Across the U.S., state and local governments are intensifying their enforcement of business license compliance. Business license tax collections are increasing twice as fast as other types of mandated taxes and fees.
Governing authorities have two main motivations for this. First, it’s simple math. As more states are faced with budget shortfalls, they are looking at all avenues to collect more revenue. Another strong reason is for the interest of public safety — especially when it comes to newer business verticals and scenarios, such as contract workers, ride-sharing and vacation rentals.
Along with the business community, governments have benefitted from increased digitization of records and better data analytics, giving them the means to better track and pursue non-compliant businesses.
Business license management is complex
The increased enforcement has only raised the bar for risk management. Maintaining business license compliance is as complex as it’s ever been. The number of licensing authorities is staggering – 75,000 authorities that span all jurisdictional levels, from the federal government to states, counties and municipalities, large and small. Keep in mind that each jurisdiction determines its own processes and administers its own requirements.
Determining which licenses you need is in itself a difficult task. Businesses may need multiple licenses that range from covering basic operations to highly specialized, industry-specific requirements. Managing new and existing licenses requires a deep and detailed knowledge base that must be constantly updated.
States also created specific licenses for industries that they deem to present a higher public safety risk. These more highly-regulated industries include the following:
- Retail
- Healthcare
- Pharmaceutical
- Insurance
- Financial Services
- Construction
- Contractors
