Liquor License 101 for Restaurants and Bars

If you’re starting up your own restaurant, bar, brewery, or event space and you plan on serving alcohol, you’re going to need a liquor license. It doesn’t matter the state where your business will be located: it’s always illegal to serve alcohol without a proper license.

But getting a liquor license can be difficult and time-consuming. And once you have one, you can lose it if you violate state guidelines, whether it’s over-serving your customers, serving minors, selling alcohol during restricted time frames, or disorderly conduct in your establishment. And now with Covid-19 in the picture, state liquor authorities are temporarily revoking liquor licenses from restaurants and bars violating mandated health and safety protocols related to the pandemic.

Here’s everything you need to know about getting a liquor license in 2020: what it is, how much it costs, and what to expect from the process.

What is a liquor license?

A liquor license makes it legal for your establishment to sell alcohol. Liquor licenses are issued by the state in which your business operates, as different states have different regulations relating to alcohol sales. Requiring restaurants and bars to obtain a liquor license makes it possible for the state and municipal government to enforce their alcohol policies.

What kind of liquor license do I need?

The type of license you need depends on how you sell or serve alcohol. The two primary “categories” are on-license and off-license.

On-license: This is for businesses that are selling or serving alcohol to be consumed on-premises. (Also called on-premise or on-sale licenses.) This is the type of license that a restaurant or bar needs to obtain.
Off-license: Specifically for businesses selling alcohol to be consumed elsewhere. Liquor stores, wine shops, and grocery and convenience stores are all examples of businesses that sell alcohol for “carry-out,” requiring an off-license.

There are several types of on-licenses that restaurants and bars may need to apply for, depending on the type of alcohol you’re serving and the manner in which you’re serving it. A few common examples:

Restaurant liquor license: This is generally known as the “all liquor license” because it allows a business to serve all types of alcohol
Beer and wine liquor license: Unlike the “all liquor license,” a beer and wine liquor license doesn’t permit you to sell stronger spirits.
Tavern liquor license: This is commonly used for restaurants that serve both food and alcohol but have at least 50% of sales generated solely from liquor.
Server license: Some jurisdictions require individual servers to apply for a server license in addition to a liquor license. Any staff serving alcohol of any kind must take a liquor class prior to getting this license, which educates them on the kinds of alcohol there is, the legal amounts in which to serve it according to the state, and DUI and DWI laws.

How much does a liquor license cost?

How much a liquor license costs depends on the state you’re operating in and the type of license you’re applying for. The range can be anywhere from $50 to more than $300,000. The average, however, is around $1,400.

Keep in mind that you might be expected to pay additional processing fees depending on your local regulations. Some states have Liquor License Quotas, which means that only a certain number of licenses can be in use at the same time, depending on the population of the area. If that’s the case, then a new liquor license can be more expensive due to limited supplies.

How do I apply for a liquor license?

Applying for and obtaining a liquor license is a bit of process. There are a number of steps you have to take (and hoops you have to jump through) not only to get your license, but to maintain it.

Know your state’s liquor laws

Before you can apply for a liquor license, you have to know what you’re applying for. Remember, there are different licenses available depending on what kind of establishment you’re opening: a restaurant, a tavern or bar, or a liquor store. Also be sure to brush up on any additional requirements your city or county may have in place. You can consult your local Alcohol Beverage Control (ABC) board for this information, or you can check with your state’s alcohol or liquor agency.

Get all of your business permits

Before you apply for your liquor license, check to see what kinds of permits you’ll need for your application. Here again, your local ABC board can be a great resource. Check their website to see which ones you’ll need. (Once you have them, keep all of the paperwork secure and on-hand, as you’ll most likely have to present it.)

Apply with your local ABC board

Once you’re familiar with your local laws and know the type of license you’ll need, then it’s time to apply with ABC board in your area. You can do so in person, or in some cases, you may be able to apply online.

