Six Things to Set Up Before You Open a Restaurant in Hudson, MA

On July 7, 2026, the Hudson Select Board voted 4-0 to have Town Counsel draft a Town Meeting warrant article seeking 12 additional pouring licenses: four all-alcohol and four wine-and-malt for the downtown business district, plus two of each town-wide, conditioned on Health Department approval (Select Board minutes, July 7, 2026).

The reason was supply. The few licenses still available are mostly restricted to the Shops at Highland Commons, more than a mile west of downtown, and the Business Improvement District told the board that prospective operators interested in downtown had been discouraged on learning that none were available (Community Advocate).

If you were one of the people who walked away, this is your opening. It is also the point at which most new restaurant owners lose money without noticing — not on the license, but on everything they did not set up in the months before the door opened.

Key Takeaways

• The licenses do not exist yet. On July 7, 2026 the Select Board voted 4-0 to have Town Counsel draft a warrant article seeking 12 additional pouring licenses — six all-alcohol and six wine and malt — for Town Meeting to consider.
• A restaurant meal in Hudson is taxed at 7%: 6.25% to the Commonwealth, plus the 0.75% local option the town has adopted. Set the point-of-sale rate before the first order, not after the first return.
• The Massachusetts minimum wage has been $15.00 an hour since January 1, 2023. The tipped service rate is $6.75, and the $8.25 gap has to be covered by tips at the completion of every shift, not averaged across a good week.
• Federal rules let a business elect to deduct up to $5,000 of start-up costs in the first year, shrinking dollar for dollar once those costs pass $50,000, and amortize the rest over 180 months — but only if they were tracked separately from day one.
• Hudson’s plastic reduction bylaw has been in force since January 1, 2026. Polystyrene foam and black plastic food service ware are out, and utensils and straws go out only on request, so packaging needs its own line in the books.

First, understand the clock

Nothing has been created yet. A Select Board cannot conjure liquor licenses beyond the quota the Legislature has set for a town, and what it voted on in July was the first step of a long process. Here is the rest of it.

1. Town Meeting has to approve the article. Hudson holds its Special Town Meeting on the third Monday in November (Town Clerk). No warrant for a fall 2026 meeting has been posted yet, so confirm the date and the article with the Town Clerk’s office rather than working from the convention.
2. The town then plans to ask for a home-rule petition. State Representative Kate Hogan represents Hudson in the 3rd Middlesex District (Massachusetts Legislature), and the board’s stated intention is to ask her to file the bill. That is an intention, not a completed act, and because Town Meeting would fall in November the filing would land in the next legislative session.
3. Then the House, the Senate, and the Governor. Each is a separate vote, on the Legislature’s calendar rather than yours.

Hudson has done this before. In 2019 the Legislature authorized five additional all-alcohol on-premises licenses for the town, restricted to its downtown C1 zoning district, and required that they be issued no later than three years after the act took effect (Chapter 57 of the Acts of 2019).

Windows like that close. If you are serious, the work starts before the license exists, not after.

The six things to have in place first

1. The entity, the EIN, and a separate bank account — before your first expense

Two different things sit in this step, and they are not the same kind of thing.

The EIN is frequently a requirement rather than a preference. The IRS says you generally need one to hire employees, or to operate as a partnership or a corporation (IRS) — which covers essentially any restaurant that will have staff.

The separate bank account is not a legal requirement. It is practice, and the IRS recommends it in as many words, telling new owners that one of the first things to do when starting a business is to open a business checking account and keep it separate from the personal one (IRS, Publication 583).

The reason to bother is easier to see from the other side of it. The expensive problem in a new restaurant’s first year is often not a bad month. It is a set of books nobody can trust, because the first four months of purchases went on a personal card and nobody remembers which ones.

Open the business account first. Run every dollar through it. It takes an afternoon and saves a full reconstruction later.

2. Track startup costs as their own category

Money you spend before you open — build-out, legal fees, consulting, training, the license application itself — is generally treated differently from money you spend once you are operating.

Federal rules let a business elect to deduct up to $5,000 of start-up costs in the first year, with that $5,000 shrinking dollar for dollar once total start-up costs pass $50,000, and amortize the remainder over 180 months (IRS, Publication 583; 26 U.S.C. §195). A parallel rule covers organizational costs — the legal and filing fees of forming the entity itself — on similar terms, though which version applies depends on whether you set up as a corporation or a partnership (26 U.S.C. §248, §709).

