How to Open a Liquor Store in Texas

Liquor stores, or package stores as they are sometimes referred to in Texas, offer a wide variety of alcohol to patrons, who purchase the goods and take it off site for consumption. Among the many consumable products you’ll find in liquor stores are hard liquor, wine, spirits, mixers, craft beers, and garnishments. Some may sell other drink-related goods such as wine or bottle openers, special glasses for the spirits, non alcoholic beverages, high quality alcohol, and snacks.

Liquor stores aren’t typically a hard business to start, but they do require special permitting. Starting a liquor business isn’t for the faint of heart. They require a lot of legal legwork to ensure you’re in compliance with state and local laws. A liquor store owner has a lot of red tape to work through in the beginning to ensure a successful venture. Among the most important is getting your liquor license, because in Texas, it’s illegal to sell alcohol without one. Those caught doing so can find themselves on the wrong — and expensive — side of the law.

The good news is as long as people drink, there will always be a need for liquor stores.

Do Your Research

Opening any type of business requires a substantial amount of research. Failure to do so means your liquor store may flounder before it ever has the chance to succeed. As a prospective liquor store owner, there are a few areas you’ll need to address before you ever open the doors — your business model put into action, so to speak.

Business Plan

A business plan is critical to help you outline all of the expenses you’ll need to lay out upfront and how you plan to generate sales and increase your overall cash flow. While business plans aren’t as robust as they used to be, they’re still a great method of outlining your goals and the methods of which you’ll use to achieve them. If you’re stumped on how to create a business plan, visit your local Small Business Administration office to get some tailored help. They can even help you apply for a small business loan.

Review Liquor Industry Trends

It’s critical to get to know the liquor store industry inside out. Research the top selling liquors and spirits in your area so you know what to stock from the get-go. Additionally, it’s necessary to have your finger on the pulse of what is trending at all times in the liquor store industry. This can help boost your sales.

Target Marketing

When you’re doing your research to open a liquor store, you’ll need to know who your target market is and how to put yourself right in front of them. Knowing how to reach your audience is the key to them knowing you exist. Many liquor stores send out fliers in the mail announcing their openings or specific sales they’re offering any given week.

Your liquor business marketing strategy should absolutely include social media and developing a newsletter to ensure that you are not only attracting customers, but that they are aware of your business and what it offers. These days, Instagram and TikTok are great marketing tools, and you can use the accounts to draw in customers with fun videos showcasing drink recipes, for example.

Consider hiring a social media brand consultant to guide you. Also be aware of the legal ramifications and disclosures that you must make in order to avoid any liability issues.

Establish Your New Texas Liquor Store Business

There are a number of steps you’ll need to take to make your business official with the federal and state governments for taxation purposes.

IRS Requirements

You’ll need to apply for a federal employment identification number (EIN) through the Internal Revenue Service. It’s a very easy step and done online at the IRS.gov website. The application is typically approved within minutes and the documents made available for download immediately. The EIN is used to file taxes and for helping to set up health and retirement benefits.

Business Licenses

In the state of Texas, you’ll need to file for a business license and register it as either a sole proprietorship, limited liability company, or corporation. There are perks and downsides to each business entity, so it’s a good idea to speak with business or tax attorneys to see which business structure is best for your liquor store setup. If you’re doing business under another name, you may be required to file a DBA, or a “Doing Business As” document to register your business name. These must be registered with the Comptroller of Public Accounts and with the Texas Secretary of State.

Miscellaneous 

Once you have your business license and your EIN, you’re ready to open your business bank account. This is necessary to keep a strict separation between personal and business expenses, lest you want a headache come tax time. You’ll also need to establish some business insurance to cover any incidents that may occur on your retail business property.

