How to Start a Bar in California: Type 48 and 47 Drawing, $19,840 Application or Type 42 With No Drawing

If you want to start a bar in California, the alcohol license comes first. It decides how long you wait, how much you spend, whether you can serve food, and whether you can open at all. Many first-time owners pick a location, sign a lease, and only then look at liquor licensing. That order creates expensive problems. This guide puts the license choice first, then cost, local approvals, and staffing.

This is informational content, not legal or tax advice. Liquor licensing, entity formation, and tax rules involve technical details that change over time. Before you sign a lease, commit to a build-out, or pay a fee, talk with a California attorney who handles liquor licensing and a CPA who understands California franchise and sales tax.

Materials and Information You Need Before You Start

Gather these items before you contact the Department of Alcoholic Beverage Control (ABC) or the Secretary of State:

• A target address, or at least a target city and county. Your license quota, annual fee tier, and local permits all depend on location.
• A written budget. Include the $19,840 application fee if you plan to enter the general license drawing, the first annual fee, entity fees, build-out, insurance, opening inventory, and working capital.
• Proof of California residency. A drawing applicant must have been a California resident for 90 days.
• Entity documents. Articles of Organization (Form LLC-1) for an LLC, or Articles of Incorporation for a corporation.
• A fictitious business name plan if you will operate under a name other than your legal entity name.
• A staffing list of everyone who will serve alcohol or supervise service, so each person can complete Responsible Beverage Service (RBS) certification.
• An insurance broker and an attorney, consulted early. Liability for serving an intoxicated customer is a major exposure, so raise those questions with both before you open.

Step 1: Pick Your License Type

California splits liquor licenses into two groups. General licenses, such as Type 47 and Type 48, are capped by county quota and are issued only through ABC's annual priority drawing. Non-general licenses, such as Types 40, 41 and 42, are issued outside the drawing. For a bar, the realistic options look like this:

License	What it allows	Drawing	Application fee	Annual fee (2026)
Type 48, on-sale general	Public premises bar. No food required. Customers must be 21 and over.	Yes	$19,840 plus first annual fee	$1,545, $1,260 or $985 by city size
Type 47, on-sale general	Bona fide eating place. The premises must qualify as an eating place.	Yes	$19,840 plus first annual fee	$1,545, $1,260 or $985 by city size
Type 42, on-sale beer and wine	Public premises bar serving beer and wine only.	No	$1,135	$705
Type 41, on-sale beer and wine	Eating place serving beer and wine.	No	Confirm with ABC	$565
Type 40, on-sale beer	Beer only.	No	Confirm with ABC	$500

A Type 48 is a public premises license. It does not require food. A Type 47 requires an eating place, so pick it only if you will actually run a kitchen that meets ABC's standard. Confirm those requirements with ABC before you design your floor plan around a kitchen.

Type 87 is a neighborhood-restricted license with its own drawing in San Francisco and Los Angeles. Check with ABC whether it fits your plan before you assume it is an option.

Watch for one detail that trips up many owners: to-go cocktails. Under Business and Professions Code 23401.5, to-go cocktails are allowed only for an eating place holding the right license, such as Types 41, 47 or 75. That privilege was extended through December 31, 2029 by AB 2663. A Type 48 public premises does not have it. If your business model depends on to-go cocktails, a Type 48 will not get you there.

Type 42 suits a bar that serves beer and wine only and wants to avoid the drawing. Because it is not part of the drawing, you do not need to win a lottery to apply for it.

Step 2: Budget the Real Costs

Use these figures in your plan:

• Type 47 or 48 application fee: $19,840, paid by a drawing winner, plus the first annual fee.
• Type 47 or 48 annual fee (2026): $1,545 in a city over 40,000 people, $1,260 in a city of 20,000 to 40,000 people, and $985 in a smaller city or an unincorporated area. Fees rise 3.31 percent on January 1, 2027.
• Type 42 application fee: $1,135, the non-general fee. The annual fee is $705.
• Type 40 and Type 41 annual fees: $500 and $565. Confirm the application fees for these two with ABC.
• Buying an existing license: ABC charges a premises transfer fee of $975, or a person-to-person transfer fee of $1,565 with a general license. Those are ABC fees only. The price a seller asks for a license is a private negotiation that this guide does not cover. Have a licensing attorney review any deal and any broker arrangement before you pay.

Full fee details are on ABC's website at abc.ca.gov. Fees change, so confirm each figure on the agency page before you commit money.

Step 3: Enter ABC's Priority Drawing (Type 47 or 48 Only)

General licenses are issued through the annual priority drawing. The 2026 drawing window ran September 14 to 25, 2026, so it has closed. Check ABC's priority registration drawings page, reached from abc.ca.gov, for the next window and its instructions. Confirm that you meet the 90-day California residency requirement before you register.

The drawing is competitive, and winning does not guarantee a license. A win gives you the right to apply, and ABC still reviews the application. You cannot legally serve alcohol until the license is issued. Plan for a long lead time, and confirm current processing expectations with ABC rather than building your opening date around a guess.

Step 4: Form Your Business Entity

Most bars use an LLC or a corporation. The Secretary of State's Business Programs Division handles both through bizfile Online at bizfileonline.sos.ca.gov.

