Best Practices for Business Licensing for Local Governments

Constituent getting a business license on their phone

Municipalities and counties have traditionally managed business licensing through paper or PDF applications. With online business licensing software, local governments can streamline the licensing and business formation process. The benefits of bringing business licenses online include improvements in efficiency, transparency, communication, cost reductions, and more.

Why do governments license businesses?

Many municipal and county governments and most state governments require businesses to have some type of license to operate. But across the board,  governments struggle to achieve 100% compliance with licensing requirements. Enforcement is challenging and under-resourced, even though having complete data about local businesses improves safety and can increase revenue collection for governments.

Here’s a set of business licensing best practices that we’ll explore in this article:

  • Collect the minimum amount of information required
  • Streamline multiple applications into one
  • Accept online payments through your online business license forms
  • Avoid email-based processes or paper-based reviews
  • Use simple language in renewal and delinquency reminders

Business licensing is important because it:

  • Ensures the safety of the community (compliance with codes and regulations)
  • Generates revenue
  • Provides accountability and transparency for the community

What are the challenges with traditional licensing processes?

Unfortunately, sometimes the licensing process is perceived by businesses to be cumbersome and time-consuming. Businesses complain about having to complete the same form multiple times year over year, waiting for their licenses to be mailed, or having to visit City Hall in person and take time away from their business.

One proven way to increase compliance is by making the licensing process easier and more efficient by moving it online with a software platform like ClearForms. But whatever software you use, here are business licensing best practices to improve compliance with business licensing:

Best Practices in Business Licensing:

Collect the minimum amount of information required:

Many times licensing application forms haven’t been updated for many years. It’s common that when governments move applications from paper or PDF forms to fully digital, mobile-friendly online data collection, it’s possible to ask fewer questions and use logic-driven “smart” forms to get necessary information without overwhelming applicants. The less time it takes to complete a license application, the more likely a business is to submit it.

Streamline multiple applications into one:

Many governments require specialized licenses for certain types of businesses, such as contractors or alcohol sales, that have a higher degree of risk for community members. Frequently business owners have to complete multiple forms with duplicate information. It’s easy for them to miss submitting a required form, and many governments don’t prioritize cross-license analysis to ensure complete submission. Digital business licensing tools like ClearForms 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 and restaurant and alcohol license and amusement license a business owner can complete one combined process. Some regions have developed cross-jurisdiction business licenses for contractors to reduce paperwork for their business community.

Accept online payments through your online business license forms:

Requiring applicants to submit payment through standalone payment systems that aren’t connected to the main business license submission often results in incomplete licensing and the need for staff to “chase down” applicants that haven’t fully completed the license process. Using systems that integrate payments into applications and renewals make it easier for businesses to pay what they owe in a timely manner.

Avoid email-based processes or paper-based reviews:

Providing staff with an easy online review capacity means they can quickly process new applications to get licensing done fast. If staff must pass paper forms back and forth or email applications between staff (or worse do manual data entry into an obsolete system) it’s easy for submissions to get lost and delayed. And that can mean delays in new business formation and job creation.

Use simple language in renewal and delinquency reminders:

A government in Kansas found an increase in renewals and better response to delinquency notices when they used simple, straightforward language in their reminder notices. Make sure your emails and any mailed communications are readable and easy to understand. And be sure to anticipate the needs of non-English speaking business owners in your community.

Some jurisdictions use data from licensed businesses to assess taxes; others charge a flat licensing fee. No matter how your government derives revenue from your licensing workflow the above best practices will help increase compliance and revenue.

Using digital tools for business licensing, such as ClearForms, can help you comply with the best practices listed above. Please get in touch with our team if you’d like to learn more.

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