Liquor Licenses and Corkage Fees: A Bar Owner's Guide to Getting it Right

When opening a bar, you might be tempted to focus on the spirits you'll stock, the music you'll play, and the bar snacks you'll offer, but there's a whole operational side that you have to figure out before you serve a single drink. Like it or not, understanding your legal obligations, particularly around alcohol licensing, is just as important as perfecting your cocktail menu. 

Get these right, and you can open and pour drinks in peace. Get them wrong, and you risk a variety of unpleasant consequences, from fines to licence revocation. Unglamorous, but completely non-negotiable, alcohol licensing is just one of those things that’s worth getting right the first time.

Let's break it all down.

What is a liquor license?

A liquor license is a legal permit that authorizes a business to sell or serve alcoholic beverages. Without one, you absolutely cannot operate a bar, and attempting to do so can result in heavy fines, forced closure, and even criminal charges.

In the United States, liquor licenses are regulated at the state level and, in many cases, at the county or city level as well. This means the rules, costs, and application processes can vary dramatically depending on where your bar is located. What's permitted in one state may be restricted or outright prohibited in another.   

The type of license you need depends on several factors, including:

• What you're selling (beer and wine only, or spirits too)

• Whether you're serving on-premises, off-premises, or both

• Your business hours

• Whether you're also serving food

• Type of venue (bar, restaurant, hotel, events space)

So watch out, possessing a liquor license does not automatically mean you can sell alcohol willy-nilly. The type of license you obtain will dictate when you can serve, what you serve, and where you serve. Once obtained, you must follow the rules set out by your license without fail.

The patchwork of state and local laws 

Before we get into the nitty-gritty of regulation, there’s one very important thing to understand. The US has no single national standard for alcohol regulation; instead, each of the 50 states has its own Alcoholic Beverage Control (ABC) authority, and many states delegate further authority down to individual counties and cities. 

The result can be genuinely confusing. Here are a few considerations to keep in mind:

Dry counties: Yes, they’re a thing! If you are planning to open in Kansas, Oklahoma, Texas, Arkansas, Mississippi, Tennessee, or Kentucky, ensure that local authorities permit the sale of alcohol. In fact, out of 3,000 counties, roughly 500 are considered dry, meaning that about 1 in 6 have some sort of alcohol regulation. 

Here are the types of jurisdictions across the United States:

• Fully wet: Alcohol sales permitted with no major restrictions

• Fully dry: No alcohol sales at all

• Moist/damp: Alcohol permitted in some incorporated areas within an otherwise dry county

• Partially dry: Beer and wine permitted but not spirits, or sales restricted to certain venue types such as restaurants

• Time-restricted: Sales permitted only during certain hours as defined by local ordinance

Top tip: Make sure to research local rules carefully before signing a lease, especially if you are planning on opening in one of the states listed above. 

State control vs. license states: Some states are "control states" (also called monopoly states), meaning the government directly controls the sale and distribution of alcohol. Examples include: Pennsylvania, Utah, and Virginia. In these states, bars and restaurants must purchase spirits directly from state-run stores, and the licensing process is managed differently than in "license states," where private businesses handle distribution. 

Quota systems: Some states limit the number of liquor licenses available in a given area based on population. In these states, licenses can be in short supply, and some can be bought and sold on the open market for tens of thousands of dollars. Florida, for example, has a quota license system for full liquor licenses. In quota states, licenses tend to be far more expensive, with establishments paying up to $300,000 for a new license. 

Local ordinances: Even within a state that permits alcohol sales, individual cities and counties can impose additional restrictions on hours of service, proximity to schools or churches, outdoor serving areas, and more. So, even if you’re not opening in a dry county, always check local ordinances in addition to state law to be extra safe. 

Blue laws: Some jurisdictions have ‘blue laws’, which restrict alcohol sales on Sundays or during certain hours. These are more common than most people expect and vary widely even within a single state.

Here’s the bottom line: Before you do anything else, or worst of all, commit to a location, research the specific alcohol regulations in your city, county, and state. Your state's ABC website is the best starting point.

Types of liquor license:

Before you apply, it's worth understanding that liquor licenses aren’t one size fits all. Different licenses cover different types of alcohol, different settings, and different types of sales. 

Here are the most common varieties you'll come across: 

On-premises licence: This is the standard licence for bars, pubs, and restaurants, allowing you to sell and serve alcohol for on-premises consumption. 

