How to open a liquor store: a step-by-step guide

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1. Step 1: Find out what your state allows
2. Step 2: Choose the location
3. Step 3: Plan the money
4. Step 4: Form the business and register it
5. Step 5: Apply for your license and permits
6. Step 6: Set up suppliers and receiving
7. Step 7: Plan the layout and security
8. Step 8: Set prices and run deals
9. Step 9: Check ID every time
10. Step 10: Hire and train your staff
11. Step 11: Keep inventory under control
12. Step 12: Run the first 90 days
13. Where Advantage fits

Alcohol is regulated at every level of government. Your state decides whether you can open a liquor store at all, where it can be, what it can sell, who it can buy from and often when it can sell. Federal rules add a registration and a few record-keeping duties of their own.

This guide puts the work in order for an independent owner opening one store. The general steps of opening a shop, such as the business plan, the lease and hiring, are covered in more depth in our guide on how to open a convenience store.

Alcohol law differs a great deal from state to state, and towns and counties often add their own rules. Nothing here is legal advice. Use this guide to build your list of questions, then take them to your state alcohol board, your city or county, an accountant, and an attorney who knows alcohol licensing in your state.

Step 1: Find out what your state allows

Do this before you sign a lease or spend money on a building. The answers can change the whole plan.

• Who may sell what. States organize alcohol sales in different ways. The Alcohol Policy Information System (APIS), run by the National Institute on Alcohol Abuse and Alcoholism, tracks state systems for selling spirits, wine and beer, which can be state-run, privately licensed or a mix. Where the state runs spirits sales, a private store may be limited to beer and wine.
• Licenses. Ask your state alcohol board which license fits a package store and how long approval takes. Ask whether there is a limit on licenses in your area, and whether new ones are issued or must be bought from a current holder.
• Local rules. Ask your city or county whether alcohol sales are allowed at the address, whether there are distance rules near schools or churches, and what local approval you need.
• Days and hours. APIS tracks bans on Sunday sales for stores state by state. Ask about Sunday, holiday and late-night limits where you are.
• Taxes. APIS also tracks the two main kinds of state excise tax on spirits: taxes on the amount sold and taxes on the price. Either way, they shape your shelf prices.

Write every answer down with the name of the person who gave it and the date.

Step 2: Choose the location

The rules from Step 1 narrow the map. Inside what is allowed, look for:

• A lease that depends on your license being approved, so you are not paying rent on a store you cannot open.
• Easy parking and a storefront drivers can see.
• A back door and space for deliveries. Cases of beer and wine are heavy, and some loads come on pallets.
• Room for a walk-in cooler or cold box if you will sell much beer.
• Good lighting outside and a layout you can watch from the counter.

Visit every liquor store within a short drive. Write down their hours, their selection and their prices on 20 of the items you expect to sell most.

Step 3: Plan the money

List the one-time costs: build-out, shelving, coolers, the security system, the register and back office, license fees and opening inventory. Then list the monthly costs: rent, payroll, utilities, insurance, card fees, software and loan payments.

You own your inventory from the day it arrives. Federal trade practice rules ban consignment sales, meaning a supplier cannot sell to you with the privilege of returning what does not sell. Some states also regulate wholesale prices, which APIS tracks under wholesale pricing restrictions. Ask each wholesaler what payment terms your state allows.

A worked example with made-up numbers

Every number here is invented. Say you plan to carry 1,500 items, with an average of 6 bottles of each on hand, at an average cost of $12 a bottle. That is 9,000 bottles and $108,000 of inventory before your first sale.

Now say you sell $60,000 a month at a 25% gross margin. Your cost of goods sold is $45,000 a month, so that opening stock would last about 2.4 months, or about five turns a year. If you planned on paying for it with the first month’s sales, this example shows why you cannot.

Use our break-even calculator to find the sales you need each month, and see the SBA’s guaranteed loans and free counseling for help with financing.

Step 4: Form the business and register it

1. Choose a business structure with your accountant and attorney, and register it with your state.
2. Get an Employer Identification Number from the IRS. It is free.
3. Open a business bank account.
4. Register for sales tax with your state revenue department. The IRS keeps a list of state government websites.
5. Register with the federal Alcohol and Tobacco Tax and Trade Bureau (TTB). Every retail dealer of alcohol must file TTB Form 5630.5d before starting business, and again after a move, a change in ownership, or when the business closes. TTB says registration is needed for every location.
6. Buy insurance. The SBA lists common types of business insurance. Ask your agent about liquor liability coverage, and ask your state board whether your license requires it.

Step 5: Apply for your license and permits

The table lists permits a liquor store commonly needs. It is a starting point, not a complete list. Requirements, fees and timelines vary by state and town.

Permit or registration	Where to ask
Retail alcohol license	State alcohol board, often with a local approval step
Federal alcohol dealer registration	TTB
Local business license	City or county licensing office
Building, occupancy and sign permits	City or county building and planning departments
Sales tax registration	State revenue department
Tobacco license, if you sell tobacco	State agency, sometimes the city or county too
Lottery retailer license, if you sell lottery	Your state lottery
Food permit, if you sell food	Local or state health department

Ask the board exactly what the application needs, for example fingerprints or background checks, a floor plan, proof of your right to use the building, or a public notice. Ask what it costs and how long each step takes. Start it first, because everything else waits on it.

