Opening a restaurant in Los Angeles takes some time and planning, but if you approach the process in an organized way, you can simplify things and relieve the stress of what seems like bureaucratic inertia. You should try to take advantage of Los Angeles incentives and credits and get the minimum number of approvals necessary to get into operation and begin earning money.
Los Angeles is a fruitful location for all types of restaurants, bars, food trucks and other food-related businesses. Some of the highest rated restaurants in the world are in the city, but there are also many neighborhood restaurants serving a smorgasbord of comfort foods, gourmet specialties and local favorites. Many aspiring entrepreneurs find success by starting with a food truck.
The most important planning strategy is determining whether to buy an existing restaurant or to start from scratch. If you plan to make even minor changes to the building, you must first submit your plans, get them approved and get the work inspected before you can get open your restaurant or bar, according to permitplace.com. Both the City and County of Los Angeles are experiencing budgetary problems that slow the approval process, so you should allow plenty of time for delays.
This article focuses on the City of Los Angeles, but the County has similar regulations with some differences. Check out the state guidelines for California licenses and our Los Angeles City guidelines to get started. A map of Los Angeles City appears below:
The Top Local Requirements for Opening a Los Angeles City Restaurant
For any restaurant, you need a tax identification number, local business permit and city-issued health permit. You also need a health permit issued by the state. You should check the Los Angeles City Business Portal for specific information on registering your restaurant or food business. This one-stop resource can save hours of research.
IRS Tax Identification NumberYou must register your business with the IRS to get a number for your business to withhold payroll taxes and pay your own taxes for the business. You can register online for free to get your IRS Tax Identification Number.
Business License Registration
Basic registration of your business costs between $50 and $100 in the City of Los Angeles, but there are also fees based on your estimated payroll and gross income estimates. These can range from several hundred dollars to thousands of dollars. You will need the following information to register your business:
- Legal Business Name, DBA Name, Start Date, Business Location, Contact Information, Sales Tax Number, IRS Number and business structure information
- Details of structure, owner information and Social Security numbers
- Answers to questions that determine your eligibility to register your business
After paying the fees, you will be assigned a temporary business tax registration certificate to display in your restaurant. A permanent certificate will be mailed in about 4 weeks.
If you need to make changes to the building where you plan to open your restaurant, you must submit plans to the Los Angeles Department of Building and Safety (LADBS). Many existing buildings must be remodeled to comply with ADA regulations for handicapped customer access. You can get further help from the Concierge Services Program and business.lacity.org.If you need to make changes in a building to accommodate your restaurant,this fee calculator widget can help you calculate the costs of getting your construction approved.
Permits for Signage
You can find out essential information about signage and sign structures at ladbs.org. The cost of the permit and inspections may vary, but you can use the fee calculator to estimate your costs.
State of California Licenses
You will need to register for a California state payroll number, a California Seller’s License to collect sales tax, a restaurant health permit, Fictitious Business Name and an optional license to sell beer and wine or beer, wine and liquor.
Payroll Tax Account Number
Unless your business only uses partners/owners for labor, you will have to pay employees and register for a Payroll Tax Account Number to withhold state taxes. You can apply online for a California Payroll Tax Account Number at www.edd.ca.gov
California Seller’s Permit
The California Seller’s permit authorizes your restaurant to collect sales taxes, and you must register your business to do this. The Seller’s Permit number can be used to buy food for resale without paying sales tax. There are no application costs, but you could be held responsible for any state back taxes that you owe. You can apply for a Seller’s Permit at the www.cdtfa.ca.gov website..
Health Department Approval and Licensing
The City of Los Angeles requires a basic health permit that’s based on food safety and building safety issues. The costs of that permit depend on how extensive your renovations are and how many inspections are needed. You can use the permit fee calculator to determine the cost of the city part of your health permit, which depends on whether you need ADA modifications., new plumbing or an upgraded ventilation system.
The state license is issued by the Los Angeles Department of Environmental Health, which inspects the premises for food safety and environmental risks. The cost of a state health permit runs $904 to $1,365 for bars and restaurants, depending on the square footage and whether your business is a bar, bar with food or restaurant. You can review a restaurant checklist for more information on health permit approval criteria. The article about San Francisco licenses and permits provides some more details about the breakdown of health permit licensing costs.
You can apply for your health permit - and most other permits - at the lacity.org website. You will also need someone on your staff to receive certification as a food handling manager by taking a course and passing a food safety exam. The official fee for the class is $118, but the state also offers private instruction at $206 per hour. Each employee who handles foods or serves customers must earn a food handler card by taking a food safety course and passing an exam, but the card can be earned within 30 days of the hiring date.
Fictitious Business Name
If you plan to run your restaurant under a fictitious name instead of your own name - and most restaurant owners do - you need to check whether the name is available in the state of California. If the name you’ve chosen is available, you have to file for a Fictitious Business Name, unless your restaurant business is a legally registered corporation or uses your own legal name.
You can research names in advance to find out whether your choice is available by using the Los Angeles County Registrar Office. You can find the necessary application form at finance.lacity.org and fill it out online.
The cost of registering a Fictitious Business Name is $26 for a single owner and $5 additional for each partner. The fee registers your name for 5 years, but you must renew before the deadline to keep your name or change it in any way. The process is different for corporations. The costs of registering your restaurant name are covered in the cost of incorporating the business, which usually requires the help of an attorney, so we don’t cover that process in this article.
In addition to applying to trade under a fictitious name, you must publish your intention to do so in a local LA paper for 4 weeks, in case someone has a legally valid objection to your use of a particular name.
Getting a liquor license in Los Angeles can be difficult. Some city districts limit the number of licenses to reduce alcohol consumption, and the state often limits the number of licenses available for new restaurants. There is always an option to buy a license from a restaurant that’s willing to sell, but you have to pay a premium that’s based on market forces. For example, full-service on- and off-premises liquor licenses can run as high as $400,000.
Relax, though, because the usual price for a state-issued Title 41 license - beer and wine on premises - runs $650, according to permitplace.com. The cost of a Type 47 license - liquor, beer and wine on premises - runs $12,000 when purchased from the state of California.
Some districts offer conditional licenses that work as long as the restaurant owner follows the rules of the local governing or zoning authority. Conditional Use Permits are available for $8,000 for a standard review and $14,500 for an expedited review. You can further information about license types and costs at abc.ca.gov. It might also be helpful to hire an attorney or a liquor-license broker to expedite the approval process.
Other Options for Your Restaurant
Don’t be in too big a hurry to get everything to make a big splash. Successful restaurants buld their customer base gradually, making sure that each area performs successfully before adding new options. You don’t need to get a music license, outdoor seating permit or liquor license immediately. You might start out with beer and wine until you can assess whether you can justify the added expense of a liquor license.
The most important thing is to stay positive and develop an organized plan. You might be able to negotiate a deal with your landlord to reduce the rent while you make repairs and get the necessary permits to open. The City of Los Angeles offers many incentives for new restaurants that help to compensate for the slow approval process.
Use the waiting time to refine your restaurant concept, build social buzz for your projected opening date and plan a grand opening that will get you started on a high note. Try to schedule your permits within the time you’re waiting for building approval, a health permit or 4-week publishing period of registering your Fictitious Business Name.