Off-premises licence: The clue is in the name; this license covers the sale of alcohol for consumption elsewhere. Think bodegas, liquor stores, and wine shops. 

Beer and wine licence: This more limited licence only covers beer and wine, not spirits. This is often cheaper and easier to obtain, making it a popular starting point for smaller venues.

Full liquor licence: The full liquor license covers all alcoholic beverages, including wine, beer, spirits, cocktails, the works. If you're serious about running a proper bar, this is the one you need. 

Temporary event licence: Usually quicker and cheaper to obtain than the other licenses, a short-term permit for events such as festivals, pop-ups, or private functions. 

Catering licence: Allows a business to serve alcohol at events held off-site, such as weddings or corporate functions.

Retail licenses: Issued to grocery stores, convenience stores, liquor stores, and any other retail establishments that sell alcohol. 

How to apply for a liquor licence

While the process varies depending on where you're based and what licence you’re trying to obtain, most applications follow a similar structure. 

Here's a step-by-step guide:

1. Research your local requirements: As you’ll know by now, every jurisdiction has its own rules. In the US, requirements differ state by state, and sometimes city by city. Take time for thorough research before moving forward. 

2. Confirm your location is eligible: Before signing a lease, verify that alcohol sales are permitted at your intended address by checking for proximity restrictions to schools, churches, or other licensed premises. And if you're in or near a dry county, confirm the exact boundary lines before committing.

3. Choose the right license type: Based on your business model, identify which type of license best fits your needs, because applying for the wrong one wastes time and money.

4. Prepare your documentation: Typical requirements include proof of identity, proof of premises ownership or lease, a floor plan of the premises, details of your business structure, and, in most cases, background checks for all owners. 

5. Complete the application and pay the fees: Fill in the application form and submit it along with the required fees, which vary widely by state, from a few hundred to several thousand dollars. Some states require you to post a public notice at your premises or publish a notice in a local newspaper, allowing the community to raise objections.

6. Attend a hearing if required: In some jurisdictions, your application will go before a licensing board. Be prepared to demonstrate that your venue will operate responsibly and won't create issues for the surrounding community.

7. Wait for approval: Processing times vary enormously by state, from a few weeks to several months. In states with quota systems, the wait can be considerably longer. Start the application process well in advance of your planned opening date. We recommend allowing at least six months to be on the safe side. 

8. Display your license: Once approved, your liquor license must be displayed prominently on your premises at all times.

P.S: If you’re applying in Louisiana, give our state-specific blog on how to obtain a liquor license a read.  

What documents do I need to apply?

As always, the age-old truism holds: paperwork really does make the world go round, and to apply for a liquor license, you’ll need to provide certain documentation. To make the process as smooth as possible, it pays to get your paperwork in order beforehand. Requirements vary by state, but for the most part, the documents you’ll need won’t vary widely.  

Here’s what you’ll most likely need:

Personal documentation

• Government-issued photo ID for all owners and principals

• Background check results for all owners and partners, and in some states, key members of staff

• Personal financial statements

• Proof of residency or citizenship where required

Business documentation

• Business registration or articles of incorporation

• Employer Identification Number (EIN)

• Business bank account details

• Proof of business ownership or partnership agreements

Premises documentation

• Signed lease or proof of property ownership

• Detailed floor plan showing the layout, entrances, exits, and areas where alcohol will be served

• Certificate of occupancy or zoning approval

• Proof that the premises meet all local health and safety codes

Financial documentation

• Proof of funding or financial backing

• Details of any loans or investors

• Personal and business tax returns in some states

Additional requirements that vary by state

• A published public notice in a local newspaper

• A surety bond

• A food handler's permit if you're also serving food

• Certificate of completion of a server training program, such as TIPS

Common reasons liquor license applications are rejected

Unfortunately, getting turned down is not uncommon. The liquor landscape is competitive, highly regulated, and unforgiving, so it’s worth knowing the most common pitfalls before you apply. 

Here are some of the most frequent reasons that businesses get rejected:

• A history of criminal convictions, particularly alcohol-related offenses

• Objections from local residents, businesses, or community organizations

• Concerns about public nuisance, noise, or safety

• Location issues, such as proximity to schools or places of worship

• Incomplete or inaccurate application documentation

• Zoning violations

If your application is rejected, you'll typically have the right to appeal, but be aware that this takes time and can be costly. In states with complex or competitive licensing environments, it may be worth consulting an attorney who specializes in liquor licensing before applying.

