Providing alcohol at your events can be a lucrative addition to the services you already offer as a venue. Renters and guests see it as a bonus on your list of amenities and will be relieved that they don’t have to provide their guests with alcohol themselves.
If you do decide that selling alcohol is right for your event venue, make sure you research the requirements associated with buying from distributors and selling to guests. Applying for a license, paying taxes on the sale of alcohol, and maintaining stock are just a few of the topics to familiarize yourself with before you start providing libations.
As with any added commitment, you want to make sure you’re ready to take on the extra responsibility.
Applying for a License
In Illinois, the sale of alcohol in its various forms is controlled by the counties in which a business is located. However, you’ll be required to purchase a license from the state in addition to your local municipality or county.
First, you’ll want to head to your local county’s website for information on licensing fees, ID requirements, documentation, and conditions for selling. If you meet all requirements, apply for a license with your county and begin the inspection and verification process. Once approved, you’ll be able to apply for a state liquor license.
For information on obtaining a state liquor license in Illinois, check out the resources available from the Illinois Liquor Control Commission. The state application will require you to provide a photocopy of your local license, your sales tax number, and your Federal Employer Identification Number (FEIN).
There will likely be a waiting period prior to receiving your license, so make sure to plan accordingly before promising any services at upcoming events.
Generally, a retail liquor license from the state of Illinois that allows you to sell alcohol for consumption on your premises will cost around $750. Your local license can cost between $150 and $250. Application fees will also likely apply in both cases.
Renewing Your License
You’ll need to renew your state liquor license once every year. The renewal rate for your local license may vary by county. Of course, whenever you renew your license, you’ll need to pay the associated licensing fees, so make sure to build this expense into your operational budget.
Your state liquor license can be renewed online via My Tax Illinois. This is the same site where you’ll submit your sales tax documentation and payments. When renewing, you’ll need to fill out an electronic application, submit the required documents, and pay the necessary fees.
Because every local liquor license will have different renewal requirements, you’ll want to find out how you’ll be notified of license expiration and what the preferred renewal method is when you initially apply.
In order to be approved for a state liquor license, you’ll need to provide proof of liability insurance. This will cover any liability involved with selling alcohol for consumption on your property.
While nobody wants to be involved in a lawsuit regarding altercations or injuries due to alcohol involvement, it’s something you should protect yourself from regardless of the state’s requirement.
Liquor liability insurance covers your event venue in the case of litigation fees, attorney fees, and court costs. It’s in your venue’s best interest to protect yourself and your employees from financial hardships that may result from a lawsuit.
Sourcing Alcohol from Vendors
In Illinois, all licensed retailers are required to source all alcohol sold from an Illinois-licensed distributor. That means that any time you run out of inventory, even if it’s just a single bottle, you have to purchase a replacement from a licensed distributor. You can’t run down the street to buy from your local liquor store.
While this might initially seem like a major disruption, it’s just a part of managing inventory and running an event venue. Licensed distributors are fairly flexible on delivering to venues, and finding a reliable, reputable distributor who can offer regular deliveries shouldn’t present too much of a problem. Just keep in mind that distributors are allowed to charge for deliveries, including fuel surcharges.
You also don’t have to stick to just one distributor. There are a variety of distributors available, from craft beer and specialty wines, to well-known spirits that guests will expect to see on your shelves.
In order to ensure your bar is well-stocked and prepared to handle the capacity of sales at any given event, you’ll want to implement an inventory management procedure for your alcohol. Tracking your inventory will prevent you from purchasing unnecessary replacement bottles and also keep you from running out and upsetting guests.
The best way to track inventory is to purchase point of sale (POS) software that deducts products from your inventory as you make a sale. While this isn’t always a fine science when it comes to pouring shots or adding hard liquor to mixed drinks, there are usually manual entry options that allow you to make any necessary adjustments.
Look for a POS system that allows you to track all sales, even rental deposits, to simplify the process. You’ll be able to enter each inventory item specifically into the software to track how much stock you’ve sold and how much remains on the shelf. You can also use this information to provide yourself with hard data regarding what alcohol your guests typically prefer, saving you time and guesswork when placing orders.
Paying Taxes on Liquor Sales
The state of Illinois charges an excise tax on alcoholic beverages by the gallon purchased that you will be responsible to pay. While tax rates are subject to change, the current rates are 6.25% in addition to the general sales tax.
As a business, you do have the option to pass this tax along to your guests when they purchase a drink by adjusting the prices per beverage. If this makes things too confusing, you can also charge a flat rate and keep track of how much you owe in taxes separately through your POS software.
You’ll also need to submit sales tax filings on alcohol sales on a monthly basis via My Tax Illinois. For help in calculating sales tax rates or to make sure you’re complying with filing regulations, don’t hesitate to reach out to an accountant or tax professional.
Whether or not you choose to sell alcohol to your venue guests is entirely up to you. Though the process of obtaining licenses, tracking inventory, and filing taxes can be overwhelming, the sale of alcohol does add a frequently sought after amenity to your venue’s list of services. Just make sure you’ve done your research, maintain compliance with regulations, and enlist the help of professionals or advisors whenever needed.