Choose a viable location for your liquor store

In this respect, you’ll want to pay attention to location, too. For example, opening a liquor store in a dry area — one where alcohol consumption is low or nonexistent — is a recipe for failure. But opening a liquor store in a lively downtown area with bars lining the streets might not be the best bet, either. A happy medium for an appropriate location is to consider an area that’s well traversed but doesn’t have much competition in the way of liquor stores.

Obtain a Liquor License for a liquor store business 

Before you can operate any type of establishment selling or serving alcohol in Texas, you must obtain a Texas liquor license. In fact, obtaining your liquor license should be among the first things you do, because you need to ensure that it’s possible to get your license first. Without it, you cannot sell any type of alcohol, even for off-site consumption.

There are a few things you must consider when seeking any one of the types of liquor licenses the commission offers.

Qualifications

There are a few steadfast qualifications all applicants must meet. For example:

• Cannot have felony convictions within past five years of application date
• Must not have moral turpitude violations, such as theft or fraud, within the past six months of application date
• Must not hold a license in a tier other than the one you’re applying for
• Must be at least the legal drinking age, which is 21

Each of these requirements is to establish that the person selling alcohol is going to abide by the laws and isn’t a liability. The TABC will deny applicants that cannot meet the above criteria.

Applying for the Right Tier

The TABC has three main tiers: retail, wholesale, and manufacturer. The type you’ll apply for depends on the nature of your business. However, liquor shops always fall under the retail sector, so we’ll focus on that element primarily.

Retail liquor licenses are for any business that sells alcohol directly to the consumer, whether it’s for onsite or off-site consumption. Applicants applying for a liquor store permit, known as a Package Store Permit, also have the option to distribute to local bars and restaurants within their county under a Local Distributor’s Permit. It’s important to select the proper tier when you’re applying for a liquor license because each one has specific requirements to maintain its status. Learn more about TABC Licenses and Permits.

Supporting Documentation

When you submit your application, you’ll need to send along supporting documentation, too. This may include zoning information, a list of products you intend to sell, and any other important information that’s required for the TABC to make a decision.

You can send the application through on the Alcohol Industry Management System (AIMS), which helps to streamline the process. Simply create an account on the TABC website, and walk through the required tasks. This system will also tell you exactly which documents you need to submit in order to move your application through the system.

If you’re struggling to complete the forms, Monshaugen & Van Huff, P.C. can help navigate the process.

Attending a Hearing

In some instances, a hearing may be required before your application can be approved. This typically happens when someone files an opposition. Then you’ll need to attend the hearing and argue your case.

Take Advantage of Courses

If this is your first liquor store, you might find it handy to take the TABC Licensing Course. It’s not mandatory, but it is very informative in terms of what responsibilities come with obtaining a license.

Wait on Approval

Once your application is submitted, you’ll receive a tracking number to keep an eye on the status of your approval. Bear in mind that it can take several weeks or even months for the commission to review your application and issue a decision. Add to the fact that you might need to attend a hearing to defend your application, and that could extend the review process even longer.

Maintain Your Liquor License

Once you’ve obtained your liquor store license, you’ll need to take careful measures to ensure you maintain it. It’s not just the liquor store owners who need to abide by the regulations, either. Employees in the liquor stores can put the license at risk. Proper training is essential to avoid any actions that might compromise the status of your license — and your business. Because without the license, your liquor store will cease to exist. Here are some guidelines to keep in mind:

• Liquor sales must be done within authorized selling times.
• Any disturbance must be reported to the proper authorities.
• It’s necessary to follow all display guidelines for your particular license.
• Liquor store owners must comply with all laws surrounding alcohol sales, including the most important one: selling only to those who are of legal age.
• It’s necessary to avoid selling to people who are obviously intoxicated.

Failure to abide by these guidelines can result in severe fines, but it can also lead the TABC to suspend or revoke your license, rendering your liquor store business inoperable.

How Much Does it Cost to Open a Liquor Store in Texas?

