Are you wondering what licenses and permits are required to open a nightclub? If YES, here are 8 licenses and permits required to open a nightclub.
Truth be told, it takes a lot to start and run a nightclub. First and foremost, a nightclub requires a substantial upfront investment, but it is a lucrative business venture when done right. Nightclubs offer attendees social settings where they can enjoy food, drinks, dancing, and entertainment.
Clubs sometimes feature live entertainment by DJs and bands. Many clubs also feature special guests to help attract attendees and ensure a unique experience.
In recent times, clubs have learned to adopt a certain theme in their décor, food, and drinks, which helps with the unique experience and atmosphere that they offer to patrons. According to industry reports, the bar and nightclub industry in the United States has enjoyed 2.4 percent growth from 2015 to 2020.
Note that this growth was primarily induced by an increase in per capita spending on alcohol and an overall increase in customer spending.
Even though the growth was notably strong from 2015 through 2019, the COVID-19 pandemic had a massive effect on the industry, and in 2020, the industry’s income declined by 9 percent. However, once social distancing restrictions become completely lifted; experts note that the industry’s growth will continue.
Per capita disposable income and consumer spending are expected to continue to grow, and it will, without doubt, induce growth in bar and nightclub industry revenue as well.
The nightclub industry has moved focus towards ensuring sustainability. Aside from the basic changes of leveraging more organic ingredients and doing away with single-use plastic items, like straws, nightclubs are increasingly looking for other sustainable options.
Bars and nightclubs are beginning to seek out vendors and equipment manufacturers who share their beliefs in sustainability.
In addition, technology is beginning to play a gigantic role in current nightclub trends. A good number of nightclubs and bars have started to offer self-pour beer and alcohol vending machines. Note that these self-serve options help take away some of the wait time customers experience when requesting drinks.
The technology can be quite costly to install, but it does offer benefits to high-volume establishments. A nightclub owner will also be expected to obtain certain business licenses and permits. While specific regulations vary by state and municipalities, there are a few steps would-be nightclub owners must take on their journey to opening. Here are some of the most important licenses and permits you need to open a nightclub.
License and Permit is Required to Open a Nightclub
Have it in mind that every business needs a business license in the United States to open and operate, therefore put this at the top of your list of Licenses and permits when starting a Nightclub. Since your establishment will be selling alcohol, you will also have to obtain licensing through the Alcohol and Tobacco Tax and Trade Bureau (TTB). Note that you need to apply for a license with the TTB before you can start operating.
If you intend to source your supplies and ingredients wholesale, then you have to get a resale permit. This is a certificate you can present as you make purchases for your nightclub that lets you avoid sales taxes on wholesale purchases.
Instead, your customers would be tasked with paying the sales tax. Note that you have to report on the sales taxes you collect, and then pay them to your state.
The sales tax rate depends on your state, so be sure to do your research. Consult your state revenue or tax department to provide you with the precise details for your resale permit. A good number of states offer the form and instructions online.
Since you are starting and running a liquor-related business, you will have to acquire a specific liquor license. The Alcohol Beverage Control Boards (ABC boards) oversee the sale of alcohol, and so every business that produces or sells alcoholic beverages will have to apply for a liquor license.
For a Nightclub, you will need what’s known as an on-premise license, on-sale license, or on-license, which means you are selling alcohol to be consumed on your property.
Certificate of Occupancy
Your Nightclub will definitely need a location before you seek a Certificate of Occupancy. Immediately you have a building, you can start the process to get the certificate.
Note that this document confirms that your building is safe and ideal for customers and legally notes the purpose of your business. Classifications include retail, industrial, mixed-use, and others. Ensure your building is up to code before applying for a C of O because that will be checked.
Seller’s Permit or Sales Tax License
A seller’s permit is a very important license for any business. When starting a nightclub, you will likely need this permit when you apply for a resale permit, so ensure to have it at hand. Note that your state may refer to this business permit as a seller’s permit or a sales tax license. Regardless of what it is called, it helps your state identify your business for tax purposes.
Since you are selling goods as a business, you are expected to pay taxes, and registering with your state ensures that they can track your business. Register your business with your state’s government to get your seller’s permit or sales tax license.
A sign is very necessary for almost every business especially to help in marketing and publicity. It helps to attract new customers and shows them where to find you. However, right before you order a neon-lit sign as big as your building, you are expected to know what you can have outside of your nightclub and how to get a signage permit.
Signage permit requirements are known to vary from city to state. Owing to that, if you rent your building and have a landlord or are in a shopping center, you may have extra requirements to consider. In general, your area could have requirements for:
- The size of your sign
- The location of your sign
- Lighting used in your sign
- How do you display your sign
We all agree music sets the tone and vibe of a nightclub. It fills a room with the right ambiance, so to run a nightclub you are likely looking into the perfect audio setup for your establishment. However, before you start playing your music, ensure to seek music licensing. Since songs are copyrighted, you are expected to pay a licensing fee to play them in your business.
A music license pays the musicians for the music you are going to play in your establishment. Without a license, you might face federal penalties and owe damages that range between $750 and $30,000, so endeavor to have the proper music licenses.
Live Performance/Entertainment License
If you intend to put together or host fun live events, there are licenses that allow you to do just that. Although you don’t have to put a live performance or entertainment license on your checklist immediately, they are a necessity if you intend on hosting events in the future.
This license comes from the licensing authority in your state rather than a national organization. Have it in mind that a music license will cover the rights to songs in live performances, so you still need one, but you need an extra permit to host a live event for your patrons.
Your city or local government should have an application for a live entertainment license online. Note that some applications might require additional documents, such as:
- A Certificate of Occupancy
- An inspection certificate
- A business certificate
- Your liquor license
Again, the required licenses and permits associated with opening a nightclub vary state-to-state and even town-to-town. Failure to acquire the needed licenses to open and operate a restaurant could result in fines, penalties, and possibly closure of the business.