Baltimore, one of the largest cities in Maryland and also one of the largest seaports in the US, is a true meeting place for the world’s different cultures. It is also referred to as a “city of neighborhoods”. The dining scene in Baltimore is equally appealing and diverse as this selection of cultural restaurants demonstrates.
Baltimore’s breathtaking view and sub-tropical climate echo the ambiance and warmth of the restaurant you want to open. Armed with the clear vision and confidence bred from many years of food service experience, you can certainly carve a niche. Turning your dreams into reality requires persistence and passion; licensing, planning, permitting and inspections can take a year or more than that to complete.
The legalities Required to Open a Restaurant in Baltimore
Before opening a restaurant in Baltimore, it is essential to take care of the administrative and legal tasks before jumping into the process.
Insurance
Below are some types of insurance for Baltimore restaurateurs to consider:
- Workers’ compensation insurance is mandatory in Baltimore, Maryland. It helps employees who fall sick during the job to cover healthcare expenses and missing wages.
- General liability insurance helps you in case you are fired because of a customer complaint, injury, or property damage, among many other types of lawsuits.
- Commercial property insurance helps you in repairing the physical location and the equipment in it if it gets damaged.
- Business income insurance can help you in recovering lost income due to theft, fires, or wind disasters.
- Business insurance is necessary to safeguard your business and assets from the occurrence of unforeseen circumstances, like natural disasters and personal injury lawsuits.
EIN
To get permits, and be able to hire employees, every business needs an Employer Identification Number also known as EIN. Applying for an EIN is not a difficult task; it can be done via fax, online, or mail. Most applicants will also likely choose to take the online EIN application option, as it is much quicker to do than to fax and print or mail an application. But it should be done in one concurrent session.
Hence, make sure to prepare all paperwork and information. The application can be found on the IRS website, including all the restrictions and instructions.
Permits and Licenses Required to Open a Restaurant in Baltimore, Maryland
Like any other state, Baltimore has its requirements around the permits and licenses required to open a restaurant. Some of the licenses are administered by the state, while some of them are done on a local level.
Below are some licenses required to open a restaurant in Baltimore:
- Business License
Why do you need it and what is it?
A business license is one of the first licenses that you need as soon as the groundwork for your business is laid out. Also known as the business tax certificate; it supports the tax compliance of your business.
How to get a business license in Baltimore, Maryland?
In Maryland, the county or city you live in controls business licenses. If you run a restaurant at multiple locations across counties and cities, it is important to get a business license for each business in various jurisdictions. To get a business license in Baltimore, you need:
- An EIN
- Business name
- Address and contact number
- A proper restaurant business plan
- A COI for your business insurance policy
What is the cost of a business license in Baltimore, Maryland?
Baltimore, Maryland business license cost differs depending on the type, scope of business, and county. Business licenses in Baltimore need to be renewed and paid regularly, so check with the jurisdiction about how often you need to renew them.
License Name: Business, cost: $110 +, Link: Maryland one-stop
- Certificate of Occupancy in Maryland
Why do you need it and what is it?
A certificate of occupancy is a document that shows that your space is zoned for your type of business, as well as up to code, safe to use, and also up to date on its inspections and checks. Not every county will need them for new businesses. Only certain situations require them, like when you are doing major change in construction or converting the space from residential to business.
Always contact the local jurisdiction to determine if your project warrant is the certificate of Occupancy.
How to get a certificate of occupancy license?
The forms are available online, but if you want to get the certificate, your business location will need to go through the fire inspections, electrical inspections, plumbing inspections, and building inspections. Always check your local city or county’s building and safety department.
What is the cost of a certificate of occupancy?
Different counties charge different amounts, and they will also vary on the type of business. The fee will vary depending on the county.
License Name: Certificate of Occupancy, Cost: depends on the county, Link: check with the local or city’s small business department.
- Food handler’s license in Baltimore, Maryland
Why do you need it and what is it?
A food service license, also called an employee health permit, is needed before restaurants, vendors, or other types of food business can safely serve and sell food onsite. All these licenses ensure that every employee knows how to do their part to keep the diners safe from any food-borne diseases. They are also referred to as ServSafe, after the company that administers most food handlers’ tests, or also as Maryland Food Handler card.
How to get this license in Baltimore, Maryland?
Every employee who serves or prepares food in Baltimore must get their Food Handler’s License within 30 days of the hiring period- cooks, chefs, baristas, servers, and bartenders. General manager may not require this. For managers who already have their food protection manager certificate, getting a Maryland food handler card is not necessary. Some jurisdictions have their own food safety training standards and programs, so their employees are exempted from getting a food handler card.
