Selected SLC Research


Policy Analysis | September 26, 2012

Business License Regulations in Selected SLC Member States

Mikko Lindberg

Arkansas

Municipalities have the authority to charge license fees to any professional engaging in business within city limits. Certain professions are governed by a board or state agency that issue licenses and collect "reasonable" fees for their operation.

A business cannot be required to pay licensing fees by more than one city in the state unless it has more than one location. (AR Code § 26-77-102)

The taxation of specific product categories in the state code is fairly limited.

Florida

Professions generally are licensed and regulated by the Florida Department of Business & Professional Regulation. Counties and cities may have their own occupational license requirements and related taxes and fees.

If a business serves more than one municipality, it may need a separate license for each one. Also, local governments have the authority to create their own tax categories subject to licensing and fees.

The taxation of specific product categories in the state code is fairly limited.

Georgia

Georgia has business licensing system where the privilege to do business is determined by the physical location of the establishment, rather than the place where business transactions occur. Thereby, a business obtains a license from the municipality or county where they are located, and this license gives them the right to do business statewide, with no further license fees required.

There still are multiple boards and agencies that regulate various occupations and establishments, with the regulatory agency dependent upon the nature of the business.

The taxation of specific product categories is fairly limited.

The code of Georgia specifically limits that businesses and practitioners "shall be required to pay occupation tax to only one local government in this state, the local government for the municipal corporation or county in which the largest dollar volume of business is done or service is performed by the individual business or practitioner." (GA Code § 48-13-7 (e))

Kentucky

Kentucky does not have a statewide business license that applies to all businesses, but certain types of businesses are required to have a special license or permit to legally operate their business. In some cases, more than one license may be required. Many cities and counties require a local business license and/or impose an occupational tax or other type of tax on individuals and firms conducting business within their jurisdiction.

One aspect of business licensing in Kentucky is the "One Stop Business Portal," a site that links every component (federal, state, local and municipal) of business licensing into one central website. Prospective business owners have the ability to search by profession and street-specific location to get a listing of every entity that should be contacted for licensing and every step necessary to legally start and operate a business.

Kentucky also has repealed a sizable portion of their state license taxes (KRS § 137 et seq.)

Louisiana

There are several professions and occupations that require licensing at the state level. A municipal or parish government may issue a local occupational license, which is determined by type of business. The local licensing authority is based on the location of the business and businesses cannot be charged more than one licensing fee per location. (LA Revised Statutes § 47-341 et seq.)

One of the innovations established by Louisiana is providing small businesses with state licensing liaisons. Every state agency that deals with business or licensing designates an officer or employee to serve as its business licensing liaison. Similar to Kentucky, the office of the secretary of state also keeps a GeauxBiz Checklist to facilitate business by providing a central system for the determination of what licenses and permits must be obtained and maintained by individuals conducting business in the state.

Although Louisiana regulates the licensing of several occupations, the taxation of specific product categories in the state code is limited.

Mississippi

Business licensing in Mississippi is similar to Alabama in that municipalities and counties do have the authority to levy taxes on merchants that do business within their boundaries. However, the Legislature has repealed a sizable portion of code sections that address the local taxation of specific products (MS Code § 27-17-1 et seq.), thereby simplifying the licensing procedures. Also, Mississippi law specifically guarantees that municipalities and counties must recognize contractor licenses issued by their counterparts and cannot require contractors to apply for another business license (MS Code § 27-17-457).

Missouri

Businesses are required to pay a county merchant tax in select counties only if the business is physically located in that county. State boards administer business licenses for various professions.

A county Licensing Division is responsible for administering a variety of licenses required within the county. These generally fall into three categories:

  • Combination state and county programs are licenses that are shared between or recognized by both the state and the county. These include Peddler/Solicitor, Auctioneer, and Pool and Billiard table licenses.
  • Licensing programs for which the county is the licensing authority regardless of the location or municipality involved. These include: Liquor and amusement activity regulations, convention and tourism tax, and convention and sport tax (based on hotel/motel room sales).
  • Licensing programs covering the unincorporated areas of the county. In these areas the Licensing Division administers commercial and charitable solicitors, trailer courts, and liquor-by-the-drink licenses, as well as false alarm charges and utilities gross receipts tax.

The taxation of specific product categories in the state code is fairly limited.

North Carolina

The state of North Carolina has no single general business license that ensures compliance with all requirements. Some businesses may be subject to several state requirements while others may not be subject to any. There are over 700 regulatory, state issued and occupational licenses and permits. In addition, a local license may be required for a business.

Any person who conducts business within a municipality, either by maintaining a business location within the municipality limits or, either personally or through agents, solicits business within the city, or picks up and/or delivers goods or services within the municipality limits, is liable for the municipality's Business License fees unless specifically exempted by state law or local ordinance.

If a company or individual is engaged in more than one type of business activity within a municipality, a separate license may be required for each type of business activity. A separate license is required for each business location in the city limits.

Businesses also must pay property taxes to the county in which they are located.

North Carolina has repealed a substantial portion of their privilege (i.e., business) taxes (NC Statutes § 105-33 et seq.)

South Carolina

South Carolina code (§ 5-7-30) allows municipalities to levy a business tax based on gross income of the business. Multiple municipalities and counties can tax a single business. However, if the person or business taxed pays a business license tax to a county or to another municipality where the income is earned, the gross income for the purpose of computing the tax must be reduced by the amount of gross income taxed in the other county or municipality.

A license may be charged for the privilege of doing business within the city or county regardless of whether there is an established place of business therein, except for businesses given special treatment by statute.

The taxation of specific product categories in the state code is fairly limited.

Tennessee

The Department of Commerce and Insurance, Division of Regulatory Boards, licenses and regulates more than 650,000 Tennesseans in their professions and businesses.

Counties and municipalities may levy taxes, regulate licenses, and charge fees for various businesses classified in the Tennessee code (TN Code § 67-4-708).

If a business is licensed by a county, it can have up to $50,000 in annual sales in any other county without obtaining a business license for that county. If the annual sales exceed $50,000 in any other county, they have to obtain a business license for that county.

Texas

The state of Texas does not require a general "business" license; however, there are a number of regulatory agencies that have licensing and permitting requirements based on the type of service, or products associated with a business.

City sales tax jurisdictional boundaries cannot overlap one another. Therefore, a city cannot impose a city sales tax in an area that already is within the jurisdiction of another city.

If a county imposes a sales tax, the tax applies to all locations within that county. However, different types of taxing entities may cross or share boundaries, and boundaries for transit authorities and special purpose districts may encompass several cities and/or counties. Most urban areas, and many suburban areas, have two or more types of local taxing jurisdictions in effect in the same geographical area.

For example, businesses located inside the city limits of Corpus Christi are within the boundaries of three types of local sales and use tax jurisdictions: the city of Corpus Christi, Corpus Christi Regional Transit Authority and the Corpus Christi Crime Control and Prevention District.

Virginia

Virginia has a vast array of business activities that require a permit or license from the commonwealth. The three main regulatory agencies are the Department of Professional and Occupational Regulation, Department of Health Professions, and the Department of Agriculture and Consumer Services.

On the local level, business license fees are paid only to the immediate local government in which the business is located. For example, a county cannot tax a business that is located within municipal boundaries.