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Top Regulated States for Business License – What’s Driving Rising Enforcement

Top Regulated States for Business License – What’s Driving Rising Enforcement

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

The strictest states for business license compliance

With licensing and permitting maintenance so complex and demanding, a good way to start is to prioritize compliance in the states known to have the most strict and regimented levels of business license regulations.

Tier I States – Highest Severity

  • Alabama
  • California
  • Florida
  • Virginia
  • Tennessee

Tier II States – Medium Severity

  • Georgia
  • Illinois
  • New York
  • Pennsylvania
  • South Carolina
  • Washington D.C.

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A non-compliance enforcement example

States are not losing any time in taking advantage of their new tracking and enforcement capabilities. In case you missed it, here’s an example:

Independence, Missouri sent city business license compliance officers door-to-door to collect unpaid license fees from a wide variety of the city's businesses. Compliance officers stopped operations for 900 local businesses that hadn't renewed their licenses to operate. While the compliance officers sympathized with business owners, they collected $67,000 in unpaid fees.

The officers are using this tactic to inspect liquor licenses and potential health code violations as well. In fact, the city announced that it will conduct these sweeps monthly.

What it takes to manage business license compliance

Business license compliance is critical to maintaining uninterrupted operations for multi-jurisdiction enterprises. Keeping up with the volume, complexity and constant change demands dedicated, specialized resources, especially for businesses operating in states that impose heavy regulations and strict enforcement.

Expert business license specialists have the knowledge and resources for ongoing research and compliance to help your team successfully navigate what’s needed. Working with an outside partner can be the most effective way to reduce the rising risks of increased enforcement.

Learn more

To learn more about how CT can help you manage your business license needs, contact a CT Service Representative or call (844) 400-9804.

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