Maintaining your liquor license

Here’s the thing: getting your license is just the beginning. Just as you can receive a liquor license, it can also be taken away. Keeping your license requires ongoing compliance, with key responsibilities including:

• Training all staff on responsible alcohol service, including how to handle ID checks and refuse service to intoxicated customers. Many states have mandatory or recommended server training, such as TIPS (Training for Intervention Procedures) or RAMP (Responsible Alcohol Management Program)

• Complying strictly with your permitted hours: serving outside of these can result in an immediate license review or suspension

• Keeping accurate records of alcohol purchases and sales

• Responding promptly to any complaints or inspections from your state ABC authority

• Renewing your license on time (renewal requirements and fees vary by state)

In many states, you'll need to designate a responsible manager or named license holder who takes personal responsibility for ensuring the premises operate in compliance with the law. This person needs to take their position seriously and should be properly trained and available during operating hours.

What is a corkage fee?

Right, now that we’ve got the hang of liquor licenses, let's switch gears. You might be asking, "What is the difference between a liquor license and a corkage fee”? A corkage fee, sometimes also called a BYOB fee or bottle fee, is a charge imposed by a bar or restaurant when a customer brings their own bottle of wine or other alcohol to drink at the site. 

Corkage is most common in upscale restaurants with extensive wine lists, but it's increasingly relevant for wine bars and venues that host private events where guests may want to bring a special bottle. Please note that BYOB policies are only legal where state law permits them; some states prohibit customers from bringing their own alcohol to licensed premises altogether, so check your local regulations before implementing a corkage policy. Even if you don’t want to pursue this option, it’s a good idea to be knowledgeable about the variety of alcohol policies and fee structures available to you. 

Why charge a corkage fee?

At first glance, allowing guests to bring their own bottle might seem counterintuitive; after all, isn't that lost revenue? In reality, a well-structured corkage policy can work firmly in your favor and can be a great alternative to more traditional bar operations. 

Here's why you should charge a corkage fee:

• Revenue recovery: When a guest brings their own wine, you lose the profit margin you'd normally make on a bottle sale. Corkage fees help offset that loss and ensure you're not simply providing a free service.

• Labor and service costs: Opening, pouring, and serving a bottle of wine takes staff time. 

• Attracting high-spending guests: Guests who bring their own special bottle — a treasured vintage, a bottle from a winery they visited, a gift from abroad are often the kind of customers who spend generously elsewhere on the menu. A reasonable corkage fee keeps them happy without giving away your service for free. 

• Competitive positioning: Venues that offer BYOB with a clear, fair corkage policy can be very successful, because let's be honest, not everyone wants to pay restaurant markups on a bottle of wine. That’s why BYOB can be a genuine selling point; guests can enjoy their evening without forgoing alcohol, at a very reasonable price. 

• Licensing savings: In some states, operating as a BYOB-only venue means you may not need a full liquor license at all, or you may qualify for a cheaper permit. New Jersey is a prime example, where BYOB restaurants are extremely common precisely because full liquor licenses can cost hundreds of thousands of dollars. For some business models, a corkage-only approach can be a genuinely cost-effective way to offer alcohol without the astronomical upfront costs. 

How to set the right corkage fee

The question you probably have now is how much is a corkage fee? Setting your corkage fee too high risks putting guests off, while too low simply undervalues the service you're providing. 

Here are a few recommendations:

• Consider your average bottle price: As a general rule, your corkage fee should be somewhere between a third and half of the average retail price of a mid-range bottle on your wine list. If your house wine retails for around $40, a corkage fee of $15–$20 is reasonable.
• Research your local market: What are comparable venues in your area charging? In major US cities like New York, Los Angeles, and San Francisco, corkage fees at upscale restaurants can range from $25–$75 per bottle. In smaller markets and more casual settings, $10–$30 is more typical. Be mindful not to stay within local expectations.
• Decide whether to limit BYOB: Many venues only allow corkage on bottles not already available on their own wine list. Others cap the number of BYOB bottles per table, or limit it to one bottle per party, while many businesses have no cap at all. Take time to consider which approach works best for your business. 

