Many business owners in Las Vegas decide to apply for a liquor license to start or grow their business. Selling liquor on your premises can certainly appeal to the partygoers of Las Vegas, but you also need to make sure you're prepared for the costs this process can entail, including origination fees. Learn more about origination fees, and find out why your liquor license application could become more expensive than you expected.

Liquor licensing in Las Vegas

While Las Vegas has a reputation as the home of constant partying, the liquor licensing process in the city is as strict as any other. Within the state of Nevada, each jurisdiction operates its own liquor licensing process, so if you want to serve, sell or distribute alcohol, you'll need a license from the local county or city. If you want to manufacture, import or sell alcohol on a wholesale basis, you'll need a state license.

As well as passing several background and criminal checks, you'll also need to pay various fees to get your hands on a liquor license. By far, the largest fee is the origination fee (sometimes called an origination charge), which will vary from one jurisdiction to another and will depend on the sort of license you want to get. The origination fee is one way the authorities limit the number of licenses issued. Put simply, a liquor license is a legal and financial privilege, so the origination fee is a way to make sure that only serious applicants try to get a license.

The fee first appeared before1990, when the number of taverns appearing in Las Vegas boomed. The fee was a way to control the number of taverns within a certain area, while generating an income for the city.

The scale of origination fees

The origination fee you have to pay can vary significantly. For example, if you simply want to sell beer or wine through a cooler in your retail store, you may only face an origination fee of $2,500. However, if your business plan applies to a tavern, restaurant or night club, you could end up paying an origination fee of $75,000. Even a hotel lounge bar would face an origination fee of $40,000 to serve liquor.

The origination fee isn't the only fee you will need to pay, either. The origination fee is a one-off charge, but even if the authorities grant your license, you'll normally also need to pay a semi-annual license fee. These license fees are much lower, but the origination fee means that the application process is just too expensive for some potential license-holders.

Avoiding origination fees

You cannot normally avoid origination fees, but some jurisdictions temporarily waive the fees to encourage new businesses to the area.

In the Fremont East District and the Arts District, the authorities introduced a special program in February 2010 to encourage entrepreneurs to the area. As part of this scheme, the licensing authority suspended the origination fee for applications from new business owners. As such, some license-holders saved tens of thousands of dollars. The ongoing semi-annual license fees remain in place.

You don't have to pay an origination fee if you change ownership or location. The one-time fee applies only when you first set up your business. As such, if you take over a business from somebody who has already paid the fee, you don't need to pay it again. What's more, if the business premises move within the jurisdiction, you don't need to pay the fee again, either.

If you change from one type of license to one with a higher origination fee, you will need to pay the difference. What's more, you won't get a refund if the new license has a fee lower than the one you have paid.

Origination fees for liquor licenses in Las Vegas can become a significant cost. Talk to a licensing consultant or experienced lawyer for more advice. For more information about obtaining a licence elsewhere, contact a local organization like Arizona Liquor Industry Consultants.