Opening a coffee shop is a very exciting endeavor. It does, however, require a significant amount of work, a great amount of which is involved in securing all of the necessary licenses and permits required to open a coffee shop. These licenses and permits include:
The Licenses and Permits Required to Open a Coffee Shop vary from state to start however in general they are:
Food Handlers Permit
Sales tax License
The first and most universal license that is going to be required to operate and run a coffee shop is going to be what’s known as a business license.
A business license is essentially just what it sounds like, it is quite literally a license that is required for anyone who would like to run a business.
If you are serious about opening a coffee shop, obtaining a business license is one of the first things you should do, not only because it’s so important but also because it shows others that you are serious about what you are doing.
How do you get a business license?
Obtaining a business license is a fairly simple process and maybe one of the easiest ones on this list
There are several different ways in which you can obtain a business license, some of them in person, and others can be completed online.
If you are looking to obtain your business license online, then sites like LegalZoom are a great place to start. They can help you obtain your business license without having to leave your home.
On the other hand, if you prefer to speak to someone in person while you are aiming to obtain your business license, check your local courthouse/ government organizations.
Different counties sometimes have different processes for obtaining your business license, but all will generally have somewhere you can go to file the necessary paperwork.
The best thing you can do is to simply contact a local representative or someone else who may know what the process is for your county.
No matter how you choose to obtain your business license, however, you will most likely have to pay a small fine or fee, so it may be in your best interest to shop around and see what the cheapest option is before you obtain your license.
Food Handlers Permit
Do you know how we mentioned that a business license is one of the easiest licenses on this list to obtain? Well, the truth is it’s number two at the highest because this permit is incredibly easy to obtain.
Food handlers permit is a certificate that allows you and your business to legally handle and serve food.
It is important to note however that the food you handle may not be cooked on-site, and if you are looking to cook your food on-site, you will need a different permit that will be mentioned later.
How do you obtain this permit?
As we mentioned, obtaining a food handler’s permit is by far the easiest license you will have to obtain.
To do so, all you have to do go online, find the course that coincides with your specific state, and complete the course and the test that follows.
All in all, the course and test combined usually only take about an hour. The course will cover a wide range of food safety topics, and if you can pass the test, then you are awarded your certificate.
The course generally only runs from about $10 – $20, so with a little bit of time, you can receive your certificate in no time.
Food Service Permit
Now, you may be wondering, why do I need a food service permit if I already have a food handler’s permit?
That is a completely valid question, and the truth is not everyone who owns a coffee shop is going to need a food service permit.
The reality is that you only need a food service permit if you are cooking the food you are serving on sight in your kitchen.
So if you are items such as pastries that you cooked on sight, then you will need to obtain a food service permit.
How can you get around needing a food service permit?
I understand that you may want to try and reduce the number of permits that you need to run your business.
If you are going to try and get around any of the permits on this list, this is the one.
The best way to get around needing this permit is to simply get your food from outside sources.
This can be from a local bakery, a grocery store, or possibly even from your own home.
As long as you aren’t cooking the food on sight, then you should be ok.
Sales Tax License
A sales tax license is required for businesses that operate in states that collect sales tax at the time of purchase.
In the US, this is most states. The only states that do not collect a sales tax and thus won’t require a sales tax license are Alaska, Delaware, Montana, New Hampshire, and Oregon.
In every other state in the US, you are required to obtain a sales tax license if you wish to operate your coffee shop there.
Why do you need a sales tax license?
Sales tax, for states that operate using one, is a way for those state governments to fund a large number of different things that the state is responsible for.
As such, they rely pretty heavily on that little extra bit of money that you pay with every purchase, which means that they take sales tax pretty seriously.
Thus, state governments who operate with a sales tax require every business to legally register with them before they collect sales tax, and if you don’t do so, you are not allowed to operate within that state.
This ensures that the states are getting what they believe they deserve, so if you want to operate within one of these states, you better get your sales tax license.
A building permit is often and more formally known as a
certificate of occupancy.
This type of permit is required for any business that is planning to operate within a cities limits.
While it may seem fairly simple, as it sounds to be just a permit saying that you can operate within a building, it requires a significant amount of work to achieve one.
This is because a building permit is the cities way of confirming that the building you are looking to operate in is completely up to shape.
