When opening a restaurant or any other business, proper permits and licenses are required in order to comply with City, State, and/or Federal requirements. In San Francisco, visit the San Francisco Business Portals Starter Kit page.
In local jurisdictions, entities doing business must possess a valid Business Registration Certificate. In San Francisco, businesses must have a valid registration from the Office of the Treasurer & Tax Collector, as stated in Article 12 of the San Francisco Business and Tax Regulations Code. This code also applies to businesses located outside of San Francisco that perform business transactions or services in San Francisco.
Here in California, the Employment Development Department (EDD) administers California’s payroll taxes, including Unemployment Insurance, Employment Training Tax, State Disability Insurance (including Paid Family Leave), and California Personal Income Tax withholding. Employers conducting business in California are required to register with and file reports and pay taxes to EDD.
Unlike real property, business personal property is appraised annually. Owners of all businesses must file a business property statement each year with the Assessor’s Office detailing the cost of all their supplies, equipment, and fixtures at each location; business inventory is exempt from taxation.
The San Francisco Office of the Assessor-Recorder allows business owners to file online by visiting www.sfassessor.org; e-filing is quick and secure, and no new software or downloads are necessary.
Required by state law, the property statement is a means to declare all taxable business property (machinery, equipment, fixtures, etc.) and is used to assist the Assessor-Recorder’s Office with assessments. The Office of the Assessor-Recorder will automatically mail notices in mid-February that include a business owners’ unique Account Number and Personal Identification Number (PIN). The deadline for filing the Form 571-L is April 1, 2016.
For assistance with completing the form, the Assessor-Recorder’s office generally offers workshops that will be announced, as the date gets closer. You can use the 2016 manual to assist you when you are ready to file.
For State of California tax guidance, which includes sales and use taxes, please visit their Tax Guide for Restaurant Owners.
Locating a space for a restaurant can be daunting, particularly in a hot real estate market. When finding a space, it is important to understand the underlining zoning to determine if the chosen location will be an easy one to establish. Zoning codes regulate permitted uses – restaurant, bars, retail, office, etc.; hours of operations; and other restrictions related to actual building form. In some areas, restaurants are not considered principally permitted uses, so a Conditional Use may be required. Additionally, if locating in a building older than 50 years, it can be considered an historic structure, which has limitations related to exterior aesthetics. In San Francisco, the Planning Department has a Property Information Map where anyone can look up the zoning for a particular address.
Before signing a lease, please check the Planning Department of the local jurisdiction.
A Conditional Use (CU) is a type of land use that is not principally permitted in a particular Zoning District. A Conditional Use (CU – or CUP in some jurisdictions) process can take months and requires neighborhood buy-in to ensure success. Conditional Uses require a Planning Commission hearing in order to determine if the proposed use is necessary or desirable to the neighborhood, whether it may potentially have a negative impact on the surrounding neighborhood, and whether the use complies with a jurisdiction’s General Plan.
There are many rules surrounding liquor licenses, which are important to know when seeking a license and to follow in order to maintain the license. Licenses can be suspended or revoked. In California, liquor licenses are granted by the California Alcoholic Beverage Control Board (ABC). And in addition to ABC, local jurisdictions have zoning regulations related to liquor licenses that may prevent new ones, designate only certain types allowable or require a Conditional Use Permit (CUP).
There are a number of liquor license types; the most common for restaurants are 41 – on-sale beer and wine for a bona fide public eating place or a 47 – on-sale general (full liquor license) for bona fide public eating place. For caterers, 58 is considered the caterer’s permit; and an on-sale general brew pub is a 75.
Throughout every county and city, there are census tracts and ABC has determined the number of liquor licenses allowable in each census tract. In cities like San Francisco where most census tracts are considered over saturated, the only way to pursue a new liquor license is to purchase an existing liquor license held by a business that has recently closed or is looking to close. Before determining whether to pursue a license, you can check the ABC system here. To apply for a liquor license, visit the local ABC office, which can be located here. The application: http://www.abc.ca.gov/FORMS/ABC217.pdf.
