Dewey Beach Business License: Restaurant Fees, What Counts as a Restaurant and the 2026 Rental License Change

Dewey Beach is a small but popular coastal town in Sussex County, Delaware, with a year-round population around 416. If you're opening a restaurant, bar, or managing rental properties there, you'll need a town business license separate from any Delaware state entity formation. These licenses come with specific requirements and, as of February 2026, some fees have changed. This article walks through exactly what you need to do and what it costs.

What You'll Need Before You Start

Gather these materials before applying for a Dewey Beach business license:

• For restaurants: Seating layout or floor plan showing dining area, bar area, and outdoor seating (if applicable); Fire Marshal occupancy capacity estimate or document.
• For rental properties: Proof of property ownership (deed or mortgage statement); number of bedrooms and living area configuration; safety certification affidavit (required annually).
• For all licenses: Proof of Delaware business registration through Delaware One Stop (Division of Revenue); Federal Employer Identification Number (EIN) if hiring employees; contact information for the property owner or business operator.
• Current valid form from Dewey Beach Town Hall: License application (forms update; call or visit their website).

Keep in mind that a Dewey Beach town business license is not the same as a Delaware Division of Corporations filing (LLC or corporation). A DBA is registered separately with the Division of Revenue through Delaware One Stop. You need both layers: the state entity formation, and the town license.

Step 1: Determine Your License Category

Dewey Beach issues different licenses for different businesses. The most common are:

• Restaurant/food and beverage establishment license (covers full-service restaurants, bars, taverns, eateries with specific seating rules).
• Residential rental license (covers seasonal or year-round short-term rental of dwelling units).
• Other retail and service licenses (gift shops, equipment rentals, professional services, etc.).

Your license category determines the fee and any ongoing compliance obligations. If you're unsure whether your business fits a specific category, call Dewey Beach Town Hall at (302) 227-6363 before submitting your application.

Step 2: For Restaurants, Confirm You Meet the "Restaurant" Definition

Dewey Beach Town Code Section 185-25.D(1)(a)[1] defines a restaurant narrowly. Your establishment counts as a restaurant if it meets ALL of these:

1. Seated dining for 35 or more patrons (based on Fire Marshal capacity).
2. At least 80% of the patron area is permanently seated (not bar seating or standing room).
3. No more than 20% of patron area is bar seating (includes cocktail bar, standing bar, or bar-style high-tops).
4. Outdoor service area (if any) must be cleared by 11:00 PM (tables, chairs, serviceable items removed).
5. No outdoor speakers or amplified sound in the outdoor service area.

If you don't meet all five criteria, you may fall under a different license category (bar/tavern, limited-service, or other). For example, a cocktail lounge with standing-room-only seating or a 40-seat bar with only six tables would not qualify as a restaurant under this definition.

Common mistake: Owners often assume a certain square footage or seat count automatically qualifies as a restaurant. Dewey Beach measures by the ratio of seated dining to bar area and requires a 35-seat minimum. A 50-seat venue that is 70% bar seating does not qualify.

Step 3: Calculate Your Restaurant License Fee (2026 Update)

The Dewey Beach town commissioners voted on February 13, 2026 to amend restaurant and food/beverage license fees. The previous structure was a $359 base plus $10 per person of Fire Marshal occupancy capacity (including decks and outdoor seating). The 2026-27 fee amount has changed; call Dewey Beach Town Hall at (302) 227-6363 to confirm the current restaurant fee for your license year.

Here's how the fee worked under the 2025-26 structure (for reference):

• Base fee: $359.
• Fire Marshal capacity: determined by the town's Fire Marshal based on your floor plan and occupancy code. This includes interior dining seating, bar seating, and outdoor seating (decks, patios).
• Per-person charge: $10 multiplied by total capacity.

Example (2025-26 rates, prior to Feb 2026 amendment): A 65-seat restaurant (50 dining, 15 bar area) with 10 outdoor deck seats would have a Fire Marshal capacity of 75 persons. Fee = $359 + (75 × $10) = $1,109.

The 2026-27 structure and amounts are not confirmed here. Verify with the town before budgeting.

Step 4: For Residential Rentals, Understand the 2026 Licensing Change

Dewey Beach commissioners voted on February 13, 2026 to raise residential rental license fees, as reported by local news. The adopted ordinance text was not confirmed, so check the final amounts with Town Hall. Here's what was reported:

Bedroom Count	Old Fee (Pre-2026)	New Fee (2026+)
2 bedrooms	$188	$250
3 bedrooms	$188 + $15 = $203	$250 + $20 = $270
4 bedrooms	$188 + $30 = $218	$250 + $40 = $290
5 bedrooms	$188 + $45 = $233	$250 + $60 = $310

Key change: The base fee jumped from $188 to $250 (a $62 increase), and the per-bedroom surcharge for bedrooms over two rose from $15 to $20 per bedroom (as reported).

Example: A 4-bedroom rental property now costs $290 per license year (up from $218 under the pre-2026 structure).

