Municipalities in South Carolina are considering a single, mandated way of issuing business licenses to counter complaints from businesses that nearly all of South Carolina’s 270 cities and towns – and a few counties – use differing classifications, due dates, government forms, and rates to issue licenses that allow them to operate in municipalities.
Advocates for one business licensing law across the state include the S.C. Chamber of Commerce.
The hodgepodge of local laws cost the state an estimated $300 million in 2013, said Melissa Carter, lobbyist for the Municipal Association of South Carolina, citing a legislative fiscal impact assessment.
Business licenses represent a significant source of income for cities and towns, but business licenses are also more than revenue generators. They are a means of tracking the kinds of businesses that open their doors and serve as a way to monitor code enforcement.
Business leaders, municipal officials and legislators have been talking for five years in an attempt to write a uniform licensing law that is customer friendly and satisfies competing interests.
Some are optimistic that might happen in the legislative session that begins in January. Others are skeptical that a solution is close.
“There is no agreement among stakeholders about what exactly needs to be done,” said Ted Pitts, the director of the S.C. Chamber of Commerce, “But there is agreement that something has to be done.”
The Municipal Association’s Carter is more optimistic that a consensus is close. “I will tell you, cities are completely on board,” she said.
A bill has not been written yet, but advocates are hopeful they have a champion in Rep. Bill Sandifer, a Republican from Oconee County and a committee chairman.
The key components of any standardized business license law include:
- One due date for all businesses
- One application for all
- An agreed upon definition of gross income, which is how license tax is calculated.
- Substantially shrinking the number of business classifications – perhaps to eight – to make it easier to determine the kinds of licenses needed. Columbia has 139 of them.
- Create a centralized computer-driven system where companies to submit applications to do work anywhere they chose in the state. The software would use companies’ protected financial information to calculate how much businesses would pay each city.
- Cities and towns could not get a revenue windfall the first year the new system goes live.
The Municipal Association wants to become the clearinghouse for the computer system through a third-party vendor. The chamber suggests the S.C. Secretary of State’s office.
A version of what the Municipal Association considers a “model law” was adopted in Rock Hill in 2009.
In the years since its adoption, lawyers, doctors and accountants have seen the cost of their license dip because their profit margins aren’t as large. Technology firms, however, have been paying more. Some licenses cost more because businesses have grown, which raises their gross incomes and, in turn, what they pay for a license.