Who Needs a Michigan Liquor License?
Michigan�s alcohol licensing laws are complicated, and so is the process for obtaining one. The state has a quota system that sets the maximum number of licenses that can be issued in a given municipality based on the size of its population. There are also many different types of licenses depending on the activities a business will engage in and what specific alcoholic beverages are being manufactured, distributed, or sold.
What Does the Licensing Process Involve?
Michigan�s alcoholic beverage industry is regulated by the Department of Licensing and Regulatory Affairs (LARA), specifically through the Michigan Liquor Control Commission (MLCC). The licensing process, however, begins with obtaining approval at the local level, often in the form of a local resolution.
Fingerprinting and a background investigation are both required. The MLCC district office will also do an inspection of the proposed premises. When all documentation has been received by the licensing staff, MLCC will review the application and approve or deny it. When applying for certain types of Michigan alcohol licenses, a surety bond must be purchased and submitted with the other required documents.
Why is a Surety Bond Required?
The surety bond that must be purchased in conjunction with obtaining a Michigan alcohol license ensures the proper payment of taxes to the state. Michigan�s alcohol bonding requirements are in addition to the federal bond mandated by the Treasury Department�s Alcohol and Tobacco Tax and Trade Bureau.
Understanding How Surety Bonds Work for Michigan Liquor Licensing
The terms of a surety bond agreement detail what the bonded individual (known as the �principal�) must do to remain in compliance and avoid claims. For alcohol tax bonds, that means remitting tax payments to the state on time and in full.� Failure to do so entitles the state (the �obligee� in the surety bond agreement) to file a claim against the bond to recover the amount due.
What Does It Cost?
The annual premium for any surety bond is a small percentage of the required bond amount (the penal amount). That penal amount is set by the state based on projected sales (for a new licensee) or previous year�s sales records (for a renewal).
The surety assigns the principal a premium rate based largely on the principal�s personal credit score. Surety companies consider a person�s credit score to be a good indicator of how easy or difficult it may be to collect reimbursement from the principal for any claims paid in advance on the principal�s behalf.
With a good credit score, your premium rate should be in the range of 1% to 3%. However, with a poor credit score, you could be assigned a premium rate as high as 10% to 15%.
Get Bonded Today
Reach out to us today about the alcohol bond you may need in order to obtain or renew your Michigan liquor license.