To get the Food handler card, employees need to pass a test about food safety and preparation with a grade of at least 80%.
What is the cost of a food service license in Baltimore, Maryland?
Baltimore, Maryland state law requires a test and license not to cost more than $20, to make sure that anyone working in the restaurant can afford to get certified.
License Name: Food Handler’s License, Cost: up to $20 per employee, Link: Maryland Food Handler’s Training
- Food seller’s permit in Baltimore, Maryland
Why do you need it and what is it?
Any business that plans to sell concrete goods that are subject to sales tax needs a seller’s permit. This permit let them charge sales tax.
How to get the permit?
A permit can either be registered online or through SBA License and Permits Portal.
What is the cost of this License?
There is no fee to apply for a seller’s permit, but you need to ask to pay a security deposit to cover the unpaid taxes if the business eventually closes.
License Name: Seller’s permit, Cost: no charge, Link: SBA permits and licenses
- Liquor License in Baltimore, Maryland
Why do you need it and what is it?
This particular license is required for any type of business to serve and sell alcohol to its patrons. Since alcohol has an incredibly long shelf life and high markup, it’s often beneficial from a profit standpoint to sell alcohol.
How to get this license?
In Baltimore, liquor licenses are issued by the state. You must have a seller’s permit ready before you can apply for a liquor license. Once you have applied for the license, you must post a public notice of application on your business premises for 30 days. Some cases also require applicants to post a notice in the newspaper or notify their neighbors. They also need to show that the business is correctly zoned for an alcohol-selling business.
The department also goes through an investigation into the future business and also the applicant to see if they qualify. It takes about 40 to 100 days for a liquor license application to be processed, based on the type of application, so ensure that a timeframe is incorporated into your countdown to the opening.
These licenses are renewed on a yearly basis, so you must pay the renewal fee before time or your license will be expired.
What is the cost of a Liquor license in Baltimore?
A liquor license in Baltimore can cost up to $120- $520, Link- Maryland Alcohol Tobacco Commission
- Catering business license in Maryland
In Baltimore, Maryland, there are no specific catering licenses. However, caterers still need to obtain a liquor license if they will be serving alcohol. Food safety certifications are also needed like other food businesses.
- Food facility health permit in Baltimore
Why do you need it and what is it?
All restaurants should have their health permits before opening, and they must stick to safe food handling, preparation, and storage practices throughout their operation. This also helps in preventing food illness in people and also provides worker safety as well.
How to get this license?
In Baltimore, health permits are controlled by the city or county’s jurisdiction, so check with the local health department to find out the procedure. Unlike the liquor license and health permits which are not transferable. When you start a new restaurant, even if it is the space of the previous restaurant, you need to get a new health permit for your new venture.
When you are applying for a health permit, which can be done online as well depending on the city, you will need to get an inspection to ensure the practices and spaces that will fit with the health and safety code of Baltimore. If your business is determined to be safe to operate, you will receive your health permit.
What is the cost of this license?
The cost varies according to the city and county-based permits.
License Name: food facility health permit, cost: variable, but usually above $1000, link: check your local health authority for online application
- Employee health permit in Baltimore
In Baltimore, an employee health permit is the same as a food handler’s license. When opening a restaurant, it is important to select the right type of business entity and ownership structure. Then you might need to secure the funding for your business.
Business entity: When planning to start a restaurant, you need to select what type of business entity you will be building. Choose between a sole proprietorship, C corporation, S corporation, and partnership.
Ownership structure: Various restaurants approach profit and ownership differently. Some simply have just one owner with the others being employees. Some give investors a stake in the business while others operate as a co-op, giving all employees a stake in the business. Many businesses have owners and partners owning the business together. However, all employees are given a bit of profit share when the business exceeds a prearranged profit threshold.
You need to figure out what kind of profit-sharing and ownership structure makes sense for your business and work with a lawyer and accountant to draw up all the important contracts and paperwork.
Loans
It costs anywhere between $97,000 and 3 million to start a restaurant, and very few people have this much money lying around. Some of the options available for Baltimore restaurant owners include brick-and-mortar loans, SBA loans, alternative loans, merchant cash advances, crowdfunding, lines of credit, and turning to family and friends for financial assistance. They all vary widely in application requirements, how much you can take, repayment schedule, type of repayment, type of collateral you need, and how quickly you can receive funding.
How do you select the restaurant location in Baltimore, Maryland?
