Opening an Indoor Playground Business: What Licenses and Permits Will You Need?

Before going any further, I want to note two very important things related to this article. 

1. I am NOT a lawyer and therefore cannot offer legal advice. Before opening your business, you should consult with a business lawyer to ensure you have all proper licenses and permits. I am simply speaking from my experience and research.

2. I live in the state of New York, in the United States. Depending on where you are located, the permits and licenses required to own and operate a business may differ. Please check your local government websites and offices and/or consult with your lawyer to see how these requirements differ for you.

Now that we’ve gotten that out of the way, I want to answer one of the most common questions I get. What licenses do I need to open an indoor playground?

But before I do, I want to debunk a common misconception. You do not need any personal certifications or a specific level of education to open an indoor playground business. Do I think you should invest in your industry knowledge and business acumen and prepare yourself for what’s to come? Yes, absolutely. 

This will increase the amount of success you’re able to achieve AND, most importantly, decrease the time it will take you to achieve success and profitability. And since my specific program, Play Cafe Academy, accounts for less than 2% of the TOTAL cost of opening an average-sized facility, it’s really a no-brainer. 

But anyways, I got a little sidetracked there-- sorry!

You do NOT need a specific personal certification or level of education to pursue this dream. Here is what you DO need, though. Depending on the size, location, and nature of your business and offerings, you may NOT need some of these. But, better safe than sorry-- so be sure to ask your lawyer about each! 

2) AN INCORPORATION FILING

New York businesses that are corporations, non-profits, limited liability companies and partnerships must register with the state using an official form or application.

A business operating as a sole proprietorship need not register, but the business’s name will take on the form of the owner’s personal name. This can be avoided by registering for a DBA (or Doing Business As).

These forms can be easily filed yourself-- so check your local government’s websites for the required form(s). We chose to have our lawyer file ours as part of our retainer, though, just because we were SO busy with my working full time and also preparing to open.

Most indoor playgrounds I have come across are LLCs (limited liability companies) but be sure to ask your lawyer and/or accountant makes the most sense for you. 

This process will give you the EIN (employer identification number) required to gain insurance, open business bank accounts, and more.

If you are a member of Play Cafe Academy and my group coaching program, Play Maker Society, then you’re in LUCK! February’s guest expert is a small business accountant who will be answering ALL of your questions. Joining after February 2020? No problem! All past guest expert trainings are recorded and are available to watch (and rewatch!) anytime! 

2) DOING BUSINESS AS

A DBA or Doing Business As, involves making a business name that differs for your personal name. You must first check to ensure your desired DBA is available (many governments offer online search databases). If it’s available, your next step will be registering it with the county clerk office. 

The cost of this process will vary between counties. This procedure is required when registering a business in the form of a corporation, limited liability company or partnership; however, it is optional for businesses based on sole proprietorships.

Our DBA is “Climbing Vines Cafe and Play”. Our actual LLC is Climbing Vines, LLC. 

3) STATE TAX REGISTRATION

When opening a small business in New York, you will need to apply for the identification numbers, licenses or permits associated with the type of service you are offering. Some of the more common taxes you will encounter are:

• Sales tax (YES, you need a permit to collect sales tax!)

• Unemployment tax

• Corporation tax

• Alcoholic beverage tax (if you sell alcohol)

Again, depending on the size and nature of your business and it’s offerings, these may differ for you. We had our lawyer handle all of these to be absolutely sure everything was done correctly! 

4) BUSINESS LICENSES

Now, as a run-of-the-mill indoor playground facility, you will typically NOT need any additional specific business license to operate. New York State’s Office of Professions will aid in determining which professions require licenses for operation

Some facilities though may choose to offer salon services, preschool or other accredited educational services, or daycare services. These WILL require additional permits and licenses. 

In New York State we can offer summer camps and drop-off care for a limited amount of hours for a limited amount of children WITHOUT needing a daycare license. This is an IMPORTANT legal question to ask your lawyer.

Not only do you need to know if you CAN offer drop-off care, but also how many adults need to be present, how long you can offer care for, what specific requirements your state and county has, and so on.

You also need to know what information you must have on your waivers (for both open play AND drop off care) to ensure you are as protected as possible (and that you have enough information in the event of an emergency-- like allergies or medical issues of the child you are providing care for). 

4) LOCAL PERMITS

New York State’s Online Permit Assistance and Licensing website can help you narrow down the search for required permits for your facility.

Each county (and even town or city!) may have its own unique regulations. Here are some of the most common licenses and permits you may need:

• Alarm Permit

• Building Permit

• Business License and/or Tax Permit

• Occupational Permit

• Signage Permit

• Zoning Permit

We needed ALL of these!

