How to organize a food festival in the US: permits, vendor tax, tickets

A food festival looks like a party and runs like a small town. For two days you are the landlord, the licensing office, the tax collector and the first responder. Most organizers get the creative side right. The ones who lose money lose it on the permits, the vendor paperwork and the tax on the gate. Here is the national checklist, with what changes by state.

What permits does a food festival need?

At least three, and the order matters.

• A permit for the event itself from the city or county, often called a special event permit. It covers the site, crowds, road closures, noise and sometimes a deposit. Start with your local government at least a few months out.
• Temporary food permits for every vendor who prepares or sells food. The FDA Food Code defines a temporary food establishment as one operating no more than 14 consecutive days at a single event or celebration, and health departments issue temporary permits on that model. Deadlines and fees are usually set per event, and late applications cost more.
• Alcohol authorization if anyone pours. This is state law, and every state does it differently.

Ask the health department whether it wants one application from you listing all vendors, or one from each vendor. Some departments inspect on the first morning, and a vendor without a permit is turned away at the gate. A vendor list sent to the health department a month early prevents a bad morning.

How does alcohol at an event work?

States treat event alcohol in one of three ways: a licensed bar or brewery gets approval to pour off its premises, a nonprofit or an organizer gets a one-event permit, or a licensed caterer serves under its own license. Texas shows the shape. A licensed on-premises retailer files for approval to sell at an event, with no filing fee if the form arrives at least 10 business days before the start, and approval runs for up to four consecutive days. Nonprofits without a license have their own permit route. Rules on who may apply, how long ahead and what you must show differ in every state, so call the alcohol agency first. Read the liquor license basics for the general picture.

Who collects sales tax from the vendors?

The vendors do, on their own sales, but many states put duties on you too. Some require the organizer to give the tax office a list of vendors. Some issue a one-event permit for the whole festival. Some let the organizer register vendors in one account. Wisconsin is a clear example. It treats a festival as a temporary event, expects the event operator to report vendors on a temporary event report, and requires vendors to hold a seller's permit. An operator that sells taxable goods itself needs a permit too.

Do four things in every state:

• Ask the state revenue department what the organizer must collect or report.
• Put a clause in the vendor agreement that each vendor holds the right permit and collects tax.
• Ask every vendor for its sales tax permit number before the event.
• Keep the vendor list, the permit numbers and the booth fees on file for several years.

The sales tax guide for US food businesses explains what vendors tax.

Are festival tickets taxed?

Often. Many states and cities tax admissions to amusement, entertainment or recreation events, and a few local governments run a separate amusement tax. Wisconsin lists admissions to amusement, athletic, entertainment or recreational events as taxable unless an exemption applies. Chicago and Cook County, Illinois, tax admissions too, at rates set by their own ordinances. Whether a food festival ticket counts depends on whether the ticket buys entry to entertainment or only gets people through a gate, whether it includes food, and where the event is held. A ticket that is a prepaid food voucher may be treated like a gift card instead.

Ask the state tax office, and the city, before you set the ticket price. Decide whether the posted price includes tax, and say so. Do not discover this after the gate opens.

What else does an organizer need?

• General liability insurance, and often proof of it from each vendor. The city may name itself as an additional insured.
• A plan for waste, water, toilets, handwashing and power. Health departments check these, and so do fire marshals.
• A plan for cash, card readers and connectivity if vendors rely on Wi-Fi.
• A written agreement with every vendor covering fees, hours, power, exclusivity and cancellation for weather.
• A rule on tips. Vendor staff keep their tips. Federal law bars an employer from keeping employees' tips.

How does a festival differ from a weekly market?

A weekly market is a series of temporary events, and a health department may license it as one program. A festival is a single event with a single permit. If your event repeats each year, keep your plan and your vendor list, and ask the health department whether last year's file can be renewed. For vendors who work both, the guide to food hall stalls and markets covers their side.

What goes wrong most often?

• A vendor shows up with no permit and cannot sell.
• The organizer assumes the vendor handles tax, and the state disagrees.
• Tickets are priced without the admissions tax.
• The alcohol application misses its deadline.
• A storm cancels the event and the agreements say nothing about refunds.

More guides for your business:

• How to run a food truck in the US
• How to run a coffee shop in the US
• How to run a bar or brewpub in the US

More in the US guides for food businesses.