The SC Business License Tax Standardization Act (H 5109) is intended to make doing business with cities and towns easier by streamlining the process of renewing business licenses. This bill meets the goal of the business community to standardize practices across the state and the goal of cities to be more business-friendly. Representative Kenny Bingham (R-Lexington) is the primary sponsor of the bill.
The Municipal Association of South Carolina has been working since last year with representatives of the business community to identify solutions and draft a bill to make the licensing process more streamlined across all cities and towns. A task force of 15 business licensing professionals has also been involved in working on this legislation.
“We certainly understand the frustrations expressed by the business community when they point to the wide variety of processes across cities and towns in South Carolina related to renewing a business license,” said Miriam Hair, executive director of the Municipal Association. “Imagine a landscaper working in multiple cities. He may be dealing with a variety of business licensing processes, forms and due dates in each jurisdiction. This legislation standardizes these processes and makes available a payment portal for businesses to pay the tax to multiple cities and towns at one time.”
Highlights of the legislation include:
- The business license year will be the same for all cities so businesses with locations in multiple cities do not have to keep track of the varying dates. A penalty will not be applied until April 30 after the federal tax return is due.
- The process for construction projects remains the same - the license is issued on individual construction projects rather than on an annual basis.
- Businesses may use the same standardized business license application in all cities. Cities must accept the application.
- Business license taxes in all cities will be calculated using the same definition of gross income. This simplifies the accounting for businesses since every city will use the same methodology.
- Cities will adopt a standardized business class schedule that is based on the profitability of business sectors as calculated by using IRS statistics. Therefore, businesses that operate in multiple cities will always be in the same class.
- Each city council will continue to set the business license rate for each class of business in their city.
- A central portal will allow businesses to renew multiple business licenses online at one time. The portal is in addition to the current options for renewal. Businesses can mail the renewal, go in person to city hall or use the centralized portal.
- Cities cannot receive a revenue windfall following the first year of the bill’s implementation.