Brewery and taproom operations: Texas permits and payroll

What to take away

TABC permit categories and taproom sales

For brewery and taproom operations in Texas, brewing and selling are separate. A manufacturer's license lets you make beer. A brewery taproom permit lets you sell it on site. Filing one before the other stalls the application, and a stalled application can push your opening past the season you were counting on.

Taproom rights attach to named permits. A Brewer's License covers a production brewery and its taproom. A Brewpub License covers a brewpub that brews and sells on one premises. A Brewer's Self-Distribution authorization lets a small brewer deliver its own kegs instead of routing every keg through a wholesaler.

To-go rights depend on the package-sales authorization attached to the permit, not just on the fact that a brewery has a taproom. A crowler or a four-pack may leave the building only if the permit authorization includes package sales; otherwise, the taproom pours for on-premise consumption only.

A taproom inside the brewery is a different filing than a separate retail space. Distribution through a wholesaler runs through a different tier entirely.

Map every filing before you sign a lease. The brewery and taproom license application sequence is where new owners lose months, and the what licenses does a brewery question is really six questions in one.

Licensing, sanitation and safety requirements vary by city and county. Confirm with the TABC and your Austin permitting office, and have a licensed attorney review the application.

TABC permit applications use specific forms. For example, Form BREWERS (08/2015) is the application for a two-year renewal of a Brewer's Permit (B). Confirm current forms with TABC before you file.

Under Sec. 101.69 of the Texas Alcoholic Beverage Code, a false statement on a permit application is a felony. All permits are issued under that code, and the penalty underscores the need for accuracy.

What the permit controls day to day

Your permit dictates hours, signage and whether you may sell growlers. It also sets who can serve. TABC requires seller-server training for anyone pouring, and skipping it risks an administrative penalty on top of any fine.

Permit type drives your POS setup. If package sales are allowed, your register needs a to-go button with the right tax treatment. If they are not, that button should not exist.

Sales tax on to-go beer versus a draft pour

Texas sales tax on to-go beer is the line item Austin taproom owners most often get wrong. A pint consumed in the taproom and a sealed four-pack follow different rules, and the difference lands in your margin, not just your receipt.

The Texas Comptroller administers the tax. The state rate is 6.25 percent. Austin adds 2 percent in city and transit tax, so the combined rate inside the city is 8.25 percent, and a facility outside the city limits collects a different total. Build the combined rate into your menu math from day one.

Pricing errors compound. Charge the on-premise rate on a crowler and you under-collect, then owe the difference plus possible penalty. Charge the packaged rate on a draft pour and you overcharge and create a refund problem.

This is where brewery and taproom pricing meets tax. A four-pack priced to hit a target margin can miss it once the correct tax treatment and the cost of the can are both applied.

Two sales examples

A taproom sells a four-pack for $18 before tax. The customer takes it sealed, so the packaged rate applies. The register adds the combined state and Austin local rate, the customer pays the total, and you hold the tax portion as a liability.

The same customer orders two draft pours at $8 each. Those are consumed on site, taxed under the on-premise treatment, and the tax portion lands in a different bucket on your return.

Two transactions, two tax treatments, one register. If your staff cannot tell which button to press, your monthly return will not reconcile.

Payroll treatment of tips for Austin taproom staff

Payroll treatment of tips in Austin follows federal law. The FLSA framework governs, and the Wages and the Fair Labor Standards Act page from the U.S. Department of Labor is the reference your bookkeeper should work from.

The core rule allows a lower cash wage for tipped employees. An employer may pay below the federal minimum and take a tip credit against the difference, but only with advance notice. Tips plus cash wage must reach the federal minimum, and if tips fall short in a week, the employer makes up the difference.

Austin's cost of living pushes taproom wages above the bare federal floor, so many operators pay full minimum or more and skip the tip credit. That is simpler to administer and easier to defend in an audit.

Either way, tips are taxable wages. The Tip recordkeeping and reporting guidance from the IRS lays out the employer's duty: withhold on reported tips, report them on the employee's W-2, and file the right forms if the establishment meets the threshold for allocated tips.

