Arkansas private club permits, and what they change in your POS
In much of Arkansas the permit on your wall, not the food on the plate, decides how your drinks are taxed.
A large share of Arkansas counties are dry, and restaurants serving alcohol in those places generally operate under a private club permit rather than an ordinary restaurant liquor permit. The permit changes the tax treatment of your drinks and it adds a record keeping requirement. In Little Rock a private club reaches 27.625% on mixed drinks against 32.625% for a restaurant.
“We are not mosquitoes. You will not be swatting us away. But we are not disappearing after the install either.”
Why do Arkansas restaurants hold private club permits?
Arkansas regulates alcohol at the county level, and a substantial number of counties are dry. In those counties an establishment that wants to serve alcohol generally does so under a private club permit issued by Arkansas Alcoholic Beverage Control rather than under an ordinary restaurant liquor permit.
For a guest the experience is close to normal. For an operator it changes two things that land directly on the point of sale: the rate charged on drinks, and the records you are expected to be able to produce.
How does the tax differ for a private club?
The state mixed drink taxes still apply. What changes is the local portion. In Little Rock a private club reaches a combined 27.625% on mixed drinks where a restaurant reaches 32.625%, because the city rate applied to private clubs is lower.
Five percentage points on every drink is not a rounding error. A system configured with the restaurant rate when you hold a private club permit overcharges your members on every tab, all year.
What does a private club need the POS to track?
Membership, first of all. If your permit depends on serving members, your system should be able to attach a sale to a member record rather than relying on a paper list at the door.
Beyond that, clean separation of food and alcohol revenue, because the ratio between them can matter to a permit, and reporting that can produce it on demand rather than after a weekend of spreadsheet work.
Ask any vendor to demonstrate both before you sign. A system that cannot show you a member attached to a tab in a demo will not do it in your dining room either.
27.625% against 32.625% on every drink you sell.
What should you confirm before configuring anything?
Which permit you actually hold, and what your city applies to that permit type. Permit rules and rates are amended, and the difference between permit classes is exactly the kind of thing that changes without a restaurant owner hearing about it.
Confirm with Arkansas ABC and with your city, and have your accountant look at the tax groups once they are built. We do that check as part of programming the menu, but it is your permit and you should see the working.
Questions restaurant owners ask
How do I know whether I need a private club permit?
It depends on whether your county is wet or dry and on the class of permit your establishment qualifies for. Check with Arkansas Alcoholic Beverage Control rather than relying on what a neighbouring business told you, because the answer follows your specific address and permit class.
Does the private club rate apply just because I keep a member list?
No. It follows the permit you actually hold. Keeping a list does not change your tax treatment, and holding a private club permit does not remove the obligation to keep proper records. Confirm your permit class before your tax groups are configured.
Can my POS attach sales to a member record?
Good systems can, but it is a configuration decision rather than something that happens by default. If your permit depends on membership, ask for a demonstration of a member attached to a tab before you sign anything.
Is this legal advice?
No. This is general guidance written to help you ask Arkansas ABC, your city and your accountant the right questions. Permit rules and rates change and this page is a starting point, not a substitute for confirming your own situation.
Vendor pricing and tax rates change without notice. Confirm current figures with the vendor, the city or your accountant before you rely on them. Not tax, legal or accounting advice.
Every number on this page traces to a primary source
- Little Rock combined rates on prepared food and mixed drinkslittlerock.gov / tax information
- Arkansas state sales and use tax and mixed drink tax ratesdfa.arkansas.gov / sales use tax
- Arkansas alcoholic beverage permit types and private club permitsdfa.arkansas.gov / alcoholic beverage control