Corkage fee best practices

A few tips to make your corkage policy work smoothly in practice:

• Train your staff: Make sure your team knows the policy inside out, how to communicate it politely, and how to handle situations where a guest is unhappy with the charge. Why not try role-playing or hanging up a few scripts to follow in the break-room? 
• Keep it simple: A flat fee per bottle is cleaner than a tiered system based on bottle value. It's easier to communicate, easier to ring through, and it avoids potentially awkward conversations about what a guest's bottle is worth.
• Consider waiving it occasionally: For a long-standing regular celebrating a milestone, or a private hire booking with a significant spend, waiving the corkage fee is a powerful gesture of goodwill that costs you very little but generates real loyalty.
• Track it properly: Corkage fees should be rung through your POS system just like any other charge. This ensures accurate reporting, helps with sales tax compliance, and gives you useful visibility into how often the policy is being used.

Be transparent: Whatever you decide, publish your corkage policy clearly: on your website, on your menu, and when guests make a reservation. Nothing frustrates a customer more than an unexpected charge appearing on their bill. 

Compliance: more than just a piece of paper

We’re sorry to say that your work as a responsible bar owner does not end once you get your liquor license. Staying compliant is a vital component of owning and operating a bar, and US alcohol law is full of rules that catch even experienced bar owners off guard. From the first pour of the night to last call, a bar owner is responsible for every aspect of how alcohol is served, consumed, and managed under their roof.

Here are some of the restrictions and laws you might need to be aware of if you’re considering opening a bar:

Dram shop laws
Most US states have dram shop laws that hold bars and restaurants legally liable if they serve alcohol to a visibly intoxicated person who then goes on to cause harm. This includes a car accident, an assault, or any other alcohol-related incident. The consequences are serious, with severe financial fines, lawsuits, settlements, and potentially the loss of your liquor license. To avoid these situations, train your staff to recognize signs of intoxication and how to refuse service. In most states, this isn’t just good practice; it’s the law.

Happy hour restrictions
Before you plan your promotional strategy, check your state's rules on drink promotions. Many states, such as Massachusetts, North Carolina, and Utah, restrict or outright ban happy hour deals, two-for-one offers, or unlimited drink promotions. These considerations will greatly impact your business models. 

Age verification
This one is countrywide: serving alcohol to anyone under 21 is strictly forbidden. The consequences of breaking this law range from fines to the immediate suspension of your liquor license. For best results, train your staff to check ID for anyone who appears under 30, and make sure they know which forms of ID are acceptable in your state. 

Last call and closing time laws
Closing time isn't entirely the bar owner's call; each state sets its own rules around last call and closing times for alcohol service. In most states, last call falls between 1 am and 2 am, but some states allow service until 4 am, while others require earlier closing times. Local ordinances can restrict things further. Make sure your staff knows exactly when service must stop. Be warned, serving even a few minutes past your permitted hours can trigger a license review.

Liquor liability insurance
Standard business insurance typically does not cover alcohol-related incidents; liquor liability insurance is a separate policy that protects your business against claims from the actions of intoxicated customers. Although not all states legally require it, operating without it is a significant risk. If you’re on the fence about insurance, we recommend speaking to a specialist. 

How your POS system supports bar compliance and operations 

Regardless of the type of establishment you’re running, your point-of-sale system plays a crucial role in keeping everything running smoothly and compliantly.

A modern EPOS system like Epos Now can help you:

• Set up corkage as a product so it's rung through correctly every time, with no missed charges or confusions

• Track alcohol sales by category to stay on top of what's selling and what's not 

• Monitor sales by time of day to ensure you're never inadvertently serving outside your licensed hours

• Manage staff permissions so only trained and authorized team members can process alcohol sales 

• Generate detailed sales reports to support compliance reviews or demonstrate responsible trading to licensing authorities

• Integrate with accounting software like Xero or QuickBooks to keep your financials clean and audit-ready

Owning and operating a bar can be an incredibly fulfilling experience, but keep in mind that it comes with a substantial administrative load. Fortunately, with the right POS system, much of that burden can be alleviated, leaving you free to focus on what actually matters: running a great bar.

Final thoughts

Securing a liquor license and setting a corkage policy might not be the most glamorous parts of running a bar, but they're among the most important. A solid license protects everything you've built, while a smart corkage fee can be a genuine competitive advantage.

And with alcohol regulations varying so dramatically from state to state, and even county to county, it genuinely pays to do your homework before you open your doors. The effort you put in up front will save you significant headaches down the line, and we have just the tools to help make all this even easier. 

Looking for a smarter way to manage your bar's sales, compliance, and reporting? Epos Now's cloud-based EPOS systems are built for hospitality businesses of all sizes. Find out more.