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 Texas liquor license.
With access to a broad range of surety markets, our expert agents are ready to assist with all of your Texas alcohol tax bond needs.
What Are the Different Types of Texas Liquor Licenses?
Texas has both wet and dry counties as well as some counties that allow certain types of alcohol sales but not others.
As it is used here, “licensing” refers to any licensing, registration, or permitting process that is required for businesses in general (not specifically cleaning businesses) at the state and/or local level.
What Are the Steps in the Licensing Process?
While Texas liquor licenses are issued by the Texas Alcoholic Beverage Commission (TABC), license applications typically are submitted through the local sheriff’s department and must be accompanied by a certificate from the city or county verifying that the business is located in an area that permits the sale and consumption of alcoholic beverages.
Texas currently issues 67 different types of liquor licenses in three broad categories: manufacturing, wholesale, and retail. The licensing process differs depending on the type of license and can be rather complex. In addition to providing all of the required documentation, applicants must pass a background and eligibility check by TABC and appear before a judge, who will decide whether to approve the license.
Depending on the type of alcohol-related business and where it is located, license applicants may be required to purchase a surety bond.
Why is an Alcohol Bond Required?
Statewide, alcohol retailers without a Food and Beverage (FB) certificate license must purchase a Conduct Surety bond in an amount ($5,000 or $10,000) determined by their distance from a public school. In certain counties, obtaining an on-premise (BE) license, or a wine and beer retailer’s (BG) permit without holding an FB certificate requires the purchase of a $2,000 performance bond.
There are several other types of surety bonds that may be required prior to being granted a Texas liquor license. These bonds all provide financial protection for the state and the public in the event that the licensee (the bond’s “principal”) violates the terms of the surety bond agreement, for example by failing to remit tax payments to the state. The bond provides funds for paying valid claims.
How Are Alcohol Bond Claims Paid?
The terms of any Texas alcohol surety bond make the principal solely responsible for paying valid claims against the bond. However, it’s common for the surety (the company that guaranteed the bond) to pay a claim initially, on behalf of the principal. The legal obligation still exists though, so the principal must repay the surety for the debt resulting from that payment.
How Much Does a Texas Alcohol Bond Cost?
Texas alcohol bonds in smaller amounts may not require underwriting. The premium for such bonds is usually a small, fixed amount that is the same for all applicants.
When underwriting is required, the premium you’ll pay for an alcohol bond in Texas depends on two factors: the required bond amount established by the obligee and the premium rate assigned by the surety. That premium rate is based largely on the principal’s personal credit score, which is the best indicator of the risk inherent in extending credit to the principal and waiting for repayment. With good credit, the premium rate can be as low as one percent.
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