6 Reasons Local Governments Should Switch to Online Business Licensing

Constituent getting a business license on their phone

Advantages of online licensing

Online business licensing software provides many advantages for local governments and businesses. Using cloud-based software tools provide many benefits to municipalities and counties, including: 

  1. showing respect for local businesses’ time
  2. supporting faster business formation and job creation 
  3. increasing revenue for government 
  4. supercharging staff efficiency
  5. eliminating paper forms and minimizing paperwork 
  6. increase business owners’ and community satisfaction with local government.

Why do local governments license businesses?

Many local and most state governments require businesses to have some type of license to operate. This licensing function has two primary purposes:

  • To ensure the safety of the community.
  • To provide a full picture of the economic activity taking place in the community.

Some jurisdictions use data from licensed businesses to assess taxes; others charge a flat licensing fee at the time of registration and during annual renewals. Some do both.

Businesses that have a higher likelihood of risk for a community (such as alcohol sales or food service) are often more strictly regulated and must obtain additional licenses not required for business such as a clothing store.

Additionally, jurisdictions often impose personal licensing requirements on practitioners of specific tasks (from cosmetologists to plumbers) with the goal of protecting the public. 

Unintended impacts of paper-based business licensing

As with any well-intentioned effort, there can be unexpected challenges that result from business licensing.  When the licensing and permitting process is extremely complex, lengthy, and spans multiple jurisdictions, it can dissuade and delay business formation. That can have significant impacts on the economic benefits that come with the creation of new businesses for a community.

Six Advantages of Online Business Licensing Software

Mitigating these negative consequences is just one of the reasons that governments should provide online licensing options for local businesses. Here are six  essential advantages that come from utilizing digital forms and workflow software tools, such as CityGrows, for business licensing operations:

  1. Convey support and respect for businesses and entrepreneurs

Small businesses create the majority of new jobs in our communities and are the foundation of local economies. Providing a fast and modern way to license these businesses demonstrates respect for business owners’ time and a willingness to adapt to their needs. Business owners want to be able to submit license applications on their own terms, for example from their phones or after traditional business hours. Online licensing makes it as easy as possible for businesses to comply with your licensing regulations.

  1. Facilitate faster new business formation 

A long paper-based or PDF process, where there is no access to real-time status updates, can be frustrating for applicants and staff alike.  When this gets taken to extremes, such as months-long waits for operating permits for new restaurants (common in major cities), this can inhibit new business formation. In some locations the combination of municipal, county, and state licensing requirements can delay the opening of new businesses for months or years. Some businesses may never open, even after paying a lease for months, if they’re unable to obtain necessary permits. That means fewer new jobs and less economic activity. Streamlining business licensing brings real benefits and supports faster business formation and job creation.

  1. Increase local government revenue and compliance 

When licensing is easily available online, more businesses will comply with local requirements. When Inyo County, California brought their local business registration process online with CityGrows, they saw a 50% increase in filings. Manual processes, paper forms, print-and-mail PDFs and paper checks had depressed compliance with licensing requirements. Because most governments don’t have the ability to enforce licensing requirements, particularly for home-based businesses that don’t have any visible operations, it’s more important than ever to make compliance as easy as possible. Mobile-friendly business licensing and fast, online payments and approvals increase participation and revenue. Digital systems also make it much easier and more cost-effective to send renewal notices, which can go out via email.

  1. Improve staff productivity and data quality.

It’s never ideal when staff spend hours doing manual data entry from paper forms. Paper and PDF-forms often have missing or unclear information, creating more work for staff and wasting time that could be spent on more productive activities. It’s far better to use a digital forms tool for a business license application. Digital tools like CityGrows automatically ensure that forms are complete before they’re submitted, and move the data entry burden onto the applicant. Fewer errors mean faster processes! Additionally, a good digital business licensing software will automate basic communication functions with applicants and allow them to print their completed license themselves. That means staff can spend time on higher-value tasks like reviewing applications (which also happens online) and providing more support to the businesses that really need it.

  1. Eliminate paper forms and streamline paperwork

Many local business license forms are artifacts of a time before digital services. Far too often business owners have to complete multiple forms with duplicate information. Digital business licensing tools allow governments to combine multiple paper forms into one streamlined interlinked digital process. That means business owners have an easier time complying with regulations and government staff have a more complete picture of local business activity. Instead of a separate business license, restaurant and alcohol license, and amusement license, a business owner can complete one combined process that fulfills all local requirements..

  1. Increase business owners’ and the community’s satisfaction with local government.

All of the positive impacts of online business licensing workflows result in better “customer” satisfaction for businesses interacting with their local government. By providing easy-to-use online licensing, local governments improve their relationships with businesses and the community. When licensing data is collected digitally on a government-specific software platform like CityGrows, built-in search and open data tools make it easy for residents to check the license status of a local business. Once digital communication channels are open, government staff, residents, and business owners build ties and trust. And happier business owners are more likely to keep their businesses local!

If your government has already instituted digital business licensing what benefits are you seeing? If not why not?  When you’re ready to explore digital business licensing for your community, please get in touch!

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