***Note: this bill has been substituted, this analysis may no longer be valid***
The question of small business licencing is a tricky one for policy makers these days. Though boutique companies have long been run out of households, modern communication has allowed for a new era in home-businesses wherein an entire company could be run, employees and all, with little more than a laptop and an internet connection.
But, because the phenomenon of the internet based company is a relatively new one, state and local governments have not kept pace and still require things such as charging a fee for business licences, the logic being that if a brick and mortar company sets up shop, they will require public goods such as roads or public parking, so they should be charged an additional fee for setting up shop. With at-home businesses, however, this argument begins to fall apart as homeowners are already paying for these items through property taxes.
Though these fees are traditionally small (generally less than $50 a year), they none the less pose a nuisance for small business owners who are otherwise contributing to the economy. As these fees do not benefit the company in any way, some have argued that they should be waived.
The fiercely pro-business Representative Jacob Anderegg (Republican – Lehi) is staying true to his mantra of small government with HB 258 – Municipal Business Licencing Amendments.
Anderegg is proposing that, if a company makes less than $250,000 a year and the primary place of operation is a home, that company would be exempt from having to buy a business licence in the community they operate in. Other restrictions include the requirement that, if a company has employees, those employees must not work at the same location as the business owner – ensuring that the place of business truly is a home.
Anderegg would require that business still register to ensure that proper statistics and complaints can be made, but by freeing up home businesses to simply operate, business owners will have one less legal restriction to worry about.
To be sure, cities and counties that currently require licences will receive a hit to their revenue stream. Anderegg does not provide for any sort of compensation, meaning that cities and counties will have to either raise fees elsewhere or cut services in order to absorb the costs. On the flip side, $250,000 in revenue isn’t a very high threshold, and those businesses that are more successful (even if they are in the home) would have to register.
This bill would truly protect the smallest of the small businesses in the state and would help incubate and foster growth. Many famous local, regional, national, and international companies start with an idea in the garage. This bill would make it just a little bit easier for the small business owner to foster their dreams.
To contact Representative Anderegg, click here or call 801-901-3580
Impact on Average Utahn:
High Impact 5 . 4 . 3 . 2 . 1 . 0 No Impact
Need for Legislation:
Necessary 5 . 4 . 3 . 2 . 1 . 0 Unnecessary
Sound Legislation 5 . 4 . 3 . 2 . 1 . 0 Clunker