1. Check and reserve the name. Search the business name database, then reserve the name for $10 for 60 days if you need time. Reservations cannot be renewed for consecutive periods. An LLC name must include "limited liability company," "L.L.C." or "LLC" and cannot contain "bank," "trust," "trustee," "incorporated," "inc.," "corporation" or "corp."
2. File the Articles of Organization (Form LLC-1). The filing fee is $70. Online filings are normally processed within about 5 business days or less, while paper filings take 10 or more business days. Expedited options are 24-hour for $350, same-day for $750 (received by 9:30 a.m.), and 4-hour for $500 (drop-off, precleared).
3. Appoint a registered agent. The agent must be an individual who resides in California or a corporation with a Corporations Code 1505 certificate. An LLC must also keep an office in California.
4. Budget the state tax. An LLC organized or registered in 2024 through 2026 owes the $800 minimum annual franchise tax from its first year. An LLC whose first taxable year begins in 2027, 2028 or 2029 pays $400 in year one under RTC 17941(g)(2), so confirm that amount with the Franchise Tax Board. An LLC fee of $900, $2,500, $6,000 or $11,790 also applies once California-source total income reaches $250,000, $500,000, $1,000,000 or $5,000,000.
5. Calendar the Statement of Information. An LLC files Form LLC-12 for $20 within 90 days of filing the articles, then every two years during the six-month window ending on the last day of its anniversary month. If it is missed, the Franchise Tax Board assesses a $250 penalty after a Secretary of State notice.

A corporation files Articles of Incorporation for $100 and a Statement of Information (Form SI-550) for $25 within 90 days, then every year. A newly incorporated or qualified corporation, or an S corporation, owes no $800 franchise tax in its first taxable year. California does not allow a domestic series LLC, so do not plan around one.

Step 5: Register Your Name, Sales Tax, and Payroll

Register these accounts before you open the doors:

• Fictitious business name (DBA). File the statement with the county clerk-recorder in the county of your principal place of business, within 40 days of starting. The statutory fee is $10 plus $2 per additional name or owner, but counties charge more, and newspaper publication is a separate cost. Publish the statement in a newspaper once a week for four weeks. The filing expires after five years. Confirm the county fee on the county clerk's website before you file.
• Seller's permit. Register with the California Department of Tax and Fee Administration (CDTFA) at cdtfa.ca.gov. The seller's permit is free. A bar selling taxable food and drinks must collect sales tax. The statewide base rate is 7.25 percent, and city and district taxes bring local rates up to 11.75 percent. Buying inventory for resale requires a resale certificate, which has no required form.
• Employer registration. If you will have employees, register with the Employment Development Department (EDD) before your first payroll.

California has no general statewide business license. The Secretary of State issues none, and the CDTFA seller's permit is not a business license. Your bar will need a city business tax or registration certificate instead, which is covered in the next section.

Step 6: Clear Local Approvals

This is where many bar projects stall. ABC licenses the alcohol, but your city or county controls whether the building can host a bar at all. Start these conversations before you sign a lease.

• Conditional use permit. Most cities require one for a bar. Ask the city planning department whether your address qualifies and how long the process takes. Do not assume the answer from a neighboring business.
• Entertainment, dancing, and late-hours permits. These may apply depending on your city. Ask the city what applies to your plans, including live music and closing time.
• City business tax. Most California cities charge a local business tax or registration certificate, and 445 of 483 cities report revenue from one. There is no common formula, so the amount depends on the city. Counties license only regulated activities.
• Food permits. If the bar serves food, you need a county health permit. You will also need a certified food safety manager under Health and Safety Code 113947.1.
• Build-out. The contractor license threshold is $1,000, so most bar build-out work requires a licensed contractor. Verify each contractor's license with the Contractors State License Board before hiring.

Step 7: Staff the Bar

Staffing decisions affect both compliance and cost. Plan for these items:

• Responsible Beverage Service certification. Servers and managers must complete RBS training. Build it into your hiring and onboarding schedule.
• Minimum wage. California's statewide minimum wage was $16.90 an hour in 2026, and it is reported to rise to $17.40 on January 1, 2027. Verify the current figure with the Department of Industrial Relations before you set pay, and check whether your city sets a higher local minimum.
• Workers' compensation insurance. Employers in California must carry it. Ask your insurance broker to quote the policy with your payroll estimate.

Common Mistakes to Avoid

• Signing a lease before confirming license eligibility. A great location is worth little if the city will not approve a bar there.
• Looking for a state business license. California does not issue one. Your local requirements come from the city and county, plus the license for your activity.
• Choosing a Type 48 for to-go cocktails. The to-go privilege belongs to eating places with the right license types.
• Missing the 40-day DBA deadline or the Statement of Information deadline. Both carry consequences, and the Statement of Information penalty is $250.
• Assuming an LLC avoids the $800 franchise tax. An LLC organized or registered in 2024 through 2026 owes it from the first year.
• Serving before the license is issued. Winning the drawing or filing an application does not give you permission to serve.
• Using a name the Secretary of State will reject. Words such as "bank" or "trust" are not allowed in an LLC name.

Expected Results

Working through these steps in order may help you avoid the most common delays and rework. A bar with the right license type, approved local permits, registered accounts, and trained staff is generally better positioned to open on its planned schedule. Results vary by city, county, and drawing outcome, and no step guarantees a license or an opening date.

Your Next Steps

1. Choose Type 48, Type 47, or Type 42 based on your concept and location.
2. Build a budget that includes the license fees, entity fees, and build-out.
3. Check the city's conditional use permit and business tax requirements before signing a lease.
4. Form your entity through bizfile Online and register with the CDTFA and EDD.
5. If you need a general license, watch ABC's drawing page for the next window.

Disclaimer: This article is informational only and is not legal, tax, or financial advice. Fees, deadlines, and rules are current as of October 29, 2026, but they change. Confirm every figure with the agency that administers it, and consult a California attorney and a CPA before you form a business, sign a lease, or apply for a license.