Entrepreneurs now say the difficulties of a new business license for their small business. But it becomes a new lesson in the business world. However, the government has enforced a press release source with the new requirements for every company.
Business License as a New Requirement
It has implications for anyone who runs or manages a small business. There’s a lesson to be learned: when it’s becoming increasingly complicated to ensure compliance with the whole business licensing requirements and tax filing requirements, the demand to comply is far more important than ever. More than 74,000 government agencies in the United States, each with its policies, rules, and requirements, may apply to a particular business. Deciding which government agencies use to a specific small business in a specific location and ensuring compliance with those terms could be questionable.
Simultaneously, cash-strapped governments are stepping up their enforcement efforts, like fines, penalties, and fees, to be a significant revenue source. Business license compliance requirements are often included in major contracts and are an essential part of due diligence in financial and procurement transactions. Licensing requirements can be particularly onerous for a company that operates in many industries. One national trading company says it must handle 180,000 business licenses and permits each year, and that figure is expected to grow.
Business License as a Professionality
The number of professions requiring licenses increases every year, often driven by people who engage in them to hope that regulation will increase the prestige of livelihoods, provide oversight, and protect clients from bad work. A study found that the percentage of occupations requiring a license increased from 5% in 1950 to 23% in 20082. Suppose a business has a business purpose that requires a certified professional. In that case, the business often must obtain a license and ensure that the professionals it uses are correctly licensed.
The incentive for state and local governments to begin accrediting cat groomers, tree trimmers, and pasta artists, to name a few, is the revenue generated. Licensing fees, fines, and penalties often more than cover the cost of administering the licensing process and is often a revenue source for governments. The idea of nexus complicates this issue. While nexus is generally used to determine tax laws and registrations’ adequacy, you can also apply it to licensing in some specific industries.
Business License Denial May Cause Penalties
Businesses whose employees provide on-site services, transportation companies, leasing companies, and property management companies are examples of businesses subject to licensing requirements if they are not located in a particular jurisdiction. At the same time, penalties for non-compliance can be high. Companies can face hefty penalties and suffer significant revenue loss if their operations are shut down for lack of proper licensing. They can also face bad publicity and suffer increased insurance costs.
If you are operating a business in many locations or doing due diligence on a target business in an acquisition, ensuring the business obtains essential permits/licenses and is appropriately registered wherever it does business is an essential task. As the complexity and importance of business license compliance increase, companies need to allocate the right people, resources, and systems to manage the process effectively. Building internal systems and expertise can be expensive, but it can be an effective way for larger firms to gather the necessary resources.