San Diego is famous for craft beer and fish tacos, but aspiring entrepreneurs will also find that the city is a big tourist destination with a culinary scene that embraces fast-casual dining, gourmet food trucks and trendy bars that redefine extravagant beverage concoctions using molecular mixology. Restaurateurs can’t afford to ignore the city’s commitment to physical fitness and healthy eating, but those are planning issues. This article is designed to help you get the necessary licenses and permits to get your food and/or beverage business up and running as quickly as possible.
City Permits for Your Restaurant
San Diego County is composed of San Diego City and County, where there are incorporated and unincorporated cities. The incorporated cities usually follow San Diego City licensing procedures, but the unincorporated cities often have their own regulations. There are also many neighborhoods and communities, some of which are also considered to be cities in their own right. You can consult this map of San Diego County to help with your planning:
You’ll have to check with the particular city where you plan to operate your business whether it requires business license registration. San Diego County doesn’t require registering your business, but many of the cities do. You have to comply with San Diego County regulations, however, if you’re located anywhere within the county.
Applying for a Federal Employer Identification Number (EIN)
All businesses must register with the IRS and get a an Employer Identification Number or EIN. Getting this number becomes your account for withholding federal income tax from employee pay and using as your account number for paying your estimated income tax for your business. You can register for free at irs.gov.
Registering for a San Diego Business Tax Number
In the city of San Diego and other incorporated cities of the San Diego County, you must apply for a business license and your Business Tax Certificate at cityapplications.com. You don’t need to apply if you live in an unincorporated city in San Diego County. Incorporated cities include Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Encinitas, Escondido, Imperial Beach, La Mesa, Lemon Grove, National City, Oceanside, Poway, San Diego, San Marcos, Santee, Solana Beach and Vista.
The basic cost of a business license depends on the number of employees. The cost of 1-12 employees is $34. The cost of registering a restaurant with more than 12 employees is $125 plus $5 for each employee, according to ajccpa.com. In some cases, there might be zoning fees, and there will be fees if you’re remodeling your building..
Getting Signage Permits in San Diego
You must check if you’re in an unincorporated city in San Diego County about local sign regulations and community guidelines. Any sign that you construct outdoors needs a San Diego City permit. Regulations and further information can be found at sandiego.gov.
There are various fees associated with a sign permit. These include the basic signage permit, which ranges in prices from $96 to $351 for each sign. The price depends on the type of sign, size and whether it’s electric. Other sign-related fees include a $10 mapping fee, a $20 records fee and a $275 maintenance fee if the sign isn’t properly maintained.
State Permits Required for Your Restaurant
There are multiple state agencies where you need to register your restaurant and pay licensing fees. These include getting your basic numbers for tax withholding, collecting sales taxes, filing for a Fictitious Business Name and getting health permits or a beer and wine or liquor license.
Registering for a Payroll Tax Account Number
If you hire any employees, you have to register for a Payroll Tax Account Number to withhold payroll taxes. You can apply for the number at www.edd.ca.gov. There is no cost of applying for a number.
Applying for a California Seller’s Permit
The California Seller’s Permit is needed to collect sales taxes for the state. You won’t have to pay a fee to get your number. You can apply for a Seller’s Permit at the www.cdtfa.ca.gov website. The permit also allows you to buy products for resale without paying sales tax.
Getting Your Health Department License
Applying for a license at the San Dego County Department of Environmental Health is one of the major permit processes in opening a restaurant. The first step is consulting with the department if you plan to make major changes to the building where your restaurant will be housed. If you do, you must submit the pans in advance for approval. When approved, you can begin construction and start with the other steps of licensing your restaurant.
You’ll receive a Plan Approval Sheet when you are ready to start the rest of the licensing processes. Health Permit licenses are based on the number of employees. According to sandiegocountry.gov, restaurants with 1-10 employees pay $753, and those with 11-25 employees pay $891. If you plan on hiring up to 100 employees, you pay $1,059. Restaurants with more than 100 employees pay $1,930.
In San Diego county, you’ll have to get a final inspection of the construction, a health inspection with all equipment in place, a copy of your menu and proof of food handler training for your manager and each employee who handles food or serves customers. Food handler training for a designated manager puts responsibility for the safety of all food in restaurant operations under his or her direct supervision. A manager, owner, chef or other employees can serve as food safety manager.
Food Safety Manager Certification courses are held at various locations throughout the San Diego County, and you can find Food Handler Certification courses for the rest of you staff at more than two dozen locations that are posted on the website. The certifications are good for three years, and you have 30 days from the date-of-hire to get a new employee certified.
Filing for a Fictitious Business Name
If you register your business as a corporation, you will generally take care of filing for a Fictitious Business Name as part of the incorporation process, usually under the guidance of an attorney. However, sole proprietorships and partnerships need to file a Fictitious Business Name application before they open a bank account in the restaurant’s name or enter into any official legal matters before any court.
Fictitious Business Names are names other than the owner’s legal name, such as “Cheesy Does It,” “Wildfour” or “Lettuce Entertain You.” No name is so creative that others haven’t thought of it, so you must check with the state’s database of registered names to see if your brilliant name is available in California. You can research your choice at the California Secretary of State database.
You must also run a notice of your intention to do business under your Fictitious Business Name for four consecutive weeks in a local newspaper in San Diego City, County or an unincorporated city of San Diego County. You’ll have to pay an advertising fee that varies, depending on the newspaper. The cost for filing is $26 for the first owner or partner and an additional $5 for each other owner of the business. The registration is good for three years.
Getting a Liquor License in San Diego County
Getting a liquor license in San Diego can be a complex process because the rules can be confusing. It might be best to hire a liquor license agent or broker if your area doesn’t have any state licenses available. State-issued liquor licenses in California are limited to certain quotas by region. If no licenses are available, you can buy a license on the open market, but the price rises dramatically, based on market value.
You can get a Type 41 license - if it’s available from the state - for as little as $650, but that only allows you to sell beer and wine on the premises. I liquor license - Type 47 - allows you to sell beer, wine and liquor on the premises. The cost of a state-issued Type 47 license is $12,000. Either of these licenses might be unavailable through the state for your location. You can contact abc.ca.gov to get further information and additional information about qualifications for liquor license applicants.
The costs of an open-market license can run quite a bit higher. For example, a full liquor license that allows the sale of all beverages on and off the premises can run as high as $400,000 on the open market. If you’re on a tight budget, you might settle for a beer and wine license until you begin earning a profit to cover some of your initial startup expenses.
Licenses for Your Restaurant that Can Wait
San Diego offers a thriving culinary scene for restaurants, bars and food trucks. Some entrepreneurs try to do too much too soon, instead of building their business gradually. You probably don’t need to get a music license, liquor license, live entertainment license or an outdoor seating license. However, you might want to consider outdoor seating in San Diego because it dramatically increases your seating capacity in what is generally considered the best climate in the United States.
You can also do well in San Diego by sticking to healthy foods and beverages because San Diego is considered America’s healthiest city. Regardless of your plans, it makes sense to start with the minimum licensing necessary to start earning a profit. Once your business builds a customer base, you can consider adding other features that require additional licenses.