October 20, 2021
By Nick Neville
COLUMBIA, S.C. (WIS) – The process South Carolina business owners use to obtain and renew their business licenses is being restructured and standardized, and Columbia Chamber of Commerce experts say this should make the entire business license process easier.
The changes come following passage by the General Assembly in September 2020 of the Business License Tax Standardization Act, which aims to create the same process for all taxing jurisdictions in the state.
All cities and towns must update their business license ordinance to comply with this law, which goes into effect on January 1, 2022. It standardizes everything from business year periods, renewal dates, and application.
The City of Columbia held the first reading of a new business license ordinance this week. The current ordinance uses over 150 business codes. Under the new ordinance, this will be reduced to just nine rate classes.
Columbia At-Large Councilman Howard Duvall says the current business license system in the city is flawed.
“The 150-category was established by hit and miss,” he said. “It did not have a proven base for determining the code and the price of the payment for that particular business. And so now we’ve got a system in place that has been tested in court several times, and meets all the criteria of fairness.”
Duvall argues that the new system will also be less complicated.
“The simplicity of this particular ordinance with the nine classifications versus 150 that the city of Columbia had will make it so much easier for the customer to understand where they are in the business classification and also be easier for the people working for the city of Columbia in the business license department to determine what your rate is,” he said.
Currently, there are different processes to apply for business licenses in each city. Once the changes go into effect, that process will be streamlined.
According to Henri Baskins, Columbia Chamber Executive Vice President, some business license taxes are due at different times, so businesses can have multiple filings and dates to pay under the current system.
“Some business had to hire additional help just to handle filing for business license tax,” she said. “This standardization is a great boon to businesses that do business in multiple jurisdictions.”
The law does allow for cities to set their own individual rates, though. Columbia Assistant City Manager Jeff Palen said that the city has worked to rebalance its business license tax rates to ensure revenue neutrality during the 2022 license cycle relative to 2020 levels.
More than 8,500 Columbia businesses will be impacted. Current city projections estimate that under the new system, the vast majority of businesses will see a change of less than $1000 to their taxes if they generate the same revenue, 165 businesses are expected to see increases of $1000 or more, and 336 are expected to see decreases of $1000 or more.
Drawing on his experience implementing this type of model over the years, Duvall said it usually amounts to smaller businesses paying less, and larger businesses paying a little more.
“The ones that had more political power were paying less than their fair share, and the ones that didn’t have the political power were paying more than they should,” he said. “This will be a completely fair system. It will take all of that political influence off of it.”
When asked at a recent council meeting about this, Palen said it was easier to generalize in other communities that had fewer business codes. With 150 in Columbia, he said, “There is not just one area that I can pinpoint.”
President and CEO of the South Carolina Small Business Chamber of Commerce Frank Knapp said his organization has been pushing for this standardization since 2010.
“This is great,” he said. “This is exactly what’s needed for small businesses to make their lives easier. Businesses in the city of Columbia that want to do business in West Columbia or Cayce or Newberry will know what’s needed to get a business license. In fact, it should be the same information to get the business license. So this is really going to make doing business in Columbia and statewide much easier for small businesses.”
The new ordinance will take effect on January 1, 2022. The previous renewal date was April 1, but business owners have until April 30 under the new system to apply for a 2022 license.
Business owners will also have the opportunity under this system to renew their business license online, which city leaders expect will save customers quite a bit of time waiting in long lines.
Under the updated system, news businesses still must obtain their licenses in person.