How to Start a Liquor Store | TRUiC (2024)

Start a liquor store by following these 10 steps:

1. Plan your Liquor Store
2. Form your Liquor Store into a Legal Entity
3. Register your Liquor Store for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Liquor Store
6. Get the Necessary Permits & Licenses for your Liquor Store
7. Get Liquor Store Insurance
8. Define your Liquor Store Brand
9. Create your Liquor Store Website
10. Set up your Business Phone System

There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your liquor store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?
• What will you name your business?

Luckily we have done a lot of this research for you.

What are the costs involved in opening a liquor store?

The capital required for start-up costs vary depending upon a number of factors. Location, staffing costs, beginning inventory, and licensing fees are all defining factors in how much you’ll need for your initial investment. BevMax requires that their investors have a minimum of $150,000 in liquid capital to properly open a franchise location. Entrepreneurs have reported start-up costs as high as $1 million for opening larger establishments.

What are the ongoing expenses for a liquor store?

A majority of your earnings will go back into re-stocking the store’s shelves. Investing in accounting software from the get-go will assist you in developing an efficient system for keeping up with your inventory.

Your second largest ongoing expense is payroll costs. You’ll also have annual licenses to renew, as well as insurance costs, which can be high in this line of work. A good portion of your monthly budget should go towards ongoing marketing campaigns, hopefully ensuring a steady flow of patrons.

Who is the target market?

As a rule, your preferred customer is anyone, over the age of 21, who enjoys a tasty beverage and prefers to do business with smaller, local establishments over the large retailer. Before investing in your retail space, conduct research to determine the competition in the areas you’re considering. What types of products do they sell and how successful is their business? What are the likes and dislikes of consumers in the area? This will help you determine if there’s a specific niche you should be targeting and what to stock the shelves with.

How does a liquor store make money?

Liquor stores make money through the sale of each beverage. Some are sold by the bottle, while others are sold in greater quantity, as determined by the distributors.

How much can you charge customers?

Pricing varies from product to product and is defined by the size, type of alcohol, and distributor prices.

How much profit can a liquor store make?

According to a recent Forbes study, liquor stores are among the top five least profitable businesses, taking home a profit of 1.7%. Owners who are able to run their own business take home an average salary of $21,000 - $51,000, depending upon size, location, and sales. At 1.7%, a store that has total sales of $500,000 realizes an annual profit of $8,500.

How can you make your business more profitable?

The following are a few strategies you can implement to ensure a more profitable liquor store business:

• Offer classes, where you teach customers about specific products. Mixology classes are also a great way to pass your knowledge on to your customers.
• Weekend co*cktail samples give customers an opportunity to try something they might not otherwise consider. By offering these tastings on a weekend, you increase your chances of selling the product you’re promoting. Speak with the liquor distributors about these events. They can offer drink recipe suggestions and many will send out a representative to help with the tasting.
• Start a wine or beer club.
• Sell additional items that pair well with the products you sell. If wine is a speciality item, offer various cheese, crackers, wine glasses, etc.
• Smaller liquor stores who have an attached bar and/or restaurant have also realized greater profits.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Liquor Store Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your liquor store is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

• LLC Taxes
• Sole Proprietorship vs LLC
• LLC vs Corporation
• LLC vs S Corp
• How to Start an S Corp
• S Corp vs C Corp

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Open net 30 accounts

Net 30 accounts are used to establish and build business credit as well as increase business cash flow. With a net 30 account, businesses buy goods and repay the full balance within a 30-day term.

NetMany net 30 credit vendors report to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

You will need to obtain a liquor license from the appropriate state agency. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most states also require retail businesses to obtain a seller’s permit. A seller’s permit enables states to record and collect taxes from goods (and sometimes service) sales.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:

• Check with your town, city or county clerk’s office
• Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a liquor store

When you’re ready to open your doors, advertise your grand opening in local newspapers, television, and radio ads. For opening night, offer taste-testing of various items and specials on select items. Just make sure your offerings are small to ensure no one leaves the establishment tipsy. Make sure you and your staff are knowledgeable on the items you offer and be ready to answer questions from your customers.

For many, alcohol is an integral part of every holiday. Hold regular, exclusive events to lure customers in. Teach them how to make a signature co*cktail, related to the holiday theme, and offer discounts on items featured in the event.

An online presence is critical to the success of every business nowadays. Maintain an informative and user-friendly website that offers answers to your patron’s most burning questions. Post about the newest specials on social media accounts such as Facebook, Google +, and Twitter and ask patrons to sign up for your email newsletter and blog. This is a great way to keep your customers informed, as well as to educate them on the intricacies of beer, wine, and spirits. By doing so, you establish yourself as a leader in the industry - someone your customers look to for guidance and support. Additionally, be sure your business is listed on Yelp and all directories specific to your area.

Who doesn’t love free stuff? Offering free t-shirts and cozies to customers who spend over a certain amount is also a great marketing tool. The patron walks away satisfied over their newest acquisition and you gain the advantage of free marketing wherever they go.

How to keep customers coming back

It will be difficult for you to compete in price with the larger establishments. If you can keep your pricing relatively close to your competitors, however, many customers won’t mind paying a little more to support a local business. The key will be how they’re treated when there. Provide exceptional customer service at all times and ensure your staff is up-to-date on the latest news and trends.

If you’re able to accurately identify your patron’s needs, you’ll develop a loyal following and ensure you invest in the most desired inventory. Have a suggestion box and ask customers for their input. While you cannot offer incentive for doing so, it’s no uncommon for companies to ask their customers to write a review on one of the online directories and social media platforms.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

• All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
• Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
• Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2022 to find the best phone service for your small business.

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