Tuesday, July 3, 2007

Licenses and Approvals

Tony Clarke posted this comment: "I am also trying to start my own brewery although I am in the infancy of planning. I'm very interested in a complete list of what licenses you need to operate a brewery in California?"

This is a great question, and this is a big part of why I started writing about opening a brewery. There's a lot of hoops to go through, so hopefully this will help Tony and others start up their own breweries as well. This is what I've had to deal with so far, so it shouldn't be deemed a complete list, especially if you're from another state. Cities vary on what is required as well.

I'll break it up into categories, the main ones being general licenses that many businesses that sell a product and have employees would need to have, as well as ones specific to breweries. I'll also break it up by local, state, and federal, along with those respective agencies.

General:

Municipal Government (city):
• Business License- Most cities require businesses to file a license to conduct business in their city.
• Building- You need a building permit if you're going to make any changes to the premises, such as electrical, plumbing, walls, and so on.

County Government:
• Fictitious Business License- If you are called anything besides the legal name of the person or organization (i.e. The Bruery LLC or Apple Computer Inc.), you need to file one of these. Essentially, you're informing the areas you are principally doing business that your conducting business under another name than your legal name. I registered "The Bruery" so I wouldn't have to write LLC on everything.

State Government:
• Sellers Permit- The State Board of Equalization requires those reselling products to file for a sellers permit so they can collect sales tax and keep tabs on you.
• Corporations / LLC's / Limited Partnerships - You'll need to file Articles of Organization / Articles of Incorporation with the State. Keep in mind LLC's and Limited Partnerships have to pay $800 a year "fee" in California. Many other states don't have fees beyond the document fees. Make sure to research what choice of entity will work the best for your situation.

Federal Government:
• IRS Employer Identification Number- If you're not running the business as a sole propietorship, you'll need an EIN. It's basically the equivalent of a Social Security Number for tracking the income of the business.

Brewery Specific:

Local Government:
• Planning- You may need a Conditional Use Permit (CUP) for the use, and it depends on the city and whether you want to run a tasting room or sell on site. Check with the planning department first before signing a lease. I'll need a CUP for a tasting room, but I don't need one if I just stick with brewing and distribution without on-site or off-site direct sales. I decided to not apply for the CUP until after I begin brewing, as they tend to take a few months and I didn't want a tasting room to hold me up.
• Water District- You may need to inform the water district of the use. My water district doesn't seem to care as I'm a fairly modest in my water demand.
• Sanitation District - You'll need to inform the sanitation district of the use, and possibly get a permit through them before doing any work to your sewer connection. Research this before signing a lease-- there are many costly devices (i.e. clarifying tanks, sewage processing plant, etc.) the sanitation district could require of you, and it would be best to avoid these areas.
• Fire Department - You will likely have to get an inspection by the fire authority. They will check that you have the required amount of fire extinguishers, that no combustables are being stored improperly, and probably check out the boiler and/or direct fire burner on the kettle. You may need to lease a building that is sprinklered. The building I leased isn't sprinklered, but it wasn't a problem as the cut off is at 6,000 s.f. of leaseable space, and I'm a little over 5,000.

County Government:
• Health Agency- You'll need a license from the County Food Health Agency, Environmental Health Agency, or whatever your county calls it. For their purposes, a brewery is a wholesale food processing facility, so you'll be held to the same standards as caterers, granola bar manufacturers, and so on. They have fairly rigorous standards, probably more so than any other agency if everything else is planned correctly.

State Government:
• Alcohol Beverage Control- You'll need an alcohol license. In California, the small brewery will get a Type 23, which is Small Beer Manufacturer. A brewpub can get the same license, or they can get a Type 74. It takes 31-90 days (count on 70-90, or more if documents weren't filed timely) to get the license from the time it is properly filed.
• Board of Equalization, Excise Tax Division- You'll have to post a bond with the state, just in case you decide not to pay your excise taxes. The minimum bond is $1,000, which you can write a check for or get a surety company to post a bond. The surety will cost about $100 a year. California excise taxes are 20 cents per gallon of beer sold, so it adds up.

Federal Government:
• Alcohol and Tobacco Tax and Trade Bureau (TTB)- The TTB is the excise taxing authority for the Federal government, but this agency also reviews other aspects outside of taxation, such as label approval and environmental review. My experience has been positive with the TTB. You'll have to post a bond with the TTB also, the minimum being $1,000. You can use a surety for this also, or just write a check for the full $1,000. The Federal excise tax rate is $7 per barrel for the first 60,000 bbl per year and $18 per barrel after the first 60,000 barrels.

I'm fairly sure this is a complete list, but I'll post as I remember / learn about others I have to get.

1 comment:

Tony said...

Thanks for the info. I'm finishing up my market research and pro forma and hope to be business plan complete by the end of the year. I'll be checking in from time to time to see how it's going...

Tony