How to open a coffee shop in California: A legal checklist
Learn how to open a coffee shop in California with our step-by-step legal guide. We cover the basics of permits, licenses, inspections, and more.
Starting a coffee shop in California can be an exciting venture, but navigating the legal requirements is essential to ensure your business operates smoothly and complies with state, federal, and local laws.
This guide outlines the necessary steps to legally open your coffee shop in California.
1. Create a Business Plan
Although not a legal requirement, a solid business plan is the foundation of your coffee shop. It should outline your goals, startup costs, and strategies to attract customers while meeting regulatory obligations.
2. Choose a Legal Business Structure
Decide on a legal structure for your coffee shop:
- Sole Proprietorship: Easy to set up but doesn’t offer personal liability protection.
- Partnership: Ideal if you’re starting with a co-owner.
- Limited Liability Company (LLC): Offers personal asset protection and flexibility.
- Corporation: Best for businesses planning to scale significantly.
If forming an LLC, corporation, or partnership, you must file with the California Secretary of State (SOS).
3. Register Your Business Name
If your coffee shop’s name is different from your legal name or business entity name, file a Fictitious Business Name (DBA) with your county.
4. Obtain Federal and State Tax IDs
- Federal Employer Identification Number (EIN): Required for tax purposes and hiring employees. Obtain it from the IRS:
- California Franchise Tax Board (FTB): Register for state income taxes:
5. Secure Necessary Licenses and Permits
State-Level Requirements:
- Seller’s Permit: Required to sell taxable items like coffee and pastries:
- Food Safety Certification: At least one employee must pass a food safety certification exam, and others must have Food Handler Cards:
- Alcohol License (if serving alcohol): Apply through the California Department of Alcoholic Beverage Control (ABC):
Local-Level Requirements:
- Business License: Apply with your city or county.
- Health Department Permit: Local health departments inspect your premises for food safety.
- Zoning Approval: Confirm your location complies with zoning laws.
- Building Permits: Required for any renovations or construction.
6. Comply with Employment Laws (If Hiring)
- Register with the EDD: File with the California Employment Development Department (EDD) if you’re hiring employees:
- Wages and Working Conditions: Follow state labor laws from the Department of Industrial Relations:
- Workers’ Compensation Insurance: Maintain coverage:
7. Understand Proposition 65
Under California’s Proposition 65, businesses must warn customers if their products expose them to harmful chemicals:
8. Obtain Insurance
- General Liability Insurance: Protects against accidents and liability.
- Workers’ Compensation Insurance: Required if you hire employees.
- Property Insurance: Covers damage to your shop.
9. Pass Inspections
Before opening, your coffee shop must pass inspections:
- Health Department: Ensures compliance with food safety standards.
- Fire Department: Confirms compliance with fire safety regulations.
10. Set Up Financial Accounts
- Open a business bank account.
- Set up a point-of-sale (POS) system for handling transactions.
- Register for state and local sales tax collection.
11. Utilize Resources
- Small Business Development Centers (SBDC): Free advice and guidance:
- CalGOLD: Identify local, state, and federal permit requirements:
By following these steps and utilizing the provided resources, you can successfully navigate the legal process of opening a coffee shop in California. For personalized guidance, consider consulting a lawyer or your local SBDC.
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Pat Sharyon
Pat Sharyon
Pat Sharyon