Defend your proposal

You might need to defend your case as to why you want to sell alcohol in a public hearing if a member of your local community protests your application.

Renew your liquor license and permits

Applying for a liquor license isn’t just a one-time thing. Expect to renew your license and permits every one to three years. And keep in mind: if you’re found to be in violation of liquor laws, you could have your license suspended or revoked altogether.

How long does it take to get a liquor license?

Like we said: getting your liquor license is a process. In some cases, expect to wait weeks or even months for your application to be processed and approved. The standard waiting time to hear back from your local ABC board is up to six months. If you live in a state with quotas, it can take longer, as you’ll have to wait for another business to forfeit theirs (or you can try to buy one on the secondary market).

So if you know you want the option to sell or serve alcohol, our advice is apply for your license as soon as you can in your startup process.

Liquor licenses: worth the hassle?

Getting your liquor license requires a lot of patience and planning — and it can be a financial investment, too. Beyond obtaining the license itself, there are other costs that go into serving alcohol, like equipment, server training, building out a drink menu, etc.

For bars, obviously, getting a liquor license is a no-brainer; for other establishments, you’ve got to decide whether it’s worth the hassle on and cost on the front end as well as the effort to maintain it. Take into account your location, hours, menu, and customer base/demographic. For example, a family or kid-focused establishment may choose not to serve alcohol. The same goes for restaurants that operate only on weekdays, during regular business hours — like breakfast spots, or cafes and coffeehouses catering to working professionals.

But many customers expect alcohol as an option, especially if your restaurant operates on evenings and weekends, or if your menu lends itself to alcohol pairings. It’s also important to note that alcohol sales generally have higher margins than food sales, so financially speaking, a liquor license is often worth the up-front hassle.

Bottom line: before pursuing a liquor license, be sure that serving alcohol in your establishment is actually going to benefit your business. If you decide to move forward, don’t be intimidated by the process. Simply do your research on the front-end: determine the licenses you need, learn about the regulations that apply, and understand the associated costs and timeline.

(Need help staffing your bar? Read our tips for hiring a bar manager here!)

You might also be interested in

Product and Company News, Technology and Software

New Kickfin Feature Alert: Blended Payouts Are Here!

Brand new feature, coming in hot!

As part of our latest product release, Kickfin now offers Blended Payouts for even easier, fully automated tip management and reconciliation.

Why Blended Payouts Matter

Now more than ever, restaurant guests use credit cards or digital payment methods instead of cash. For many operators, that means there isn’t enough cash on hand at the end of a shift to pay out tips. But employees still want to receive their payouts immediately after clock-out.

As our customers know, Kickfin solves for those cash shortages by automating and digitizing the payout process — giving you the power to send instant, cashless payouts directly to your employees’ bank of choice, 24/7/365.

The result: minimal cash handling and risk, better accuracy and tracking — and of course, fewer bank runs.

However, digitizing payouts often results in some leftover cash in the drawer. Over time, we’ve heard from customers who prefer to use up that cash to pay out tips, then distribute the remaining tip amounts via Kickfin.

With Blended Payouts, you can do just that — and still account for every penny paid out, quickly and accurately, within the Kickfin platform.

How Blended Payouts Work

As always, all Kickfin customers can still choose to split individual payment amounts between instant payouts and payroll. Once you enable the new Cash Payouts feature, you will now be able to account for any cash tip payments that were also distributed.

Note: This feature lives within Kickfin’s Tip Calculator, which means you must have an active POS integration to use it.

Once it’s enabled, you’ll see the new “Cash Payouts” button on the Payment Review screen.
After clicking the button, users will be able to enter the individual cash amounts that were distributed to employees.
Back on the Review screen, you’ll see instant payout, payroll, and cash payment amounts for each employee. All three payment methods will have their own line items and be accounted for under your Payment Details.

Watch here for a full walkthrough of the new feature.

Ready to enable Blended Payouts?

