South Carolina cities face a wave of paperwork as they look to update their business license requirements and rate structures.
Kiawah Island has joined many other jurisdictions in requiring income-verifying documents with their license renewal forms to confirm the accuracy of business license fees, which are based on reported income levels.
Greenville is considering an update to its business license tax rates to incentivize grocery store development in key neighborhoods. This bellwether city could point to a new trend where cities update business license programs to drive key initiatives.
Any update to business licenses can create confusion and delay renewals and payments from business owners if cities aren’t prepared with solutions and processes to support these changes to business licensing.
The question for South Carolina cities is: are they implementing best practices for business license management, or will they face a deluge of documents and support questions?
The Benefit of a Business License Tax
With the state’s low property taxes, business licenses are viewed as a critical source of city revenues. In most municipalities, 25% to 50% of their general fund budgets come from the business license tax, according to the Municipal Association of South Carolina.
If cities opt to collect a business license tax, they are required by law to do a number of things, including accepting a standardized application form and allowing businesses to make renewal payments through an online payment system.
Cities have the flexibility to adjust their tax rates and are free to adopt technology to support their staff with end-to-end business license management—from application to ongoing filings and document management—to reduce manual work and time-consuming paper processing.
Key Results from Adopting a Business License Solution
Cities using a business license filing portal report:
- A 20% increase in on-time payments.
- 95% say ensuring payment accuracy improves revenues and predictability.
- Staff save up to 20 hours per week with a solution that automates accounting and compliance.
South Carolina cities adopting business license software solutions should look for cloud-based, built-for-purpose tax management software that reduces manual accounting and reporting to ensure that they are maximizing revenues for their communities.
Best Practices in Business License Management
While some South Carolina cities have adopted the state license portal to enable registration and payments, the system is not a tax system of record for the city’s data and reporting needs. Yes, enabling businesses to submit an application, annual filings, and payments online is an important first step, but it is not the only step.
If cities want to improve collections, they need a tax system of record that provides staff with proper auditing tools. And, if they want to ensure that businesses pay the right amount, they need a system that accurately calculates payments and fees for them.
Adopting a solution that provides auditing and reporting functionality—and connects to the city’s accounting system—and one that provides a business owner portal with fee calculations ensures maximum revenues for the city or county.
