The Executive Suite: How to Start a Microbrewery in Illinois

Wednesday, October 2, 2013

How to Start a Microbrewery in Illinois

Microbreweries produce limited amounts --- usually not exceeding 460,000 gallons per year --- of what are considered "craft beers." Beer is brewed in smaller batches using traditional methods and often using specialty ingredients. Due to the limited amount of space and equipment you need, starting a microbrewery is less expensive than opening a full-scale brewery, but it still requires a significant amount of startup money. Additionally, as manufacturers of alcoholic beverages, microbreweries are still subject to the laws of the state in which they're located and/or distribute. In Illinois, the Liquor Control Commission oversees and licenses microbreweries to ensure compliance with the law. To start a microbrewery in Illinois, you must follow the appropriate licensing procedures as both a business entity and an alcohol manufacturer.

Suggestions

Draft a business plan that provides an estimate of the funds and equipment you need to start brewing and how these will be procured; a plan for how you'll package and distribute your beers; a list of what beers you'll produce; and how you'll manage production flow to ensure steady supply. Also include accounting methods, advertising strategies, and employee and safety policies.
Select a location for your microbrewery. Ensure that the site has adequate space for your equipment and a plumbing/drainage system that can handle the amount of water used in the brewing process. Depending on how much beer you intend to brew at one time, this can even be a home location, such as a detached garage.
File an assumed name with your local county clerk if you'll operate as a sole proprietorship. Otherwise, file your incorporation with the Illinois Office of the Secretary of State. In addition, trademark any logos, bottle labels or other business insignia you'll use to brand your microbrewery.
Apply for a business license from your local county clerk's office and your city, if applicable. Note that you may receive only conditional approval of this license until you've obtained all of the state and federal permits required. Additionally, you might need zoning permits or water/waste management permits prior to being allowed to operate your microbrewery.
Obtain a Business Tax Number from the Illinois Department of Revenue and a Federal Employer Identification Number, or FEIN, from the IRS --- even if you won't have employees, this number is required to obtain the other licenses you will need. You may also be required to hold tax permits from your local county and city government. The county clerk's office can advise you of whether these are necessary.
Apply for a Federal Basic Permit, a Label/Bottle Approval Certificate and a Brewer's Notice from the Alcohol and Tobacco Tax and Trade Bureau. You're required to submit information about your business, including copies of your assumed name/articles of incorporation, FEIN and anticipated brewing volume per year. Additionally, note that you must receive these approvals prior to applying for an Illinois manufacturer's license.
Complete and submit an Application for State of Illinois Manufacturer's Liquor License to the Liquor Control Commission, including copies of your Federal Basic Permit and Label/Bottle Approval Certificate, as well as the appropriate licensing fees. File a tax bond with your application in the form of an insurance bond, letter of credit or certificate of deposit.
Prepare your microbrewery for inspection by the Liquor Control Commission, which usually occurs within 30 days of receipt of your application. Once the inspection has been completed, you're issued a manufacturer's license or notified that your application has been denied, along with information regarding fixing any deficiencies or instructions on providing additional information so that your application can be reviewed again.
Fill out and submit an Application for State of Illinois Craft Brewer's License to the Liquor Control Commission. You must provide copies of your Manufacturer's License, your Federal Brewer's Notice and Label/Bottle Approval Certificate, and your previously submitted tax bond. Although this license isn't a necessity to run your business, it does establish you as a microbrewery and allow you to self-distribute a large portion of your beer.