There are a number of costs involved with opening a liquor store. In the beginning it can be a huge cash layout, but fortunately, there are small business loans for those looking to secure funding. With proper marketing and pricing strategies, it’s possible to run a successful liquor store, even if it’s your first foray into the business. Here are some of the expenses you’ll encounter.

Liquor License Fees

This is an upfront fee, since you’ll need to get the liquor license before you can open, but it’s also an ongoing fee. Every two years, you’ll need to renew the license for your liquor store in order to remain in compliance. As long as you follow all the laws and guidelines outlined by the TABC, this typically isn’t a difficult process.

Initially, you’ll pay the application and processing fees, as well as city, county, and state fees. Your costs will depend on the locale where your liquor store is located. Renewal fees tend to be the same as your initial layout.

Overhead Expenses

First, there’s the matter of finding a retail space — you’ll need to account for the purchase or rent of the property. This is likely to be one of your biggest overhead expenses. Location is an important factor in determining costs, because should you open near a school, you may have to pay more upfront in the form of a bond.

Your utilities, such as electricity and water, will be a consistent expense and may vary from month to month, especially if you run the air conditioning unit consistently, which in Texas is easy to do because of the weather.

Inventory Costs

The biggest expense you’ll have with inventory is the initial layout, when you order all of the supplies to stock the store before you’ve even opened for business. After that, it’s a matter of replacing what you’ve sold, so you’ll have the income coming in to front those costs.

Additionally, you’ll want to purchase some sort of liquor store inventory management system because you need a surefire way of keeping track of what you have in stock as well as what’s selling and what is simply collecting dust on the shelves. An inventory management system simplifies your ordering process as well.

These systems can run you hundreds or thousands of dollars, depending on how complex you want to go. For a simple liquor shop with one location, you won’t need to purchase a top-of-the-line system. However, if you have plans to expand or to open more than one liquor store, a more intricate system is worth the investment upfront.

Point-of-Sale System

Every new business, including liquor stores, should have a reliable point of sale (POS) system. They truly make life simpler in the long run. Many have a payment processing service within, which makes it easy to take all types of payments without having to run several machines. Advanced systems can carry out other tasks such as age verification and promotion management. Then, there are additional features that can help with weekly and monthly reports, specifically when it comes to sales analysis.

If you offer dual pricing — cash discounts, for example — and mix and match bottle pricing, you can program it in the software and have it do all the math for you. You can even buy a liquor store POS system that ties into inventory for an all-in-one solution that works for tracking and reporting.

Marketing and Advertising

Once the new Texas liquor store business is established, it likely won’t need much in the way of advertising, but it’s always a good idea to keep marketing to the masses. This keeps your liquor store in the front of people’s minds and when they need to do a run for alcohol or related products, your store will be in the forefront of their choice of locations to visit.

You’ll need a healthy budget for this, typically costing a few hundred dollars per month to run ads and send out direct mailers. Of course, as your sales goals and advertising tactics change, so will the amount you spend. Plus, there may be seasons or holidays — such as Thanksgiving and Christmas — that you’ll want to hype up.

Hiring Experts

Every new liquor store business needs a team of experts. This often includes a business attorney as well as a business accountant to make sure all reporting requirements are in line with state and federal regulations.

Bearing all of these costs in mind, you can reasonably expect to spend tens of thousands of dollars upfront to get your liquor store up and running. Then, there are ongoing monthly costs that you’ll have to lay out as well. Opening a liquor store is not a cheap venture, but it has the makings of a very successful business if you set yourself up for success before starting your business. Make sure you take care of all of the legalities so that your business isn’t at risk.

How Monshaugen & Van Huff, P.C. Can Help

Navigating the licensing process for your liquor store business can be time-consuming, and at times, confusing. Don’t be afraid to call in the experts. Attorneys at Monshaugen & Van Huff, P.C. can help you fill out the forms, secure the documentation, and guide you through the process so that you have everything you need to get approved done right the first time. Simply reach out and contact us today to get started.