If you’re a current customer, in touch with our Customer Success team at support@kickfin.com to activate this new feature.

(Not a customer yet? Click here to see Kickfin in action and learn how you can automate tip pooling and payouts!)

Product and Company News, Technology and Software

Kickfin Partners with Union POS to Automate Tip Distribution for High-Volume Bars and Restaurants

Kickfin is excited to share the latest addition to our integration marketplace. Read on for all the details around our partnership with Union POS. (If you’re a current Union POS customer and you’d like to learn more about how Kickfin automates tip pooling and payouts, schedule a live demo here.)

AUSTIN, Texas (August 13, 2025)—Kickfin, the leading tip management software, today announced the launch of its integration with Union, the purpose-built POS and engagement platform powering the nation’s busiest bars, nightclubs and restaurants.

Thousands of operators use Kickfin to eliminate tedious tip calculations and remove cash from the tip distribution process so managers can move faster, track everything, and ensure accuracy and compliance.

By activating the Kickfin-Union integration, we eliminated clunky spreadsheet formulas and fully automated our tip pooling process. After going live, we reduced our time to close out by an average of 30 minutes after every shift.

The Kickfin-Union integration gives Union’s customers the power to auto-calculate tip pools in a matter of clicks and send payouts directly to employees’ bank of choice—no cash or pay cards required.

“By integrating with Kickfin, we’re giving operators the power to choose best-in-class tools that work seamlessly with their Union POS and data,” said Alex Broeker, the CEO and founder of Union. “This direct integration brings automated tip management to our operators while unlocking new opportunities for operational efficiency, employee satisfaction and simplified compliance.”

KPG Hospitality, which operates experiential bars and unique concepts throughout Texas and Tennessee, was among the first operators to activate the Kickfin-Union POS integration.

“Our venues run at a very fast pace. When you consider the time it takes managers to manually calculate tip amounts every day, after every shift, across every location, it’s a lot of unnecessary admin hours,” said Troy Cramer, the managing partner at KPG. “By activating the Kickfin-Union integration, we eliminated clunky spreadsheet formulas and fully automated our tip pooling process. After going live, we reduced our time to close out by an average of 30 minutes after every shift.”Key Features of the Union + Kickfin Integration:

Automated Tip Pool Calculations: Calculate complex tip pools in seconds, saving managers hours of administrative work while ensuring accuracy and transparency.
Instant Cashless Payouts: Pay out tips directly to employees’ bank of choice instantly, eliminating the need for cash handling and bank runs.
Simplified Compliance: Maintain a digital record of every payout, making tip reporting and tax compliance straightforward.
Enhanced Tracking: Easily track tips by pay period with comprehensive reporting capabilities.
Streamlined Operations: Implement complex tip policies with just a few clicks through an extremely easy-to-use interface.

“Our integration with Union, a leading POS system built specifically to support the busiest venues in the industry, makes perfect sense,” said Kickfin co-CEO Brian Hassan. “Together, we’re creating a solution that saves time, reduces errors, and delivers a better experience for both operators and their staff.”

Available immediately through both Union and Kickfin, venues can integrate their systems and begin leveraging these capabilities today. To learn how this partnership can transform your tip management operations, schedule a demo at GetUnion.com or kickfin.com/demo.

About Union
Union powers a first-of-its-kind venue operating system purpose-built for the nation’s busiest bars and restaurants. More than a point-of-sale, Union connects 1,500+ establishments with 5M+ consumers and leading brands through real-time consumption data. The platform drives operational efficiency, enables frictionless mobile ordering, and facilitates brand-patron interactions that enhance venue loyalty. With $2B+ in annual transactions, Union creates a virtuous cycle where venues improve customer experiences, brands gain direct consumer engagement, and patrons enjoy personalized rewarding hospitality—transforming high-volume operations into next-gen guest experiences. To learn more about Union, visit http://www.getunion.com

About Kickfin
Kickfin is a leading digital tip management platform that automates tip pool calculations and delivers cashless tip payments directly to employees’ bank accounts. Designed to eliminate the administrative burden of tip management, Kickfin helps restaurants, bars, and hospitality venues save time, reduce errors, and improve employee satisfaction. With features like instant payments, digital record-keeping, and simplified compliance, Kickfin is transforming the way venues handle tip distribution in today’s increasingly cashless economy.