What is required to obtain a building permit?
To obtain a building permit, you have to have confirmation from the city or town that you’re operating in that your building is secure and safe.
This seems simple enough until you realize the extent to which the city will go to ensure the reliability of your building.
When the city looks to confirm the safety of your building, they are going to involve a large number of departments and other people.
For example, they are the very least going to get confirmation from the fire department that your building is structurally safe and that there are enough fire exits as well as from the health department.
This is the most basic level to which the city will look to confirm the safety of your building.
More than likely though, the city is going to involve quite a few other characters in your confirmation.
Some cities may involve architects and engineers to check the safety of your building.
Other cities may involve zoning departments and other bureaucrats.
Let’s be honest, this process may take a very long time, but unfortunately, it’s something you have to do, so if you can, start this process early.
Check out more licensing tips HERE.
Once your business is up and running, you as the owner are responsible for quite a few different things.
You are responsible for ensuring the safety of your employees and your customers, which involves ensuring that your building is safe, your products are safe, and that your equipment is safe to use.
In the end, if something is to happen, you also want to ensure that you can protect both yourself and your business.
That is where liability insurance comes into play.
Liability insurance is simply a blanket term used to cover any form of insurance that covers instances where you or your business may be liable for any damage done.
What falls under liability insurance?
As we mentioned, liability insurance is any kind of insurance that is meant to protect you or your business from any damages that may occur.
Generally, most insurance companies will quote liability insurance as to fall under one of three categories:
- Bodily injury or property damage
- Reputational harm
- Advertising errors
Bodily injury and property damage are probably what you think of when you imagine liability insurance, and that’s for good reason as those types of damages would likely be the most costly.
But you can’t ignore the other two types of liability insurance as they both are very important when running a business, and can save you lots of headaches in the future.
What is the starting cost for a coffee shop?
The average and traditional sit-down coffee shop will cost somewhere between $200,000 and $375,000 to open and startup.
This will usually include your initial costs, so if you can access this much money, then you may be able to start your coffee shop dream right away.
Is it worth opening a coffee shop over a coffee cart?
Both coffee shops and coffee carts are worthwhile investments for anyone looking to start their own business.
As a result, there is no straight answer to this question. Instead, you have to weigh what you value most to decide between the two.
For example, a coffee cart has lower start-up and operation costs, but a coffee shop generally brings in more revenue.
Thus, if you are looking for a low-cost investment, then a coffee cart is the way to go. But if you have the money to invest in a coffee shop and are looking for more profit, then the shop is the way to go.
Looking to learn more about how to start your very own coffee shop? Download our Free eBook here as well as receive our Free newsletter with great tips on how to start your very own coffee shop!
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Hi! I’m Shawn Chun
My adventure in coffee began when I first launched my first coffee shop back in the early 2000s. I had to figure out so many things on my own and to make it worse within 2 years of opening two large corporate coffee chains moved in just blocks away from me!
As I saw smaller and even some larger coffee shops in the neighborhood slowly lose customers to these giant coffee chains and slowly close up shop, I knew that I had to start getting creative…or go out of business.
I (like you may be) knew the coffee industry well. I could make the best latte art around and the foam on my caps was the fluffiest you have ever seen. I even had the best state-of-the-art 2 group digital Nuova Simonelli machine money could buy. But I knew that these things alone would not be enough to lure customers away from the name brand established coffee shops.
Eventually, through lots of trial and error as well as perseverance and creativity I did find a way to not only survive but also thrive in the coffee/espresso industry even while those corporate coffee chains stayed put. During those years I learned to adapt and always faced new challenges. It was not always easy, however, in the end, I was the sole survivor independent coffee shop within a 10-mile radius of my location. Just two corporate coffee chains and I were left after that year. All told the corporate coffee chains took down over 15 small independent coffee shops and kiosks and I was the last one standing and thriving.
Along the years I meet others with the same passion for coffee and I quickly learned that it is not only “how good a barista is” that makes a coffee shop successful, but the business side of coffee as well.
Hence why I started this website you are on now. To provide the tools and resources for up and coming coffee shop owners to gain that vital insight and knowledge on how to start a coffee shop successfully.
Stick around, browse through my helpful blog and resources and enjoy your stay! With lots of LATTE LOVE!