Starting a new business is always exciting, but people should think about the legal aspects and considerations before starting a new business. Legal requirements are in place to protect your business and patrons, and there are several steps you’ll have to work through to get the business going. However, a bar business has even more legal issues that need addressing before the business can open. Let’s look at the basics for opening a bar and tackle a few legal aspects as well.
Basics for Starting a Business
Writing up a comprehensive business plan serves two purposes: Chiefly, this plan clarifies your goals for the business, including planning, starting, and running the business. Secondly, once you have a well-written plan, it is the perfect tool for obtaining financing for the business.
Choose an ideal business location that is convenient for customers. Consider downtown areas close to businesses to attract the after-work crowds and locations near college campuses to pick up business from young adults. Make sure there is good street visibility and parking.
Starting up a new bar takes time to get established, and most new bar owners tend to underestimate costs when first starting. Plan to get financing to cover the major costs of a new building, renovations, and expenses for at least a year.
Decide on the name of the new bar. Take the time to find a creative name that reflects the interests of the patrons you will serve. Make it short, clever, and easy to remember. Be sure to verify that the name is not already in use by another company. You’ll also have to register the business name with the state.
According to New Century Financial, a company that provides accounts receivable and factoring services, you should determine your business structure. Typical options include sole proprietorship, Limited Liability Company, or a variety of corporate structures. Next, you must apply for a federal tax identification number from the IRS, a state business license and other permits may also be required.
Acquire business insurance. Set up a meeting with a qualified agent to discuss all your insurance needs including liability and liquor liability insurance.
Legal Considerations
The business location requires proper zoning. After finding a suitable place for the bar, you’ll need to check into zoning regulations. If the business location was previously used as a bar or nightclub, it may already have liquor zoning. However, you might have to start from scratch and request zoning for your new bar with the zoning board for the city.
You must obtain a license from the city government to sell alcoholic beverages. These are pouring licenses, and they vary significantly depending on the variety of alcohol you wish to sell. In addition, if you want to provide any form of entertainment, you may also need to purchase entertainment licenses.
Dram shop laws cover your liability for serving patrons (adults and minors) that become intoxicated, damage property, or injure another party or themselves. The majority of states have dram shop laws in place today, and they may all vary somewhat. As a bar owner, it is important that you understand the governing laws that apply to you and your business in your specific state. It is also equally important that employees receive training to spot and handle patrons that have had too much to drink.
Opening a bar requires serious considerations. Like other businesses, you are responsible for running the business, hiring employees, and obtaining state and federal applications, licenses, and permits. However, running a business that sells liquor means additional legal responsibilities. You’ll need to get special zoning permits and liquor liability insurance coverage in addition to dealing with dram shop laws.
