A Guide to Business Licensing for Local Governments
Chapter 1
Business Licensing
Overview
Chapter 2
Advantages & Challenges of Using Business Licensing Software
Chapter 3
Setting Up an Online Business Licensing System
Chapter 4
Combining Business Licensing & Tax Filing in One System
Chapter 5
Chapter 1
Business Licensing Overview
According to the Census Bureau, over 5 million applications were submitted to create a new business in 2021. Not only was this a record high, but it is indicative of a greater trend at play. Despite the world being turned upside down by COVID-19, global economic uncertainties, and rising inflation, people are continuing to take the leap and invest in starting new businesses to chase their entrepreneurial dreams.
However, with millions of people looking to start new businesses every year comes a unique set of logistical challenges. To successfully manage the businesses operating within a municipality, it is imperative that municipalities have an efficient way of processing these new business applications and license renewals quickly. Otherwise, municipalities risk losing out on new businesses operating in their jurisdiction and in turn, the critical tax revenue a business might bring in.
Here are some commonly asked questions for business licensing and what a municipality needs to know to set business owners up for success.
Uncovering the Business Owner Experience with Local Government
What is a business license?
So, what exactly is a business license? A business license is a license or permit issued by a government agency that allows individuals or a company to conduct business within that municipality’s jurisdiction. This official authorization plays a critical role in ensuring that businesses adhere to local laws and state and federal regulations, ranging from safety to public health to zoning laws. Business licenses build credibility with consumers and offer a level of protection against fraudulent businesses.
Which kinds of businesses need a business license?
Virtually every business requires either a license or permit to operate legally. However, the type and number of licenses can vary significantly depending on the business’s nature, location, and industry. For example, a restaurant might need health permits, liquor licenses, and building permits to be in compliance. On the other hand, a home-based business might only require a general business license.
Are there different types of business licenses?
As mentioned, there is not a one-size-fits-all when it comes to business licenses. These licenses range from general business licenses, which allow a company to conduct business in a city or county, to more specific ones, such as professional licenses for certain fields, including law, medicine, and cosmetology, to name a few. Plus, there are zoning permits, health department permits, sales tax licenses, and so on. The type of license needed is largely dependent on the nature of the business and the regulations that govern that industry. While it is ultimately up to business owners to ensure they apply for all the required licenses and permits, a municipality should aim to make this information readily available on the government website.
How much do business licenses cost?
Speaking of fees, how much does a business license usually cost? The fees typically associated with business licenses can range anywhere from $50 to $750. Some jurisdictions charge a flat fee, while others base the fee on the size of the business or the anticipated profits. Additional costs may also be associated with obtaining specific permits, undergoing inspections, and annual renewal fees.
How do you acquire a business license?
The process of acquiring a business license varies by municipality and depends on the type of business. But to acquire a business license, the prospective business owner usually needs to file paperwork with the appropriate city or county office, including information about the business, the tax ID number, and often, a fee. Businesses typically need to go through additional steps, such as inspections or background checks, in order to get approved.
What are the challenges associated with business licensing?
There are many challenges that come along with effectively managing the business licensing process within a municipality. Sometimes, a municipality can receive too many license applications to be able to quickly and efficiently sort through and approve them all. In a world that increasingly values efficiency, having a system in place that helps simplify and streamline the business licensing process can be an invaluable asset. This is where a software solution for business licensing becomes crucial. Implementing such a system can help municipalities automate their processes, reduce administrative burden, and increase the accuracy and speed of license approval.
How long does it take for a business license to be approved?
Again, it depends on the individual municipality to determine how long it will take to approve a business license. The factors that impact this approval process include the type of business, whether or not the prospective business owner is in compliance with local laws, and whether or not there are additional steps required, such as undergoing an inspection, etc. Certain businesses have the potential to impact the surrounding community, and these are sometimes opened up to a public forum for discussion. This could certainly tack on the time it would take to get approved for a business license. Lastly, if a municipality doesn’t manage all or part of the business licensing process online, the amount of time it takes to review a business license application can be extended due to the number of manual steps and approvals required.
Ready to take your business licensing processes to the next level?
Business licensing, with all its complexity and moving parts, might seem like a challenge for many local governments, but it doesn’t have to be. By moving away from traditional paper-based systems and towards a modern business licensing software solution, municipalities can facilitate a more efficient, user-friendly licensing experience. This can lead to improved compliance, a reduction in errors, and a more comprehensive understanding of the local business landscape. In turn, this can help municipalities collect more revenue and foster a more vibrant and compliant business community.
Additional Resources
- Top Report Insights for Local Governments to Improve Business Relations
- Economic vs. Physical Nexus: Should Remote Sellers be Required to Obtain Business Licenses?
- From Athletic Club to Short-Term Rental: An Overview of Different Types of Business Licenses
- The Pros and Cons of Requiring Multiple Business Licenses vs. One Universal License
on-Demand Webinar
How Local Governments Can Simplify the Business Licensing Process
Chapter 2
Advantages & Challenges of Using Business Licensing Software
More local governments are automating business licensing to improve processes, increase compliance rates, and provide a better experience to business owners. But what are the advantages and challenges of using software for business licensing, and how do you know when it’s the right time to invest?
Chapter 3
Setting Up an Online Business Licensing System
When businesses have everything they need to apply for, renew, and pay licensing fees all in one place, it makes it that much easier to stay in compliance with government regulations. If your agency is looking to set up an online business licensing system, here’s how to get started.
Watch a series of demos to see how the GovOS Business Licensing solution can work for you!
Success Story
How Okaloosa County, FL Uses the GovOS Business Licensing & Tax Application to Collect and Manage Over $30M in Annual Tourist Development Taxes
Chapter 4
Combining Business Licensing & Tax Filing in One System
For jurisdictions that collect tax revenue from businesses, simplifying the tax remittance process by bringing it online benefits their citizens and staff, and is a proven way to increase compliance. Here’s why more local governments are moving these two processes into one system.
Chapter 5
Supporting Your Local Business Community
Do your local businesses have all the information they need to remain in compliance with government requirements? Communities with successful licensing processes stay engaged with their business owners, providing notifications and resources to deliver a better experience to the community.