The business license tax is a critical source of revenue that cities and towns use to fund the services they provide. Of the state's 271 municipalities, 230 require business licenses, and the revenue from those can comprise up to one half of the general fund budget in some cities.
Maintaining this valuable funding mechanism means that cities need to show to businesses and lawmakers that they are committed to business-friendly practices. The many enterprises that conduct business in multiple South Carolina municipalities can face a frustrating maze of various license renewal due dates or divergent categorizations of their business and how it should be taxed. Standardization can replace this kind of uncertainty with a fair process that makes operating within cities easier, with standard gross income periods and renewal dates.
Standard application
In 2014, the Municipal Association of South Carolina created the Standardized Business License Application, which was designed to meet the needs of businesses that operate within multiple jurisdictions. Municipalities that either adopt or accept the application can help make the licensing process easier.
Model ordinance
Municipalities can fully standardize practices by adopting the model business license ordinance. The ordinance provides a class structure based on the North American Industry Classification System and IRS statistics, which the Association updates every two years. The ordinance has stood up under multiple court challenges.
Of the 230 cities and towns with business licenses, 121 use the model ordinance, sometimes adopting amendments to reflect local priorities. These include municipalities of every size, including 50 with populations of less than 2,000; 56 with populations from 2,000 – 20,000; and 15 with populations of 20,000 and above.
Moving toward standardization
Business licensing work has many moving parts, and standardization can be a significant undertaking. Many cities and towns that have started this effort have set up a schedule of incremental standardization over several years. Those interested in planning out a gradual process can learn more by contacting the Association's Manager for Collection Programs Caitlin Cothran (ccothran@masc.sc) or Research and Legislative Liaison Melissa Carter (mcarter@masc.sc).
Learn more about business license tax processes in the Association's Business License Handbook. City business licensing officials can also receive training about professional best practices from the SC Business Licensing Officials Association.