Step 6: Set up suppliers and receiving

Ask your state board who you may buy beer, wine and spirits from. Federal law adds one firm rule: retail dealers may buy distilled spirits only from wholesale dealers, with a few narrow exceptions such as a distillery or a dealer selling off its whole stock when it closes. Restocking spirits for resale from another retail store breaks that rule.

Federal trade practice rules also limit what suppliers can do. TTB prohibits exclusive outlet deals, tied house arrangements, commercial bribery and consignment sales, practices it says threaten the independence of retailers. If a supplier offers you money, free equipment or services in return for buying its brands or giving it shelf space, ask TTB and your state board whether that is allowed before you say yes.

Receiving and records

1. Count every case against the invoice before the driver leaves, and check for breakage.
2. Check the seals. Spirits bottles must carry a tamper-evident closure, and TTB asks retailers to report bottles that arrive with the closure missing or broken.
3. Keep every invoice. Federal rules require retailers to keep records of all alcohol received: what, how much, from whom and when. Invoices count.
4. Write shortages and breakage on the invoice, and follow each credit until it appears.

Two more federal rules apply after the sale. If you sell 20 wine gallons (75.7 liters) or more to one buyer at one time, about 100 bottles of 750 ml, you must keep a record of the sale with the buyer’s name and address. And you may not sell to another dealer for resale without a federal wholesaler’s permit. Never refill or top up a liquor bottle, which is a federal offense.

Step 7: Plan the layout and security

• Group spirits by type and then by price, with the best sellers at eye level.
• Keep high-value bottles behind the counter or in a locked case.
• Put chilled beer and wine near the back so shoppers pass other shelves on the way.
• Leave aisles wide enough for a hand truck and a shopper with a case.
• Keep a clear view of the door and the aisles from the register.
• Put cameras on the register, the door, the high-value shelves and the back door, and keep a drop safe at the counter.
• Record every broken bottle as a write-off with the reason, so a count later makes sense.

Step 8: Set prices and run deals

Price by category. Spirits, wine, beer and mixers each need their own target margin, and your best sellers need a look at what nearby stores charge.

Before you plan case discounts, coupons or deals, ask your state board whether it limits discounts, coupons or below-cost pricing on alcohol. If you advertise a bottle as marked down, the FTC’s guides on former price comparisons say the old price should be one you actually offered openly for a reasonably substantial period.

A mix-and-match example with made-up numbers

Say a wine costs you $9.00 and sells for $13.99, so you keep $4.99 a bottle, a margin of about 36%. A deal takes 10% off any six bottles, so the price falls to $12.59 and you keep $3.59 a bottle, a margin of about 29%.

A shopper who would have bought two bottles at full price earns you $9.98. If the deal moves that shopper to six bottles, you earn six times $3.59, or $21.54. If shoppers who already buy six get the discount, you simply earn less. The deal pays only when it changes what people buy, so check the numbers a month in. See our article on multipack and mix-and-match deals, and our markup and margin calculator.

Step 9: Check ID every time

The minimum age to buy alcohol has been 21 in every state since 1988. Set a clear rule, for example asking for ID from anyone who looks under 40, and apply it to every customer.

• Your state may set a minimum age for clerks who sell alcohol. Check it before you hire.
• Some states set requirements or offer incentives for seller training. Ask your board whether your clerks need a course.
• If you sell tobacco, federal rules require you to sell only to customers 21 or older and to check the photo ID of anyone under 30. State and local laws can be stricter.
• Keep a log of refused sales with the date, time and clerk.

Our article on tobacco and alcohol ID checks has a counter routine you can train.

Step 10: Hire and train your staff

Plan the hours you will be open and the people you need at your busiest times. Then hire.

• Every new hire completes Form I-9.
• Federal law requires overtime pay of at least time and a half for hours over 40 in a workweek, unless an employee is exempt. Where a state’s overtime law gives more, the employee gets the higher amount.
• Check your state’s minimum wage.

Train every clerk on ID checks and refusals, the register, cash handling and drops, receiving, and what to do in a robbery. Give each clerk their own register login, so every void and refund has a name on it.

Step 11: Keep inventory under control

Spirits are small, valuable and easy to pocket, so count them more often than anything else.

• Count your 25 most expensive spirits every week, and your top sellers every shift if losses appear.
• Do a full count at least once a year, or as often as your accountant needs one.
• Compare each count with what you received and what the register sold, and look for the cause of every gap before you adjust.

Our retail inventory management guide covers counts, reorder points and shrink in more depth.

Step 12: Run the first 90 days

• Every day: count the drawers, make the deposit, check deliveries against invoices, and review voids and refunds.
• Every week: review sales and margin by category, count high-value spirits, update prices where costs moved, and check that deals rang up right.
• Every month: review the profit and loss statement with your accountant, file taxes on time, check license renewal dates, and drop items that do not sell.

Where Advantage fits

Advantage is a back office that connects to the registers it supports. You build mix-and-match deals, item lists and price changes once and send them to the register, and each change is marked confirmed only when the register’s own reply proves it. Vendor EDI invoices sent to your store’s own invoice e-mail address update item costs, and a daily e-mail lists the costs that changed. Shifts close at the store with a guided checklist, and each Shift Report shows the cash counted and the over or short. See Advantage for liquor stores, the pricebook and deals and Send to POS.