Across the U.S., state and local governments have increased their enforcement of business license compliance. Business license tax collections are increasing faster than other types of mandated taxes and fees.
A strong reason is 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 the increased digitization of records and better data analytics, giving them the means to better track and pursue non-compliant businesses.
In many cases, business license enforcement is the responsibility of local government agencies, such as city or county business licensing departments. However, some industries may be subject to additional licensing and regulatory requirements at the state or federal level, which may be enforced by specialized agencies or regulatory bodies.
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 license(s) 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.
Some industries are known to have more complex business license requirements than others. States create specific licenses for industries that they deem to present a higher public safety risk. These more highly-regulated industries include the following:
Industries with more complex licensing requirements can also vary widely depending on the specific business and the state in which it operates. It’s a best practice for businesses to research the licensing requirements in their industry and seek assistance from a professional if needed.