Many different types of small businesses can increase their daily revenues by becoming legally able to serve alcohol to their patrons. That's why so many business owners apply for liquor licenses each year. However, liquor licenses come in a wide variety of types--making the choice for business owners difficult. 

In order to know which license is right for your business, you'll need to have a business plan for your distribution of alcohol. That requires knowledge of the various license types and what rights they confer upon holders.

No Consumption Licenses

No consumption licenses are the types of licenses commonly sought by retailers looking to add alcohol to their lists of items for sale. These licenses allow shop owners to offer certain types of beverages to their customers during approved hours of business. These licenses, often referred to as Packaged Goods licenses, include:

• Beer and wine licenses
• Beer, wine, and liquor licenses

Beer and Wine Licenses--These licenses allow shop owners to sell low-alcohol content beverages, often limited to beer and wine. Sometimes, these licenses are added to a tavern or restaurant's liquor service license, which allows customers to purchase alcohol as well as consume it on site.

Beer, Wine and Liquor Licenses--Licenses in this category include distilled spirits and other "hard" alcohol for distribution. Because of the liability and regulations regarding beverages with higher alcohol content, time windows for sale are often more strict than with a beer and wine license. Also, variations of this license are more specific depending on the nature of your business.

The availability of these licenses vary by location, meaning your options for no-consumption licenses might be limited. If multiple options are available, you'll need to factor in your business hours, customer demand, and other products to determine which license makes the most sense for you.

Consumption Licenses

This category of liquor license allows for the legal purchase and consumption of alcohol on site. Because of consumption laws, these licenses often carry more specific guidelines than no-consumption licenses. A few of the more common consumption licenses include:

• Tavern
• Restaurant
• Catering
• Patio
• Brew Pub

Tavern--This is a license for businesses that make over 50% of their revenue from the sale and consumption of alcohol. For businesses designated as a tavern, customers must be over the age of 21. In fact, the only way a person under 21 can be on site is if accompanied by a legal guardian of legal age.

Restaurant--For places that serve food but do not make 50% of their revenue from the sale of liquor, a restaurant license is appropriate. Because food is the major focus of the business, certain regulations apply to a restaurant license that are not present with a tavern license. For example, a restaurant license often limits patrons to only one drink at a time. Also, certain specials and discounts found in taverns are not allowed at a restaurant.

Catering--A catering business is unique in that it prepares food at one site, then serves it at another. Serving alcohol with this product requires the sale of alcohol off site--requiring a specific type of license with specific regulations. Often, the types of alcohol served are limited, as well as the time when service is legal.

Patio--Since a patio is an outdoor space, municipalities can have specific regulations about the sale and distribution of alcohol. This requires a specialized license. Furthermore, since most patios are seasonal offerings, a full-year license is often not required.

Brew Pub--Brew pub licenses combine a consumption license with a manufacturer's license--within certain limits. On top of that, since quite a few microbrews have alcohol contents above 3.2%, requirements for serving hard alcohol are often established with a brew pub license.

Nothing is ever a substitute for researching your local municipality's liquor licensing and distribution requirements. That said, understanding the general types of licenses available can help frame your research and the development of your business plan as you incorporate alcohol into your business strategy.