Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. In this guide, we’ll walk you through how to get a California liquor license.
With access to a broad range of surety markets, our expert agents are ready to assist with all of your California alcohol tax bond needs.
What Are the Different Types of California Liquor Licenses?
There are two overarching categories of licenses issued in California for businesses in the alcoholic beverage industry—licenses for businesses that sell alcoholic beverages directly to the public for consumption on or off premises and licenses for businesses involved in manufacturing, importing, distributing, transporting, or warehousing alcohol. There are multiple license types within each of those two broad categories.
What Are the Steps in the Licensing Process?
It’s exceedingly rare for new liquor licenses to be created, so it’s almost certain that the only way you will be able to get one is to buy an existing one from a current licensee. This can be a very complicated process that often requires the assistance of an expert or attorney.
Once you locate a license for sale, there are still a number of hoops to jump through, including:
- Getting the proper zoning permit for your area
- Submitting an application to the California Department of Alcohol Beverage Control (ABC)
- Waiting a month for a public response to the notice posted by ABC
- Undergoing an investigation by ABC
- Purchasing an alcohol tax bond
This last point is very important. Without a California alcohol tax bond in force at all times, you could lose the license you’ve worked so hard to get.
Why is a California Alcohol Tax Bond Required?
A California alcohol tax bond, also known as an alcoholic beverage tax bond, is required by the California Board of Equalization to ensure that businesses holding alcohol licenses abide by all applicable portions of California’s Revenue and Taxation Code and Code of Civil Procedures.
The bond provides a way for the state to collect unpaid taxes from a licensee. The state can also file claims against an alcohol tax bond on behalf of customers and suppliers who incur a financial loss as a result of the licensee’s violation of the terms of the surety bond agreement.
How Are California Alcohol Tax Bond Claims Paid?
There are three parties to a California alcohol tax bond, which is a legally binding contract:
- The “obligee” requiring the bond is the California Department of Tax and Fee Administration (CTDTFA). The obligee establishes the required bond amount (the bond’s “penal sum”).
- The “principal” required to purchase the bond is the licensee. The licensee is legally obligated to pay valid claims against the bond, up to the bond’s penal sum.
- The “surety” is the company authorizing and guaranteeing the bond. The surety investigates claims and pays the valid ones initially, on behalf of the principal, and is subsequently reimbursed by the principal.
In paying a claim on the principal’s behalf, the surety is extending e principal credit in the claim amount. But the legal responsibility for paying claim remains with the principal. Consequently, if the principal fails to repay that debt to the surety, the surety can take legal action against the principal.
How Much Does a California Alcohol Tax Bond Cost?
Because of the credit risk inherent in paying claims for the principal and waiting to be reimbursed, the surety sets the premium rate for a given principal based largely on the principal’s personal credit score. A high credit score suggests that the risk to the surety is low, earning the principal a low interest rate—possibly as low as one percent.
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Our surety agents will get you the California alcohol tax bond you need for a California liquor license at a competitive rate.