The Department of Alcohol Beverage Control provides free, 4 hour seminars for ABC License applicants and their employees. The 2016 training schedule can be found here.
Restaurants are large users of water, and with the current drought, the State of California has placed rules on water use with violations that can result in a fine of up to $500. Follow regulatory updates to the drought at ca.gov/drought/. The fines are handed out by local law enforcement and water agencies to those they see violating the restrictions. The regulations went into effect August 1, 2014 and are focused on outdoor water use for both individuals and businesses.
In 2015, the California State Water Resources Control Board adopted new regulations for water usage, making it mandatory for restaurants not to provide water to patrons unless they request it. To download a poster to educate customers, click here.
In San Francisco, rules related to sidewalk cleanliness in front of a business specify that water can be used if needed to clean materials and substances that pose a public health and safety risk. Only hoses equipped with spray nozzles that have an automatic shutoff trigger are allowed or pressure washers that use less water than hoses. Per City grease disposal requirements, restaurants are not allowed at any time to wash their kitchen mats outdoors.
Click here for more detailed information about the San Francisco Public Utilities Commission (SFPUC) conservation rules, or visit here for more tips and information on free water-saving devices, free water-wise evaluations at your home or business, and rebates on new water-efficient fixtures, or e-mail the SFPUC here.
In addition to rules related to water usage, San Francisco’s Fats, Oils and Grease (FOG) Control Ordinance requires San Francisco restaurants and other food service establishments that cook food, and therefore have grease in their wastewater discharges, to install grease capturing equipment (i.e. traps or interceptors). The FOG Control Ordinance provides clear guidelines on exactly what type of grease capturing equipment restaurants must install and includes standards to ensure that the equipment is well maintained and serviced.
Many Bay Area cities have laws related to recycling and composting. In San Francisco, there’s a Mandatory Recycling and Composting Ordinance, which requires San Francisco residents and businesses to properly separate recyclables and compostables and keep them out of the landfill. San Francisco businesses are required to order service from Recology to receive recycling, composting, and landfill bins. Property owners and managers must provide color-coded containers for tenants, employees, contractors, and customers to ensure separation of discards.
Additionally, San Francisco has a Food Service Waste Reduction Ordinance, which requires restaurants and other food service businesses to use compostable or recyclable food service containers and utensils. Food and drinks cannot be sold in styrofoam containers. Compostable bags and food service-ware accepted in San Francisco’s compost program must be certified by the Biodegradable Products Institute as “compostable,” also referred to as “BPI Certified.”
To learn more about the Mandatory Recycling and Composting Ordinance, contact SF Environment’s Zero Waste team at 415-355-3700.
The State of California adopted a plastic bag ban for large grocery chains and pharmacies beginning July 1, 2015. It will extend to convenience stores and liquor stores July 1, 2016. In San Francisco and other Bay Area Cities, a plastic bag ban has existed for some time. San Francisco’s Checkout Bag Ordinance requires that no restaurant or food establishment shall provide a non-compostable single-use plastic checkout bag to a customer. Stores that provide a customer with an allowed checkout bag must charge at least ten cents ($0.10) per bag. Restaurants can only provide carryout bags that are one of the following: certified compostable plastic, made from recyclable paper with 40% post-consumer recycled content, or are designed to be reused at least 125 times. Restaurants may still use plastic bags for wrapping moist / wet / hot food items to prevent spillage or contamination of other items, and these bags used to prevent contamination are not considered “carry-out bags” under the ordinance, so you are not required to charge a fee for those bags. In addition, left-over food bags or “doggie bags” are not considered check-out bags under the ordinance so restaurants are not required to charge for these bags either.
Businesses keep the 10 cent charge, which can help offset the increased costs of compliant bags. The business must add the cost charged to the customer as a separate line item on the POS system and label it a “Checkout Bag Charge.”
Many restaurants seek the opportunity to add outdoor seating as a cost effective way to expand their footprint. If the intent is to utilize the public sidewalk space, permits are needed to be obtained from the local department of public works.
For San Francisco, learn more about how to do so here.