Step 5: Apply for Your License and Provide Required Documents

Once you've determined your category and calculated the fee, submit your application to Dewey Beach Town Hall:

1. Obtain the current application form from Dewey Beach Town Hall, (302) 227-6363, or check their town website.
2. For restaurants: Include your floor plan, seating layout, Fire Marshal capacity estimate or certification, and proof that the venue meets the restaurant definition (80% seated, 20% max bar, etc.).
3. For rentals: Include property deed or proof of ownership; number of bedrooms and living area; a signed safety certification affidavit (the town may provide a template).
4. For all licenses: Provide proof of your Delaware business license from the Division of Revenue (required for gross receipts tax filing). If you plan to operate as an LLC or corporation, form it with the Delaware Division of Corporations first. A DBA is registered with the Division of Revenue through Delaware One Stop and requires an active business license.
5. Pay the license fee (cash, check, or credit card depending on town policy).
6. Submit before the deadline: For ongoing businesses, restaurant licenses are due April 30 of each year. For rental licenses, confirm the due date with Town Hall. New businesses should apply before opening.

Step 6: Understand Annual Compliance Obligations

Holding a Dewey Beach license comes with ongoing requirements:

• Renew annually: Restaurant licenses run on a May 1 to April 30 license year (for 2025-26); confirm the license period for other license types with Town Hall. Renewal forms are due by the deadline; late penalties apply.
• Rental property safety affidavit: Owners of rental properties must return a signed safety certification affidavit each license year confirming the property meets town safety and building codes.
• Gross receipts tax filing: Because Delaware has no sales tax, your business owes gross receipts tax on its revenue to the Division of Revenue. For restaurants and contractors, the rate is 0.6472%. For rental income, confirm the applicable rate with the Division of Revenue. File monthly or quarterly (new businesses start quarterly).
• Town accommodations tax on rentals: On top of the state gross receipts tax, Dewey Beach collects a 3% town accommodations tax on short-term rental revenue. The state also collects 4.5% accommodations tax. Owners are responsible for collecting and remitting both.
• Occupancy limits on rentals: Dewey Beach limits residential rental occupancy to two persons per bedroom plus two in the living area. A 3-bedroom property may house at most 8 persons (3 × 2 + 2). Ask Town Hall what penalties apply for exceeding it.

Tips to Avoid Common Mistakes

• Don't skip the state layer: You need both a Delaware state business license (from Division of Revenue through Delaware One Stop) and a Dewey Beach town license. The town license alone won't satisfy state requirements.
• Verify Fire Marshal capacity in writing: Get a signed Fire Marshal capacity estimate before you finalize your restaurant layout. A miscalculation here affects your license fee and may require expensive renovations if your seating exceeds capacity.
• Plan for the 2026 rental license increase: If you own rental properties, budget for the higher fee ($250 base plus $20 per bedroom over two). Confirm the adopted amount with Town Hall.
• File safety affidavits on time: Rental property owners who miss the annual safety affidavit deadline should confirm the deadline and any consequences with Town Hall. Set a reminder well before it.
• Account for both accommodations taxes: On rental income, you owe 3% to the town (Dewey Beach) and 4.5% to the state. Many owners overlook the town portion.
• Don't assume your establishment is a restaurant: The definition is strict. A wine bar with 50 seats split 30% dining and 70% bar-style seating is not a restaurant under Dewey Beach Code. Confirm with the town before you design your build-out.

Expected Results and Timeline

Once you submit a complete application with all required documents and payment, expect:

• Processing time: The town does not publish a standard turnaround that we could confirm. Call Town Hall at (302) 227-6363 to ask.
• License issuance: You'll receive a physical or digital license to display in your business or keep on file.
• Operational approval: For restaurants, the license signals that your seating and occupancy setup meets town code. For rentals, it means the property is registered and you're cleared to begin taking reservations.
• Ongoing filing: Prepare to file gross receipts tax returns monthly or quarterly with the Delaware Division of Revenue. Rental owners must file town accommodations tax separately.

Your license is valid for one license year and must be renewed before it expires, even if you're closed during off-season.

Contact Information and Next Steps

Dewey Beach Town Hall: (302) 227-6363, call to confirm current restaurant and rental license fees, obtain application forms, and verify any code requirements before investing in your business plan.

Delaware Division of Revenue (Gross Receipts Tax and Business License): https://revenue.delaware.gov/, register for your state business license through Delaware One Stop and set up gross receipts tax filing.

Delaware Division of Corporations (Entity Formation): https://corp.delaware.gov/, file your LLC or corporation before applying for your town license (a DBA is registered with the Division of Revenue instead).

Legal Disclaimer

This article is informational only and does not constitute legal or tax advice. Dewey Beach town ordinances, fees, and compliance requirements may change. The 2026-27 restaurant license fee amount mentioned in this article is subject to verification with Dewey Beach Town Hall, call (302) 227-6363 to confirm current fees before budgeting. Delaware tax treatment and occupancy regulations are complex and vary by business type. Consult a Delaware business attorney and a qualified tax professional (CPA) before opening a restaurant or rental business to ensure you meet all state and local requirements.