Things to Know Before Opening a Bar or Nightclub

Opening a bar or nightclub is similar to opening any other type of business. However, there are added considerations due to the very nature of such an establishment. Many things that other businesses don’t have to think about, you do food, liquor, entertainment, etc. As a result, filing all of the necessary paperwork for a bar can be a time-consuming task. It can also be a costly mistake if you miss you something.

How to Opening a Bar or Nightclub

Here are the steps to opening a bar or nightclub that you should follow, including ways to verify you have all of the licenses and permits you need.

1. Create your business plan.

The best first step you can take is to create your business plan. There are many different templates available online, but the key aspects of a business plan are:

  • Target Markets
  • Business Goals
  • Analysis of the Industry (or Competitors)
  • Financial Outlook and Revenue Forecast

Having a finished business plan will allow you to better complete all of the other steps outlined below and is one of the most necessary pieces of paperwork you’ll need when seeking to fund.

2. Determine what you’ll offer.

A bar or nightclub has many options when it comes to services and amenities to offer its patrons. Here are a few things you should consider:

  • Will you offer food? If so, how robust will the menu be?
  • Will you want to get a full liquor license or just serve beer and wine?
  • Will you have a dance floor?
  • Will you have a DJ, live band or both?
  • Will there be a cover for people to enter your bar? Will there be any restrictions (except space) on who can and cannot enter?

Each of these elements will inform all of your decisions in the steps outlined below, including the size and type of space you’ll need, the types of licenses you’ll need and more. Making sure you have a clear understanding of the daily workings of your establishment before proceeding will make the process that much smoother.

3. Determine what type of equipment you will need.

Once you know the types of amenities you’ll offer, you’ll have a better idea of what types of equipment you might need. For instance, if you’re offering a full menu, you’ll need to find a space with a working industrial kitchen or a space that has room for one. Make a list of the necessary equipment with associated costs, including service contracts for any machine that requires upkeep.

4. Determine how many and what types of employees you’ll want to hire.

A bar or nightclub has more types of employees than many other small businesses. Many bars find it necessary to employ some type of security in the case of rowdy patrons. Also, if your club will have an entertainment component, you might want to hire a booker, someone whose job it is to find acts and promote shows at your bar to encourage patronage. Since you’ll be serving alcohol, you’ll need to be sure that your bartenders and wait staff comply with the state age requirement for dispensing and serving alcohol.

In addition to determining the number of employees, you’ll want to forecast salary and benefit costs. Make sure that you have a good idea of the current rates being offered in your area so that you’ll be competitive and attract top talent.

5. Determine how much money you need.

Based on the types of amenities you’ll offer, the equipment you’ll need and the number of people you’ll hire, as well as the type of space you’ll need, you should be able to accurately forecast how much money you’ll need to start your business.

This might also be a good time to determine what type of business you’ll have: LLC, partnership or corporation. Each offers its own benefits and drawbacks, but for legal reasons and tax purposes, it is important to make sure your business is set up correctly.

6. Investigate the required licenses and associated fees.

If you’re going to serve alcohol, you will need an Alcohol Tobacco Tax and Trade Bureau Alcohol Dealer Permit. This will be in addition to any liquor licenses you’ll need to acquire in order to legally operate in your state or city.

At the city level, you’ll need to apply for the following:

  • Place of Assembly permit
  • Place of Entertainment permit

If your business serves food, you’ll need to file for these at the city level:

  • Department of Public Health Permit
  • Food Plan Check
  • Bar and Tavern Permit

As a general business, you’ll need to apply for these city-level permits:

  • Business Property Tax Registration
  • Business Registration Certificate

And at the state level:

  • Business license (issued by your state’s Secretary of State Office)

To best determine which licenses are required in your state and for your business, check out Licenses and permits, which provides a clear report of required and optional licenses based on your search parameters.

Note: The names of these permits may vary by state/city, so it’s a good idea to pull together a comprehensive report before going in search of them all.

7. Set up your accounting for success.

All businesses need a Tax ID Number  (TIN) in order to file annual taxes with the federal government.  There are different types of Tax ID Numbers, including an Employer ID Number (EIN) for businesses with employees.

Additionally, you’ll want to have business insurance. Insurance will protect you from different forms of liability, including being sued by patrons or employees, as well as helping to reimburse you if any equipment is lost or stolen. It’s important to note that, in most states, business insurance is required for any establishment where there is contact between employees and clients.

You might also consider consulting with an accountant at regular intervals during the first year of your business. Checking in with a professional and having him or her review your books will make filing taxes at the end of the year a much simpler process. An accountant can also ensure that you have covered your bases in regard to taxes and fees, which will hopefully allow you to avoid any penalties.

In general, the process of opening your own bar or nightclub will be a time-consuming task, but the end result will be a business you can grow and nurture for years to come.

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