The catch is that your tax preparer can only apply that treatment if someone tracked those costs separately as they happened. Lumped into general expenses, they are nearly impossible to pull back apart nine months later.

Set up the category on day one. Confirm the specific treatment with your CPA.

3. The license is not a normal expense

An all-alcohol license in a town where supply is capped by law is not a $50 sign permit, and it should not sit next to one in your chart of accounts.

Federal law treats a license or permit granted by a governmental unit as a section 197 intangible — generally amortized over 15 years rather than written off in the year you pay for it (26 U.S.C. §197). Whether that is how yours is actually handled turns on the specifics: what you paid, whom you paid, how long the license runs, and whether it arrived attached to an existing business. Those are questions to put to your CPA before the first return, not after it.

What bookkeeping owes you either way is simpler. The cost sits in its own account, with the paperwork attached to it, so that whoever prepares the return has something to work from. Do not let it disappear into “licenses and permits.”

4. Get the meals tax right from the very first order

Massachusetts charges 6.25% on restaurant meals, and the state counts food sold “to go” as a meal, so takeout is not a separate question (Mass. DOR, Sales Tax on Meals). A city or town may add a local option meals excise of 0.75%, which brings the effective rate to 7% where it has been adopted (Mass.gov, Local Option Excise Taxes). As of August 2026, 272 Massachusetts cities and towns had adopted it (DOR Division of Local Services).

Hudson is one of them. The rate you charge in Hudson is 7% — 6.25% to the Commonwealth and 0.75% to the town. Set your point-of-sale system to 7% before the first order, because a POS set to the wrong rate does not fail loudly. It quietly undercollects for months, and the state still wants the full amount.

And understand what that money is. Massachusetts administers meals tax as a trustee tax — the Department of Revenue’s own term, handled by its Trustee Tax Bureau alongside withholding and room occupancy (Mass. DOR, Sales Tax on Meals). You add it to the check, you collect it, and it is owed onward. It is not revenue, even though it sits in your account and looks like cash, which is exactly why it gets spent on a walk-in cooler in a slow February.

It is also the one category where the bill does not necessarily stop at the entity. Massachusetts law provides that a person responsible for paying over a company’s trustee taxes can be held personally and individually liable for them, with a lien attaching to that person’s own property (M.G.L. c. 62C, §31A). An LLC does not make that particular problem go away.

5. Tipped payroll has its own rules, and they are stricter than people expect

The Massachusetts minimum wage is $15.00 an hour, where it has stood since January 1, 2023 (Department of Labor Standards). It is not indexed to inflation, so it does not rise on its own each January — any increase has to come from the Legislature or a ballot question.

You can pay tipped staff a service rate of $6.75 an hour, but only if they make more than $20 a month in tips and you have given them written notice of the law beforehand. The $8.25 gap between $6.75 and $15.00 is the tip credit: the part you are allowed to let tips cover, and only if tips actually cover it.

If tips fall short, you owe the difference — and Massachusetts looks at that shift by shift rather than averaged comfortably across a good week. The statute requires the employer to calculate it “at the completion of each shift worked by the employee” (M.G.L. c. 151, §7). A strong Friday does not cover a thin Tuesday. Your scheduling, your POS tip data and your payroll have to talk to each other, or you will not know you are short until someone else tells you.

One rule people get backwards: restaurant employees are exempt from overtime under Massachusetts law, but not under federal law (Department of Labor Standards). The federal rule still applies to you, and it is worth settling role by role before the first schedule goes up.

6. Separate your food costs from your packaging costs

Most new restaurants run one large “supplies” account and never learn anything from it. Split food from packaging, packaging from cleaning, cleaning from smallwares.

That matters more in Hudson than in most towns. Since January 1, 2026, the town’s plastic reduction bylaw has barred food establishments from distributing disposable food service ware made from polystyrene foam or black plastic, and limited plastic utensils, straws, stirrers and chopsticks to customer request (Hudson Board of Health, Non-Recyclable Plastic Reduction By-Law). A restaurant opening now is subject to it from the first order rather than phasing into it.

