Is a License Necessary to Open a Cyber Cafe?

Cyber cafes, or Internet cafes, offer their customers access to computers with Internet connections for a wide range of business and personal purposes. An entrepreneur can profit from a cyber cafe, especially in a location where demand for public Internet access is high and unmet. Prior to opening, cyber cafes need the same basic licenses as other types of businesses, depending on the specific Internet services they offer.

Business Licenses

The basic license that every type of cyber cafe or other business needs is a business license, or a business permit. This license allows a business to operate legally and subjects it to local regulations for taxes, employment and marketing. A cyber cafe owner needs a business license prior to signing up for a business account with an ISP, or Internet service provider. Business licenses are generally affordable to encourage new businesses to open in communities and provide jobs, services and tax revenue for the government.

Gaming Licenses

Cyber cafes are often sites for game playing, whether it takes the form of online multiplayer games or individual digital gambling. In some states, cyber cafes can apply for additional gaming licenses. These licenses are necessary for cyber cafes that plan to offer games of chance, such as computerized poker, blackjack and bingo. Gaming license costs vary by state. They require cyber cafes that have them to comply with laws such as enforcing age limits for gambling.

Tax Issues

One reason that states require cyber cafes to hold business and gaming licenses is to tax them properly. State tax codes determine how cyber cafes report gambling revenue, as well as how they report normal business income and pay business income taxes after taking applicable deductions. A business license also provides a cyber cafe with an EIN, or employer identification number. This number is necessary for a cyber cafe owner to withhold taxes from paychecks for employees such as tech support specialists, food servers and site operators.

Additional Regulations

Opening a cyber cafe involves additional regulations outside of license requirements. Failing to follow such regulations may result in a license suspension for the cafe. For example, cyber cafes with gaming licenses may need to display helpful information for gambling addictions or charge an hourly rate below the state maximum allotment. Cyber cafes that serve food must comply with health codes and submit to inspections. Those that serve alcohol or sell cigarettes must observe state alcohol and tobacco permit requirements and restrict sales to customers over the legal drinking or smoking age.