And shockingly enough, the signage permit was the MOST difficult to get! Our town has a “historic” look and feel and they did NOT want us to have a multi-color sign, and they would NOT let us have any sort of back-lit sign. 

This made our sign MUCH more expensive because we had to light it from the front.

My recommendation is to ask local business owners where you plan to open if they had any difficulty obtaining local permits. Some municipalities are notorious for being more “difficult” than others.

And as I mentioned, these difficulties can not only take time to deal with but also present you with unforeseen costs. 

5) HEALTH PERMIT / HEALTH DEPARTMENT REQUIREMENTS

This is technically also a local permit, but I wanted to break it out into its own section so I could better explain.

In our specific county-- we MUST have a health department license if we sell anything above plain black coffee (like specialty espresso drinks) OR if there is any food preparation on our end.

Even though we do not have an oven or a stove, we need a license because we cut up our snacks and things like that.

We also must have a 3-bay sink, a commercial dishwasher, a commercial fridge, a handwash sink (a specific distance from our prep table), a mop sink, and MORE!

For us, a health department license only costs $75 per year, so it is well worth it. However, the cost of the additional equipment we needed in order to serve our VERY limited menu (and the space it took up in our tiny kitchen!) was a huge shock.

BEFORE you plan your space out and determine your specific start up costs, be sure to research your local health department requirements!

If you are in New York, check out the following health codes for more information.

• Subpart 14-1 contains the regulations for Food Service Establishments, such as sit-down restaurants, take out restaurants and schools.

• Subpart 14-2 contains the regulations for Temporary Food Service Establishments, such as those found at fairs and other community events.

• Subpart 14-4 contains the regulations for Mobile Food Service Establishments and Pushcarts.

• Subpart 14-5 contains the regulations for Vending Machines. 

6) INSURANCE REQUIREMENTS  

If your New York-based business requires employees, you must pay for several additional expenses, including disability insurance, worker’s compensation and unemployment insurance taxes.

Disability insurance, which supports insured workers when facing non-work related injuries, is REQUIRED. 

Employers must deduct this insurance tax from employee wages and then send the information to the state. You can learn more from the New York Worker’s Compensation Board.

On the other hand, worker’s compensation tax aids workers who are injured on the job. This is also required. Information concerning this tax can also be found on the New York Worker’s Compensation Board.

Unemployment insurance tax aids unemployed workers who are willing and able to work. Liability conditions for this tax vary depending on the nature of your business and where you are located (and if you are located in an “at will” employment state. 

7) BONUS: EMPLOYER REQUIREMENTS 

If you going to employ a team (even just one employee!) you will face additional requirements.

1. Withholding Income Taxes. Following the filing process of the 4th quarter of the year, employers should keep track of employment tax records for the next four years or longer. The following items should be included in your records:

• Employer Identification number

• Personal information on employees, including social security numbers

• Information on wage, annuity and pension payments

• Copies of tax withholding allowance certificates from employees

By maintaining accurate and organized records, you can keep track of your business’s growth and progress, prepare tax returns, determine tax deductible items and determine the sources of your receipts.

• W-4 and W-2 Forms. Employees must provide employers with a signed Form W-4, a withholding exemption certificate. It is the employer’s responsibility to send the completed form to the IRS. In addition to the Form W-4, employers must also handle Form W-2, which contains information concerning withheld taxes and paid wages of  employees during the previous year. 

Every year,  Copy A of the form should be sent to the Social Security Administration by the end of February. If a form is submitted through electronic means, the due date extends to the end of March. Undelivered copies (if the W2 gets returned in the mail) should be kept on file by the employer.

• Employee Eligibility Verification (Form I-9)

New employees must complete Form I-9 and return it to the employer within three days of employment. This form provides proof of eligibility to work within the country, so the employer must keep a completed form on file for each employee.

• New Hire Reporting

It is the employer’s  duty to collect and report information regarding new employers  within 20 days of the beginning of employment. This information should include the employee’s full name, address, social security number , available health benefits, the date of employment and information about the employer.  Our accountant (who also processes our payroll) gave us a form to have employees fill out! 

This all seems complicated, but the GOOD news is that your lawyer and accountant will be able to help with much of it.

My best advice is to retain a business lawyer as soon as possible so that your plans or your budget are NOT halted or interrupted by unexpected permits or requirements.

If you are a Play Cafe Academy member, you already have access to all of our documents (including our open play and drop-off waivers that cost us a combined $600+ for a lawyer to create!) so this process will be EVEN simpler for you.

Not a member yet? What are you waiting for?! Click here to make the BEST possible investment in the success of your business. You won’t regret it!

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