Nightclubs are very lucrative business opportunities. But before you can start your own, there are some challenges you need to face head-on. It takes some time to open your own nightclub, requiring you to collect substantial capital and get all the licenses and permits in order.
In this article, we’ll walk you through all the technicalities of obtaining licenses to legally and successfully start your nightclub business. After starting, you can work with Hype Designs for designing and developing the most essential products for your nightclub business.
Licenses and Permits Required to Open a Nightclub
Nightclubs are heavily regulated, and understandably so, considering the nature of the business. To make sure you don’t run into issues down the line, here are the licenses and permits you need to obtain before starting your nightclub.
State Registration
Before you can put up and run a business, you’ll need to register your business with the appropriate state agency, depending on where you intend to operate your nightclub, which will be the secretary of state in your location. This step is important to register your business name and obtain legal liability protection.
Business Licenses
Every business in the United States needs a business license to open and operate. You can apply for this at the city level, which requires periodic renewal that’s usually once a year. This you can obtain from your local city or county.
Resale Permit
A resale permit is required if your nightclub will be sourcing supplies and ingredients wholesale. Obtaining this will allow you to buy your club’s operational necessities while avoiding sales tax on wholesale purchases.
These costs are passed onto your customers when they buy alcohol or food from your establishment. You’ll then need to report and turn over the sales tax you collect to your state.
Alcohol Licenses
Serving alcohol is the bread and butter of a nightclub business. It can also be part of a more expensive and luxurious offer such as bottle service. As a liquor-related venture, you’ll need to obtain a specific alcohol or liquor license from Alcohol Beverage Control (ABC) boards.
There are different types of alcohol licenses, depending on how the liquor is sold and consumed. For a nightclub, you’ll need what’s called an on-premise, on-sale, or on-license, which allows you to sell alcohol that will be consumed in your establishment.
Certificate of Occupancy
Right after you’ve built your nightclub establishment, you’ll need to apply for a certificate of occupancy. This document notes the purpose of your business and is a confirmation that you’ve passed the criteria required for building safety. Before starting the process of obtaining a certificate of occupancy, make sure your building is up to code.
Nightclub Signage Permit
For marketing and publicity purposes, nightclubs will have to plaster their business name on a sign displayed right outside their establishment. But before you can be allowed to do this, you’ll need a signage permit.
The process and requirements for this will vary from state to state, and the specific zoning rules in your location. But generally, most authorities regulate the size, location, lighting, and display of your signage.
Live Performance/Entertainment License
Your nightclub may want to host live performances or entertainment events for your guests. Regardless if you plan on doing that as soon as you open or later down the line, you’ll need to obtain the proper license.
Depending on the requirements of your local licensing authority, you may need the following to obtain a live entertainment license:
- Certificate of Occupancy
- Business Certificate
- Liquor License
- Inspection Certificate
Music License
Even if your nightclub doesn’t plan on hosting live performances, you’ll still need a license to play music inside your establishment. This is because songs are protected by copyright, and should you want to play them in your venue, you need to pay a fee so the artist or musicians are compensated.
Hot Food and Drink License
To serve any form of hot food or drinks at your nightclub, the Licensing Act of 2003 requires that you obtain permission from your local authorities. This comes in the form of a hot food and drink license. When applying for this, make sure you properly look into what the license covers. Nightclubs will need one that allows them to serve hot food and drinks late at night.
Local Health Permits
Because you’ll be serving food and beverages in your nightclub, you’ll need a health permit from your local health department. Typically, this will require your employees to pass a food handler’s course and your building to pass periodic health inspections.
Seller’s Permit or Sales Tax License
A seller’s permit also called a sales tax license in some states, registers your business for it to be identifiable for tax purposes. You can apply for this with your state’s tax authority. Do note that a seller’s permit is required to obtain a resale permit.
Employment Information
Of course, your nightclub will need to hire employees to work security, run your bar and kitchen, and serve your customers. For this, you need to meet several requirements to comply with employment and labor laws, as well as fair labor standards.
These include paying taxes on behalf of your employees, obtaining workers’ compensation insurance, and posting workplace safety and procedural posters in your establishment.
Nightclub Insurance
With the highly regulated nightclub scene also comes strict rules on insurance coverage. You might need to obtain insurance that covers your staff, building, and guests to ensure a safe and secure environment. The rules regarding nightclub insurance will vary per state.
Check with Your Local & State Government for Additional Permits
The permits and licenses required to open and run a nightclub will vary from city to city and state to state. In addition to the ones we listed above, your local government may have additional requirements. Make sure you check with your local authorities to find out what you need to start your nightclub business.
