(The Center Square) – As South Carolina’s Legislature returns this week, a bill that would simplify the state's system of business license taxes is awaiting consideration by the Senate Finance Committee.
The South Carolina Business License Tax Standardization Act, H. 4431, sponsored by Rep. Jay Jordan, R-Florence, and passed unanimously in the House earlier this year. It is awaiting consideration in the Senate Finance Committee.
“If you’re a small business owner with locations in two or more towns or a shop in the next county, you must learn two different systems with two sets of definitions,” said Ben Homeyer, state director of the National Federation for Independent Business. “Not only might the renewal dates differ from one jurisdiction to the next, but so might the definition of basic concepts such as gross revenue and even how a business is classified.”
More than 200 municipalities and counties in South Carolina have a business license tax, and businesses are required to be licensed in every locality in which a company does business, including making deliveries. Because businesses frequently operate in several jurisdictions, they are required to pay license taxes to many local governments.
“Small businesses don’t have the resources to sort through all this,” Homeyer said. “H.4431 would be a good first step toward removing many of the regulatory and process impediments that make compliance a challenge for small businesses.”
H. 4431 would modernize the state’s business license tax system by establishing a one-stop web portal for registering and paying all business license taxes statewide, providing a standard schedule for taxation in all jurisdictions, requiring all localities to accept a standardized application for licensure and providing a tax deduction for revenue earned in other jurisdictions where the business is licensed. It also creates a delivery license, capped at $100, for companies who enter a jurisdiction only for deliveries.
“The current system of business licensing, with its maze of duplicative licenses, makes it more difficult and costly for small businesses to serve larger areas, specialize, and grow," Citadel professor Russell Sobel wrote in an analysis of South Carolina business license taxes. "Thus the current system stifles both the creation of specialized small businesses and the creation of wealth."