Industry Trends, Restaurant Management

Kickfin vs. TipHaus: Which Tip Management Software is Best for You?

If you’re in the market for tip management software, you might find yourself comparing Kickfin and TipHaus.

Kickfin is the largest provider of instant tip payouts on the market and has processed more than $2 billion in employee payments for all kinds of restaurants, from “mom-and-pops” to national franchises — and everything in between.

Kickfin and TipHaus are both designed to digitize tip distribution for restaurants. However, there are some significant differences between the two platforms that you’ll want to consider before making a decision.

Kickfin and TipHaus: Compare at a Glance

Why Do Operators Choose Kickfin Over TipHaus?

Kickfin Offers Better Pricing

Kickfin’s direct-to-bank transaction fees are more competitive than the transaction fees TipHaus quotes their customers.

This is primarily due to the fact that Kickfin is the largest provider of instant payouts in the country (validated by Visa and MasterCard data), with more than $2 billion in employee payments and multiple payment processor relationships.

Employees Prefer Kickfin

Kickfin was built to make life easier not just for operators, but also for their employees.

No app downloads: Kickfin only requires a one-time, 30-second enrollment for employees. (No app downloads or extra phone storage needed!) Payment history and reporting data can be viewed as needed simply by logging into their browser.
No paycards required: Kickfin also doesn’t require pay cards, while TipHaus offers “HausMoney” as a primary payout option for employees. HausMoney is essentially a pay card that employees’ tips are loaded onto. Funds aren’t available to use until the following day. HausMoney may be free for operators, but many employees don’t want to be forced to use a pay card due to the hassles of transferring funds to their own bank accounts, as well as the transaction fees and wait times they may incur. They’d prefer their earnings streamed to their accounts instantly, after every shift—which is how most Kickfin customers choose to pay out their employees.

Zero Prefunding* With Instant Payouts

With Kickfin, customers can send instant, direct-to-bank payouts with zero prefunding required.* While TipHaus does offer zero prefund, employee payouts must be sent to a TipHaus paycard (HausMoney). In other words, if you want to use a zero prefund option with TipHaus, you won’t be able to offer instant, direct-to-bank payouts to your employees.

Option to Manually Input Tip Data

With TipHaus, a POS integration is required, and all tip payment data is generated by the software’s tip calculator.

Kickfin was designed for ultimate flexibility. While many customers use Kickfin’s POS integration to auto-calculate tip amounts, some restaurants don’t need automated tip calculations and prefer to use Kickfin unintegrated. That isn’t an option with TipHaus.

Additionally, some Kickfin customers use Kickfin to auto-calculate tip pools, then manually upload other tip data on an as-needed basis. This comes in handy when you need to pay out “extra” staff, like entertainers, security guards, etc.

Easy, Accurate Distribution of Auto-Gratuities and Service Charges

Kickfin tracks Tips and Auto-gratuities separately. As a result, you can report those types of payments to payroll separately and handle them independently for tax purposes.

Why does that matter? In light of the 2025 “No Tax on Tips” legislation, tipped employees no longer have to pay federal income tax on the first $25,000 in tips earned each year. However, they do need to pay taxes on earnings from services fees, autogratuities and other compulsory charges that are not considered tips by the IRS.

(If 100% of your service charges does not go to your employees, Kickfin allows the “house account” to retain a portion of service charges, while the rest is distributed to your team.)

Enhanced Tip Calculation Functionality and Features

Kickfin’s Tip Calculator was designed to be both highly robust—so it can handle the most complex tip pooling policies—while also being incredibly simple and intuitive to use.