Choosing the right location for your restaurant is very critical. You need to do a lot of research on the demographics, and competition in your location and market, as well as actual size, space, history, and visibility. You could also opt to go location free by becoming a ghost kitchen.
If you plan to have a physical location for your restaurant, you can either lease it or buy a restaurant space, or you can build your restaurant from the ground up. Below are some additional criteria to focus on when evaluating a restaurant location to decide if it is right for you or not:
- Community
- Target market
- Ideal customer profile
- Real estate market conditions
- Size of the site
- Previous tenants
Naturally, the location of your restaurant and the layout of the space should bring life to your restaurant. If you are looking at opening a steakhouse, you might need your own building whereas if you are looking at serving tacos or sandwiches, perhaps just a food truck will do.
It is vital to keep in mind that your available square footage and location will also play a major role in your kitchen design and floor plan. If you envision creating a high-volume Italian concept with an open kitchen, you might need a larger footprint and the ability to knock down the walls for proper ventilation. Not all landlords will give you this leniency.
Steps to keep in mind before opening a restaurant in Baltimore:
Step 1: Write down your recipes and plan your menu. Decide how the kitchen needs to be set up, and what kind of glassware, etc. you want to use. Include incidentals specific to your restaurant like paper, cloth napkins, tablecloths, fondue forks, and bread baskets.
List the edible supplies required to prepare the menu as well as non-edibles, uniforms, cleaners, and others. Determine how many servers, support staff, and preparers are required to present the menu in the manner you envision. Using the menu you can calculate your daily operating cost and startup.
Step 2: Extrapolate the annual operating costs from the daily costs, divide the startup costs by five and add the results to determine your 1st year of operating cost. Choose the media outlets you want to employ to reach out to the market, and add the costs of special events, cost of promotions, and giveaways to project your advertising costs.
Determine how much profit you need. Add that, your restaurant marketing costs and operating, plus 25% to cover the emergencies. This is your total for 1st year of the budget, which gives the total to calculate how much food you must sell and at what price to succeed.
Step 3: Compile your business plan beginning with short biographies of your team and yourself, highlighting your experience and passion. Write about the concept in depth; your goal is to bring the ambiance to life and make the reader taste the food with your words. Identify the market you aim to reach and explain your strategy for reaching them.
Discuss why you choose to open a restaurant in Baltimore and give emphasis on the ways you will enhance the community. Think beyond exquisite cuisine and atmosphere; stress the jobs you want to bring to the community and also your plans for community involvement. Attach your details and budget for how you will reach your financial goals to complete your business plan.
Step 4: You must contact the Baltimore district office of the small business administration to investigate financing options for small businesses. 90% of new restaurants fail within the first 5 years of opening, the odds are no better in Baltimore and the primary reason is the same; insufficient funding.
You need a startup cost as well as an operating cost for a minimum of one year. If you don’t have the necessary financing, the SBA administers low-cost federal loans for fledgling entrepreneurs, assists in finding investors, and also secure loans and corporation lines of credit.
Step 5: Finalize the structure by registering your restaurant business. General partners and sole proprietors are required to adhere to the municipal code where the restaurant will be located and comply with Baltimore, Maryland’s tax laws. Limited partnerships and all corporate structures must register with the Maryland department of taxation and Assessments.
Step 6: Research the municipal food service, health, and zoning requirements previous to shopping for a location. Just because a building housed a restaurant before does not give assurance and meets the current standards. Inspect the property cautiously to ensure that you don’t face trouble with renovations from code violations.
Step 7: Schedule fire safety inspections and health with the municipality and obtain the required tax insurance and permits. You need worker’s compensation, unemployment, and business insurance and must apply to the internal revenue service to obtain an EIN and tax ID. The Maryland Department of Assessments and Taxation provides a comprehensive checklist and links to local licensing and taxation agencies on the website.
Step 8: Prepare your safety and health inspections by putting the finishing touches on your restaurant. The inspectors will expect to find the utilities on, all equipment in good working order, and edibles and inedibles stored properly. You are ready to open the restaurant once the municipality issues the permits and licenses.
Opening a Restaurant in Baltimore
Opening a restaurant is a huge undertaking with dozens of steps, mountains of paperwork, and overlapping requirements. Putting down a solid restaurant business plan and securing the funds for your restaurant are some of the initial things you need to do so that you can afford everything your business needs, whether it is permits, licenses, or any other legal document.
As you come near to the opening day, you can also start to peruse the restaurant technology options to find which combination of systems and products makes sense to help you set the operation up for success from day one.