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How to Open a Bar in California

by Scott Damon ; Updated September 26, 2017
A successful bar in California can be profitable indeed.

Owning a bar can be quite profitable in California. From the glitz of Hollywood to the rolling hills of wine country, people are willing to pay for the atmosphere and social settings alone. Throw in the fact that the profit margin on many drinks is quite high, and you could have yourself a very successful business. But before pouring that first glass of merlot, there's plenty of hard work to be done to open your bar in the Golden State.

Form a corporation through California's Secretary of State and Franchise Tax Board. This will allow you to separate the bar's books from your personal finances. This will also help you establish business credit, and allow you to take advantage of certain tax benefits that corporations have that individuals do not within the state. These benefits include tax credits of up to $37,740 for each qualified employee over five years, and sales tax credits on purchases of up to $20 million for certain equipment needed to start a business.

Obtain a business license, if the area in which you plan to the open the bar requires it. Los Angeles County, for example, has specific requirements (detailed on its website), including that a bar needs a special license if it plans to serve food.

Get the proper liquor license through the California Department of Alcoholic Beverage Control. License options include temporary, beer and wine, and a full spirit license.

Secure a location for your bar. For instance, if you want to open a college bar, you'll want to be close to a campus. When securing the location, try to negotiate favorable terms, such as a free month's rent, or a short-term contract. This will help keep expenses low and add flexibility as you get the business off the ground. Contact a California commercial real estate agent to who knows the area to help you with your search.

Tailor the location to your desired tastes. This cost may vary depending on your bar's theme and the location's previous tenant, but try to keep expenses low until the doors open. Check with the California State License Board to ensure the contractors and other professionals you're working with are indeed licensed.

Hire excellent staff. Workers should have previous experience in the California bar industry or an obvious desire to learn the ropes. Depending the bar's offerings, you may need to hire managers, assistant managers, bartenders, waitstaff, chefs, line cooks, dishwashers and bus boys. Contacting California restaurant and bartending schools is a great way to find qualified workers.

Promote your business. Create an advertising budget and spend it on newspaper, radio and local magazine ads. Hiring a local advertising agency that is familiar with the area and the desires of Californians can go a long way into driving business to your bar. Also, create an website, and pages on social networking sites. Put up a clear sign that people can see from a distance. Offer promotions for first-time or customers. And don't forget the promotion bars are known for: happy hour. Be sure to offer enticing drink and food specials during the early hours of the evening.

Stay on top of the California bar business, paying particular attention to changes in state law that could help or hurt your establishment. For instance, the California Restaurant Association keeps tabs on legislative changes within the state. Join the association, or read its website regularly. Maintain your advertising and promotions, and keep quality standards high.

Tips

  • Promote safe driving practices. Encourage designated drivers, provide phone numbers for cab companies, and keep patrons' keys if they are too drunk to drive.

About the Author

Scott Damon is a Web content specialist who has written for a multitude of websites dating back to 2007. Damon covers a variety of topics including personal finance, small business, sports, food and travel, among many others.

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