Beer Maker Needs Liquor License

Q: I’ve created a sports beer and found a microbrewery owner who likes my idea and wants to produce and distribute my product. I expect to maintain a controlling interest in the product. Do I need to secure a liquor license? Or could I share the liquor license with the microbrewery?

--Stanley D. Fowlks,

Los Angeles

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A: Unless you formally become a co-owner or an employee of the business that is producing your product, you will need to get your own liquor license. The type of license you need will depend on whether you will primarily be selling to retail establishments, such as bars, restaurants and liquor stores--in which case you will need a beer and wine wholesaler’s license--or expect to sell your beer to importers and wholesalers. In that case you will need a beer and wine importer’s general license.

You can be a sole proprietor and have a license--you don’t need to have any employees--and your shipments to your customers can originate from the microbrewery that is manufacturing and distributing the product. You should plan on having a work station at the facility, where your license and business records will need to be kept. If you’ll be working from a separate office or from your home, you’ll need two licenses.

To get more information on how to apply for a liquor license, visit our Web site at https://www.abc.ca.gov and contact one of the five district offices in Los Angeles County for more information. A fee is required, as well as an investigation into your moral character and your company, so expect a wait of up to several months before the license is issued.

--David Wright,

chief, business practices,

California Department of Alcoholic Beverage Control,

Sacramento

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Q: I am thinking of renting out a small apartment attached to my home to occasional vacation travelers. What do I need to consider in switching from my monthly rental to a vacation rental?

--Sherrie Norton, Los Angeles

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A: If you will have visitors coming and going frequently, you need to legitimize your business, meaning that you will want to establish a formal business structure (probably a sole proprietorship), make sure you are operating within zoning and parking guidelines for your neighborhood, obtain a business license, and open a merchant account with your bank, so you can accept credit card payments and do not have to deal with foreign currency conversions from international travelers.

I recommend that you accept payment only in dollar-denominated travelers checks, cash and credit cards and avoid the potential hassles of taking personal checks or foreign currency. You also may want to look into offering additional services for your guests, such as daily maid service, light meals and information and recommendations for tourist attractions and sightseeing tours. If you’re taking bookings or selling tickets to certain attractions, you may be able to get commissions on the transactions.

Hire a certified public accountant to help you get started, set up your business structure and bank account and advise you on your new venture. A short-term rental will have different tax implications than your monthly rental, for instance.

When it comes to marketing, you can get listed in travel guides that advertise vacation home rentals, which are particularly popular with travelers from Europe. You may want to focus on marketing to tourists from a particular part of the country or from a particular place overseas. You also could hire a booking agent or sign up with an organization, such as a bed-and-breakfast group, that would help you with marketing and advertising.

The best way to build your business is through word of mouth, so make sure you have your visitors sign a guest book, and if they’ve had a good visit, encourage them to recommend your place when they get back home.

--Steve Kunkel, CPA/certified

financial planner,

Duitch Franklin Business Services, Los Angeles

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Q: I am an electrical engineer, and I want to open a business that sells electronic parts to other businesses. How do I get the manufacturer to sell the products to me at the distributor’s price, so I can resell the product at a reasonable price?

--Gilbert Murray, Fontana

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A: Breaking into an industry such as electronics is a difficult proposition for a small-business person unless you are creative enough and lucky enough to identify an untapped niche that has a sizable market potential. The electronics industry is highly competitive, prices are continually falling, there are extremely slim profit margins and large companies tend to dominate.

In my experience within a similar market environment, the distributors sell products to retailers at cost or very, very close to it. They do not rely on large markups to survive. They make a profit by selling an enormous volume every month. When they hit a particular volume mark, they get rebates of 5% to 10% from the manufacturers. So the wholesale distributors are very motivated to move large amounts of inventory--even if they have to sell nearly at cost--so they will get their rebates on the back end from the manufacturer.

The only way you, as a small operator just starting out, could compete in this marketplace would be to join an electronics industry buying group or focus on selling to a niche that is not already being served by the big companies and will allow you to get a good markup even though you’ll be selling a smaller volume.

Look into electronic industry associations--you can find them on the Internet or by asking your reference librarian for directories of business and trade associations--and inquire about buying groups. These groups consist of several smaller companies that band together and pool their resources so they can place larger orders with the manufacturers and get better prices.

As an alternative, or in addition to that idea, see if you can specialize in distributing electronic brands or models that the larger distributors and retailers do not routinely carry, so you won’t have to compete head to head with the big guys.

--Michael Fox, president,

M&M; Paper Co., Van Nuys

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If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to kklein6349@aol.com. Include your name, address and telephone number. This column is designed to answer questions of general interest. It should not be construed as legal advice.