A few unique things about Kickfin’s Tip Calculator:

No data sync delays: Tip calculations are immediate and on-demand. With Tiphaus, a data sync process is required which can add extra time to your tip calculation process.
Built-in flexibility: Kickfin releases new Tip Calculator features on a regular basis based on feedback we regularly source from customers. For example, Kickfin now offers check splitting for both individual checks and groups of checks, making it easier to handle large parties and events.
Ease of use: Customers regularly shout out our sleek, high-quality user interface compared to other platforms. Notably, we’ve made it easy for managers to review all details before hitting “submit,” ensuring the accuracy of every payout.

Cash Tip Tracking and Payouts

Many operators choose Kickfin because they don’t have enough cash on hand to pay out credit card tips, and they want to reduce the amount of cash handling in their restaurant altogether.

However, we know cash will probably always be (a small) part of the equation. Kickfin makes it easy for you to handle that with some added functionality:

Tips left in cash: If a diner leaves a pile of cash at your table, it might not get recorded in your POS. However, Kickfin allows you to record it and distribute it through our platform.

Cash payouts: Many operators may want to distribute all of the cash left in their register at the end of a business day to avoid bank runs. Again, that’s easy to do with Kickfin.

Multiple Payment Processors for Guaranteed Deliverability

For many employees, especially those living paycheck to paycheck, it’s critical that they receive their tip earnings and that they’re instantly accessible/ready to use.

TipHaus uses only a single processor. Kickfin uses multiple payment processors to ensure deliverability of payouts should a processor experience a disruption or become insolvent.

Direct POS Integrations

All of Kickfin’s POS integrations are direct API integrations, while TipHaus has been known to utilize third-party software to integrate with some POS systems. The problem with third-party software is that it can be susceptible to more connectivity issues, creating problems with data reliability.

Top-Ranked Customer Support

Kickfin has an award-winning Customer Success team that is exclusively focused on helping our operators get the most value possible out of Kickfin.

Every member of our team is based in the U.S. We provide free, personalized training and onboarding for your whole team, and when questions or issues arise, we can be reached by phone, email, text or chat. We also have a robust library of support documentation and videos that provide step-by-step guidance for every aspect of the platform.

Credibility and Recognition

At the end of the day, Kickfin’s large and fast-growing customer base speaks for itself, as do their rave reviews of the platform.

For multiple years, Kickfin has been the only tip management software that is recognized on both the Inc. 5000 and Deloitte Fast 500 lists. Kickfin has received recognition from peer software review sites like G2 and Capterra for consistently high customer rankings and reviews.

*Zero prefund is available to select customers after a credit review to confirm their fit with the zero prefund program.

Ready to take the next step?

See why thousands of restaurant pros use Kickfin to auto-calculate tip pools and pay out tips in real time, no cash or math required! Get a demo today.

Industry Trends, Restaurant Management

FAQ: What the “No Tax on Tips” Act Means for Restaurant Operators and Your Restaurant Team

We’ve been talking about “No Tax on Tips” for months, and now it’s a reality. But what exactly does that mean for restaurant operators and their tipped employees?

Signed into law on July 4, 2025, as part of the broader “One Big Beautiful Bill” tax package, the new policy eliminates federal income tax on tipped earnings (up to a cap…along with some other caveats…) for qualifying workers.

While No Tax on Tips garnered widespread support from hospitality employees and employers alike, there’s still a lot of confusion about how it works, who qualifies, and what it means for your restaurant team.

Our FAQ breaks it all down: the fine print, the benefits, the limits—and how you can make sure your team is positioned to take full advantage.

What does “No Tax on Tips” actually mean for my team?

The No Tax on Tips Act has created a new federal income tax deduction — up to $25,000 of “qualified tips” per year for employees in traditionally tipped occupations.

