary depending on your location and even business structure. 

Do note that when Googling for licenses, always try to go with the .gov or other official sites. You’ll find tons of third-party agents who may do your job, but charge a fee for it. Of course, these agents make your job easier so if that’s what you’re going for, skip the earlier advice. 

I will also recommend consulting a business lawyer before you set out with the licenses. This will help you get more region-specific information, adhere to the requirements better, and ensure there are no errors in your filing. 

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