Certain businesses operating in the state of New York are required to meet specific requirements surrounding licensing, to ensure they are abiding by state rules and regulations. One of these requirements pertains to any business participating in alcoholic beverage manufacturing, retailing, wholesaling, and importing.
Should your business activities include these business functions associated with alcoholic beverages, New York requires you not only to have a valid license but also a surety bond.
It is essential for companies in the alcoholic beverage and liquor industry to understand what a liquor license bond is, which businesses are required to have one in place, the bond amounts necessary, bond costs, and the process for obtaining a bond.
What is Liquor License Bond?
As with any surety bond, a liquor license bond for New York businesses is a contract between three parties: the obligee, the principal, and the surety company. The obligee is the entity requiring a bond to be in place; this is the State of New York’s Division of Alcoholic Beverage Control. The principal of a liquor license bond is the business required to obtain a bond in order to comply with licensing laws. Finally, the surety company is the one providing the bond to the business as part of the licensing requirements.
A liquor license bond in New York is put in place to ensure a licensed retailer or wholesaler of alcoholic beverages in the state conducts business in compliance with state laws. This bond also ensures a company will pay penalties, charges, and fines that may arise during the operation of its business as a licensed retailer or wholesaler.
If a bond claim is made against a company, the surety pays the claim amount up to the limits of the bond. However, a New York business with a liquor license bond is required to repay the surety. For this reason, bond claims resulting from misconduct or fraud should be avoided whenever possible.
Which Businesses Need a Liquor License Bond?
Any retail companies that sell alcohol or liquor to customers in New York are required to hold a liquor license bond. This is necessary in order to obtain the proper licensing for retail sales in the state. Businesses that fall into the retailer category may be wine or liquor stores, restaurants that serve alcohol, cafes and bars that serve alcohol, and caterers or event venues offering alcoholic beverages.
Additionally, certain wholesalers are also required to get a liquor license bond to operate legally. Wholesalers may include those that participate in the wholesale distribution of cider, wine, liquor, or beer. Importers are also required to obtain a liquor license bond under New York licensing regulations.
Bond Amount Breakdown
The amount of the liquor license bond your business needs depends on the type of business you operate. Here are the most common bond amounts based on the business category:
- Retailer liquor license bonds: $1,000
- Wholesaler liquor license bonds for cider: $1,000
- Wine wholesaler liquor license bonds: $10,000
- Liquor wholesaler liquor license bonds: $20,000
- Beer wholesaler liquor license bonds: $10,000
Importer liquor license bond amounts vary depending on the amount of alcohol imported annually.
The Cost of a Liquor License Bond in New York
For retailer liquor license bonds in New York, bond premiums – the cost you pay for your bond – is a small fraction of the total $1,000 bond amount. The total bond cost is based on the term of the liquor license you hold. Minimum premiums for liquor license bonds are as follows:
- For a one-year liquor license term: $50
- For a two-year liquor license term: $75
- For a three-year liquor license term: $100
Bond costs for wholesaling businesses in the state are calculated not as a flat premium amount, but instead, as a percentage of the total bond required, based on the business category you fall in to. Liquor license bond premiums range from 1 to 10% of the bond amount.
The percentage the business pays depends on the financial strength of the company, the credit history of the business owner, and the length of the bond term. Individuals with stronger credit will pay a lower bond premium, compared to those who have less than ideal credit.
How to Obtain Your Bond
Securing a liquor license bond as a New York business is a straightforward process. For retailer bonds, an application can be submitted online in a matter of moments. The application asks for information about the business name and address, whether a liquor license is a new license or a renewal, and contact information for the business owner. Applications also require a start date for the bond. If the liquor license is new, you simply enter the date the application is submitted. It is essential that the liquor license bond application has the same term as the liquor license for the business.
For wholesaler liquor license bonds, the same information is required. However, the surety company will also ask for details regarding the business owner’s personal information. The application details are then submitted to the surety company for review, including a credit check. A bond quote is provided once the application is complete.
Having a retailer or wholesaler liquor license bond for businesses selling alcoholic beverages or liquor in the state of New York is a crucial requirement of complying with current laws. Fortunately, obtaining a bond is a simple process, and the cost of a liquor license bond is minimal compared to most other business expenses.