Tipped employees can deduct up to $25,000 in tips from their federal taxable income. (For added context, based on Kickfin customer data, the average tipped employee earns $125 per shift and works 15 shifts per month. That totals $22,500 in annual tip earnings.)
The deduction starts to phase out at $150,000 in annual income.
The deduction is currently restricted to those who earn $160,000 or less in 2025, but that’s expected to change in coming years to account for inflation.
These earnings are assessed based on employees’ income as of December 31, 2024.

Two other important items to note:

Deduction, not exclusion: This is a deduction, not an exclusion. That means all tips still need to be reported; the deduction will be claimed when your employees file their taxes. The deduction is on top of the standard deduction ($16,000 for individuals, $32,000 for married couples filing jointly).
Other taxes still apply: This bill is all about federal income taxes, so Social Security and Medicare taxes still apply. Also, keep in mind that this is a federal tax deduction. States will individually decide whether or not to align with the change.

Which types of tips are eligible?

The bill applies to cash tips—but it’s technically a little broader than that. According to the Senate Finance Committee, “cash tips” includes:

Physical cash tips
Credit card tips
Tips shared through pooled or tip-sharing arrangements

Other types of charges and fees that restaurant customers pay are not eligible for the dedication.

Mandatory service charges
Surcharges
Automatic gratuities

Essentially, any earnings from compulsory charges are not considered tips. Even if a restaurant passes those funds on to employees, they’re not eligible for the deduction. Do employees have to report their tips to get the deduction?

Short answer: Yes. And aside from being legally required to fully report their tip earnings, it actually behooves them to do so.

It’s no secret that many tipped employees don’t fully report their tip earnings. There are a variety of reasons for this: general confusion about tip reporting, poor tracking, and of course, a desire to avoid taxes.

Credit card tips are automatically tracked in most POS systems, so those are typically accounted for. Cash tips, on the other hand, are often underreported.

Again, because this new bill is a deduction, not an exclusion, employees must report their tip earnings to qualify.

Not only will this (legally) allow employees to reduce their tax burden; reporting their full income can really come in handy with things like loan applications, unemployment benefits, and Social Security earnings.

Is this all good news for employees?

Again, for the most part in the hospitality and service industry, there’s a lot of support for this legislation.

It will put money back in the pockets of many tipped employees—which can make a meaningful difference, especially for those who live paycheck to paycheck.

But some in the industry have voiced concerns:

Lowest-earning tipped workers won’t see much benefit. Many of the lowest-earning tipped workers wouldn’t benefit much, or at all.because they’re not paying a significant amount in federal taxes to begin with.
Some workers excluded: Not all hospitality employees are tipped employees – if you’re not operating a tip pool for example, a lot of your BOH employees aren’t going to see any benefit here.
Service/surcharges/auto-gratuity: Compulsory charges are not considered tips, so even if all of those funds are going to the employees, they will still be taxed. Again, that means BOH workers who aren’t tipped but who benefit from service charges won’t get a tax break.

What do restaurant operators need to do?

While there’s no major compliance burden on employers (yet), the smartest operators are thinking ahead—especially when it comes to digitizing tip management.

Here’s why that matters:

Accurate reporting: Employees need clear, auditable records to claim the deduction
Transparency: With platforms like Kickfin, employees can log in to view their full payment history—no guesswork required
Tip pooling: If you want your BOH team to benefit, you’ll need to operate a formal, compliant tip pool.
Efficiency: Automating tip pools (and ensuring accuracy), managing payouts, and syncing with payroll is easier than ever.

Is it time to hit the reset button?

If you’re already using a digital tip management platform like Kickfin, you’re a step ahead—your team will be well positioned to take full advantage if and when the law goes into effect.

If not: This new policy is a great reason to refresh your tip management approach, including digitizing your distribution process, re-evaluating your tip pool policy, and improving payment tracking for your team. And good news—Kickfin can help with all of that. Let’s talk.