The relevant forms are IRS Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips, and Form 4070, Employee's Report of Tips to Employer. These are the "right forms" the IRS guidance refers to.

Confirm your specific obligations with a CPA or employment attorney, because tip-credit and reporting determinations vary by employer and by state.

Tip pooling and the back of house

Tip pools are allowed, but who may participate has tightened. Managers and supervisors generally cannot take a share of a traditional pool. If your pool includes kitchen staff, put the structure in writing and apply it the same way every pay period.

Document the pool formula. An Austin taproom with a shifting pool rule is an easy target in a wage complaint.

Texas requires employers to register with the Texas Workforce Commission (TWC) for state unemployment tax (SUTA). Under Texas Payday Law (Tex. Lab. Code ch. 61), employees who are not exempt from overtime must be paid at least twice monthly; employees exempt from overtime must be paid at least monthly. Final wages are due within six days after discharge or by the next regular payday after resignation. These obligations run parallel to federal payroll rules.

Set the brewery and taproom employee pay structure before you hire, not after. Retroactive fixes to tip handling are expensive.

Overtime and scheduling for Texas taproom employers

Overtime is calculated by the workweek. The trigger is hours worked past 40 in a single workweek.

That matters for scheduling. A Thursday event that pushes a bartender to 42 hours means 2 hours at time and a half, even if the week felt light overall. There is no averaging across two weeks unless you have a valid alternative work schedule.

Some roles are exempt, but narrowly. A salaried taproom manager who genuinely directs the operation and earns at least $684 per week (the current FLSA exemption threshold) may be exempt. This is a U.S. Department of Labor rule and has been litigated; the 2024 DOL rule raising the threshold was vacated, so the $684/week figure stands as of early 2025. Confirm with an employment attorney.

A shift lead who pours beer most of the shift usually is not, whatever the title says.

Overtime is calculated on the regular rate, which includes more than the hourly wage. Non-discretionary bonuses and some shift differentials get folded in. Get this wrong and back wages add up quietly.

Scheduling practices that hold up

Five practices do most of the work.

For wage benchmarking across the Austin market, the Quarterly Census of Employment and Wages from the Bureau of Labor Statistics gives employment and wage data by industry and geography. That beats a national average when you set taproom pay.

The Overview of BLS Statistics by Geography page explains how those geographic cuts are built, which helps when you compare Austin to Dallas or a smaller Texas market.

Records TABC and payroll agencies expect

TABC inspectors and payroll agencies want overlapping paper, so one filing system serves both. The mistake is keeping two sets in two places under two retention rules.

TABC inspectors typically ask for your current permit, brewer's records, alcohol purchase invoices, and sales records that reconcile to what you reported. They also want proof servers completed required training.

Payroll agencies want time records, tip reports, payroll tax returns and proof of deposits. The IRS tip rules require a daily record of tips reported by each employee if you rely on that reporting to satisfy your obligations.

Use a brewery and taproom compliance checklist to keep both sets in one calendar. Owners who do this pass inspections with a folder, not a scramble.

Retention at a glance

The table below summarizes practical windows. Confirm current requirements with your accountant, because thresholds and forms change.

A pre-inspection checklist

Common questions

Do I need a separate permit to sell beer to go in Austin?

You may sell beer to go only if the authorization on the issued permit includes package sales. A Brewer's License and a Brewpub License are different instruments, so do not rely on the general permit name; check the authorization on the face of your permit before buying a crowler machine.

Is there a Texas tip credit I can use?

Texas has no state tip credit, so the federal FLSA rules apply. You can take the federal tip credit if you notify employees and their tips plus cash wage reach the federal minimum. Confirm your position with a CPA or employment attorney.

Does Texas require daily overtime?

No. Texas follows the federal standard of time and a half past 40 hours in a workweek. There is no daily overtime trigger under state law.

How long should an Austin taproom keep payroll records?

Plan on three years for payroll records and at least two years for time records, with tax records held longer. The IRS generally expects employment tax records kept for four years.