There is no published figure for what that does to a particular operator’s packaging spend, and there will not be one — it depends entirely on what you were going to buy. Which is the argument for the line item. If you cannot see packaging on its own, you cannot price takeout correctly.

What actually closes new restaurants

It usually is not the food, and it usually is not the rent.

It is the first ninety days, when payroll is due on a schedule you do not control — Massachusetts requires most hourly employees to be paid weekly or bi-weekly, within six days of the end of the pay period (M.G.L. c. 149, §148) — when vendors move you to shorter terms because you have no history, when the meals tax bill arrives for a quarter you have already spent, and when nobody has a current picture of what is actually in the account.

You can survive a slow opening. It is much harder to survive a slow opening you could not see coming.

How this was checked

Every figure here comes from a primary source: the Town of Hudson’s own Select Board minutes and Town Clerk schedule, Chapter 57 of the Acts of 2019, the Massachusetts General Laws, the Department of Revenue and its Division of Local Services, the Department of Labor Standards, IRS Publication 583, and the United States Code. Where a newspaper is the only source — the Business Improvement District’s account of operators walking away, and where the remaining licenses sit — it is carried as reported and linked as such.

Three things were left out on purpose.

No Town Meeting date. Hudson’s published schedule puts the Special Town Meeting on the third Monday in November, and applying that rule to 2026 produces a specific date. But no warrant has been posted and no date has been voted, and a scheduling convention is not a called meeting. Confirm it with the Town Clerk.

No adoption date for Hudson’s local meals excise. The rate is solid at 0.75%. The adoption date returned inconsistent values across the state’s own report tables, so it is not printed here. The rate is the part you need.

No $50,000 first-year startup deduction. Several widely circulated articles claim the 2025 federal tax act raised the section 195 first-year amount from $5,000 to $50,000, with a $500,000 phase-out. That describes the House version of the bill. The enacted law left those dollar amounts alone, and the United States Code still reads $5,000, with the phase-out beginning at $50,000.

This is general information about published rules. It is not tax advice and not a review of your situation, and it does not account for your entity type, your lease, or your filings beyond Massachusetts. Figures were retrieved on 22 August 2026, and the license article is still moving.

Frequently asked questions

Can I apply for one of the new licenses now?

No. They do not exist yet. The July 7 vote authorized Town Counsel to draft a warrant article; that article has to pass Town Meeting, then travel to the Legislature as a home-rule petition, then through the House, the Senate and the Governor. What you can do now is be ready — entity, EIN, bank account, books — so that you are not starting from zero on the day they land.

What meals tax rate do I charge in Hudson?

7%. That is the 6.25% state sales tax on meals plus the 0.75% local option, which Hudson has adopted. It applies to takeout as well as dine-in, because Massachusetts counts food sold “to go” as a meal. Configure the point-of-sale system before the first order rather than correcting it after a return has already gone in.

If my servers make good tips, can I just pay them $6.75 an hour?

Only under conditions, and only shift by shift. The service rate is available for employees who make more than $20 a month in tips, and only after you have given them written notice of the law. Then, at the completion of every shift, the service rate plus tips has to reach $15.00 an hour. If it does not, you owe the difference for that shift; a good week does not average the problem away.

Do I owe overtime to my kitchen staff?

Restaurant employees are exempt from overtime under Massachusetts law but not under federal law, so the federal rule is the one that governs. Which of your roles it reaches is worth confirming role by role rather than assuming, and it is a payroll setup question rather than a year-end one.

Does the plastic bylaw apply to a restaurant that has not opened yet?

Yes. It took effect on January 1, 2026 and applies to food establishments in Hudson, so a business opening after that date is subject to it from the first order. Plan the packaging budget and the supplier list around it rather than reordering in month two.

You are already paying for bookkeeping

It is paid in the hours after close on the nights you would rather be in the dining room, in the penalties nobody warned you about, and in the decisions made on a feeling instead of a number. The question is only whether it is being done well enough to be worth what it already costs.

Green Books Inc is in Hudson. We work with small businesses here in English and Spanish, and we would rather help set the books up right than clean them up in year two. Monthly bookkeeping starts from $200 a month. If you are working toward one of these licenses, book a consultation and we can go through the setup against your actual plan.

Related reading: OBBBA in 2026: what Massachusetts employers must do now, 10 ways small businesses can save money in 2026, and, if you have not chosen a structure yet, entity and business setup.