Food and drink · LLC guide · updated
How to start an LLC for a restaurant
Restaurants sign long commercial leases, buy expensive equipment, hire staff early and serve the public every day. Many have personal guarantees on the lease, but an LLC still keeps slip-and-fall claims, illness claims and vendor debts with the business. Liquor licenses, health permits and the lease are issued to the entity.
Our registered agent is optional: $74.25 a year, the same at renewal. Questions first? Ray or Vinny picks up at (954) 470-8356.
- EIN
- Food service permit
- Liquor license
- Sales tax ID
- Workers' comp
Restaurant businesses in the U.S.
Source: U.S. Census Bureau, County Business Patterns 2022 (NAICS 722511) and U.S. Census Bureau, Nonemployer Statistics 2022 (NAICS 7225), the latest U.S. totals.
Why restaurant owners form an LLC
Slip and fall
Wet floors and crowded dining rooms make premises injuries the most frequent claim.
Liquor liability
Many states let injured people sue the place that served a visibly drunk guest (dram shop laws).
Commercial lease
A 5 to 10 year lease is the largest debt most owners sign. Negotiate a capped or burn-off personal guarantee.
An LLC keeps the company's debts and claims away from your personal assets when you run it as its own business: its own bank account, contracts signed in its name, and no mixing of money. It does not cover your own negligence, and lenders often ask for a personal guarantee. Insurance comes first.
Licenses and registrations for a restaurant
Federal items link to the agency's own page. State and local rules vary, so pick your state at the top for your state's business portal. Tick items off as you go; the list remembers your progress on this device.
- We do thisForm the LLC and get its EINAlmost every registration above asks for the company's legal name and EIN, so this comes first. We file the LLC with your state for $123.75 plus the state fee, and can get the EIN for $41.25; the IRS also issues it free online.
Insurance and taxes to plan for
Insurance
- General liability
Covers customer injuries and food illness claims.
- Liquor liability
Required by many states and landlords if you serve alcohol.
- Workers' comp and property
Workers' comp is required with employees in nearly every state; property covers the build-out and equipment.
Taxes
- Tip reporting
Employers report tips on payroll and may claim the FICA tip credit (Form 8846) on tips above the minimum wage. IRS / agency page
- Sales tax on food and drinks
Prepared food and alcohol are taxed in most states, sometimes at a higher local rate.
If you buy the building, hold it in a separate LLC that leases to the restaurant. If you own a second location, many owners give each location its own LLC so one failing lease does not take down the other.
Forming the LLC itself: 7 steps in every state
- 1. Check the name
- 2. Name a registered agent
- 3. File with the state
- 4. Sign an operating agreement
- 5. Get an EIN
- 6. Open a bank account
- 7. Keep it in good standing
The filing office, fee and yearly report change by state. Open your state's step-by-step guide.
What it costs to form a restaurant LLC
| Cost | File it yourself | With Vermilion Vitez |
|---|---|---|
| State filing fee (paid to the state) | $35 to $520 | $35 to $520 |
| Filing service, operating agreement included | $0 | $123.75 |
| EIN from the IRS | $0 | $0 yourself, or $41.25 if we get it |
| Registered agent, per year (optional) | $0 if you serve yourself | $74.25 |
State fees as charged at our checkout. Industry licenses, permits, bonds and insurance above are separate and set by each agency. Checkout shows the card processing fee before you pay.
Frequently asked questions
Do restaurant owners need an LLC?
It is not required, but the risks of injuries, illness, alcohol and a large lease make it the standard starting point. Landlords and liquor boards expect a business entity.
Can the LLC hold the liquor license?
Yes. Liquor licenses are usually issued to the business entity, and the state will run background checks on the owners. Changing owners later can require approval, so set the ownership up correctly at the start.
Will the landlord still want a personal guarantee?
Usually yes for a new restaurant. Try to cap it at a set number of months of rent or have it expire after a period of on-time payments.
What licenses does a restaurant need to open?
A business license, a food service permit from the health department, building and occupancy approvals, a sales tax registration, and a liquor license if you serve alcohol. Your city's business portal lists the local ones.
How much does it cost to form an LLC for a restaurant?
Your state's filing fee ($35 to $520 depending on the state) plus $123.75 if we file it, with the operating agreement included. Industry licenses, bonds and insurance are extra and set by each agency.
Is this page legal or tax advice for my restaurant?
No. It summarizes public rules in general terms, with links to the agencies that set them. For your situation, talk to a licensed attorney or CPA, or book a free call with us.
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Have us file your Restaurant LLC
$123.75 plus your state's filing fee, with the operating agreement included. Checkout shows the full total, card processing fee and all, before you pay.
Rather talk first? Call Ray or Vinny at (954) 470-8356.