It’s not a secret that “no news is good news” with your business licensing activity, right?  While the ultimate goal of your licensing team is to be compliant, the unspoken goal may simply be not to raise any attention within the company.  The unfortunate side to this unspoken goal is that it always creates more problems than it solves.  And it turns dormant business license compliance issues into expensive business license remediation projects later.

Think about it this way – if you never get a medical check-up, you don’t have to get nagged by your spouse about how you’re not keeping up with your health rigorously.  You don’t have knowledge of a problem, your spouse doesn’t have an issue to press you on, and life just keeps rolling along.  Ignorance is bliss.  Unless there is a problem.  Then it becomes a bigger problem which is much more difficult to treat.  Maybe you do avoid the nagging for a longer period of time, but the outcome is much more serious, and can even be fatal.

OK…maybe that’s a bit over the top as an analogy, but directionally it’s correct in your tax and licensing departments.  So often the people handling the tax returns and business licenses feel like they have too much risk associated with really digging into the company’s level of compliance, and are coached into waiting for the symptoms to show up.  The shame is that it’s a disservice to the company and ultimately a blemish for the employees.

Companies who hire an outside partner to ensure compliance relieve all of the issues much more gracefully.  If it’s your job to ensure compliance, why not be proactive about it?  Get the check-up every now and again, and start treating the issues before the symptoms get out of control.  Here’s a good example – let’s say you’re a progressive company with lots of locations and a wildly creative product development team.  You’re releasing a unique set of products and features every quarter.  And the public is crazy about them.  You’ve got market acceptance…and growth…and shareholder value.  But you also have risk if you haven’t kept up with the business licensing requirements.  Some new products/services may require a licensing change.  Any new location may have unique licensing requirements that you haven’t faced before.  Your new product or location may trigger a gross receipts tax that you’re not aware of.  The symptoms are lining up and you don’t even know it.

I have a vested interest, because Business Licenses, LLC helps diagnose and treat these issues for large companies.  The reason we have a business is because it’s so much easier to rely on a partner who has been there before.  It’s like going to a doctor who understands your family history.  Both of us know what to look for.  And you get the benefit of a partner who can quietly solve the problems before they become front page news.  So why not hire a partner who can check into your licensing “wellness” and then give you a prescription for a quick recovery?  You’ll know the issues sooner, and you’ll have them solved before they become toxic and expensive.  And you’ll avoid all the nagging associated with doing it yourself!

About The Author

Doug Starr has served as Business Licenses, LLC’s Vice President of Sales and Marketing since joining the firm in 2011. Doug has more than 18 years of senior management experience in start-ups, with the last 11 years focused on sales tax and business licensing solutions. He has specialized in general management, sales, marketing, & streamlining operations for service businesses. Prior to joining Business Licenses, LLC, Doug was the Managing Partner for TaxConnex, a sales and use tax compliance start up, helping to grow them into the premier provider of sales tax compliance services for the SMB market. Doug also served as Director of Sales and Marketing for the indirect tax arm of Thomson Reuters’ Corporate Software and Services Division.

Doug is a graduate of California State University at Fullerton, and is a graduate of numerous executive, sales and marketing advanced education programs from Darden School of Business, McCombs School of Business, and the Mihaylo College of Business. He is also involved in a variety of community service initiatives, including Big Brothers, Big Sisters of America, High Tech Ambassadors, Radical Mentoring, and The Best Imaginable College Experience.

The economy is on the move (hopefully upward) and many businesses are experiencing growth either by acquisitions or expansion into new areas.  In the excitement/confusion of such growth, licensing concerns can get pushed down to the bottom of list.  However, this may be more detrimental to your new business plan than you realize.  Recently, I had a company that was acquiring another company and wanted to know how to transfer the acquired company’s licenses.  In this example, the licenses at issue were contractor licenses in numerous different states. Luckily, the acquirer had started this research process early – before the acquisition had closed.

They were somewhat surprised to find that the acquired company’s contractor licenses were not actually “assets” they would purchase as part of the deal.  Each of those company contractor licenses were tied to an underlying Qualified Manger or Employee license.  Not only did the acquiring company need to obtain new licenses since the licenses could not be transferred, they had to find new Qualifiers or employ the existing Qualifiers in order to even apply for new licenses.

As part of the closing, they needed to determine when the acquired company’s employees should be switched to the acquiring company’s payroll.  Many of those employees were license Qualifiers.  In the end, the company ended up having to have the Qualifiers file notices of disassociation from the acquired company so that they could be listed as Qualifiers on the new contractor license application.

Meanwhile, since there is a grace period for the disassociated company to obtain a new Qualifier, the acquired company could continue to operate under its licenses until the acquiring company had obtained new licenses. One of the most important questions that need to be asked in any acquisition or sale is whether the licenses are part of the package.  It seems like common sense, but many business people do not realize that some licenses run to the individual and not to the company.  This situation applies to small businesses as well as large companies.

Even transferring unregulated licenses can be more complex than one would think.  For example, a corporation decides to change its business structure to a limited liability company but everything else regarding the business operations and assets are essentially remaining the same.  Seems simple right? This company was unhappy to discover that for the most part all their tax registrations and business licenses could not be simply transferred. They were required to file new applications and registrations and close out the old corporation’s licenses.  Even if you are not changing your business structure, changes in ownership or officers can trigger licensing issues and require significant license amendments or relicensing.

So while change is good and can lead to greater profits, it may not be easy and there are many pitfalls along the way.  Avoid licensing pitfalls by using licensing research as a planning tool and keep licensing tasks near the top portion of the to-do list.

*The information contained herein is intended for informational purposes only and does not constitute legal advice and is not intended to constitute advertising or solicitation for legal services.

About The Author

Lorraine Cody serves as Director of Research at Business Licenses LLC. She is an accomplished attorney with significant experience in commercial litigation, insurance defense, antitrust, real estate and broker malpractice. Her background includes large law firm experience, substantial political and legislative experience and extensive public speaking experience. Prior to her work with Business Licenses, LLC, Lorraine served as a councilperson for the Town of Southeast, New York. She was publicly elected to the Town Board and served a four year term, working closely with legal counsel and land use planners and consultants. She was responsible for creating and overseeing the town website and recodifying the Town’s municipal code. Lorraine also served as an associate for Chadbourne & Park LLC, where she performed a broad range of litigation duties in state, federal and appellate courts.

Lorraine was admitted to the New York State Bar and U.S. District Court for New York. She received her Bachelor of Arts in Political Science from Russell Sage College and graduated Magna Cum Laude from Brooklyn Law School.

A good measure of your legal team’s due diligence capability is the attention that is paid to licensing requirements while everyone is in the M&A scrum. We are often consulted only days before the merger documents are supposed to be signed, when one of the attorneys realize that “Newco” may not be able to operate – especially if there are changes with responsible party officers and professional qualifiers in the surviving company.

Some Authorities will allow a grace period for companies to square away the licensing when they undergo a change of the type listed above. What is needed is comprehensive knowledge of the requirements in all active jurisdictions so the paperwork can be triaged and prioritized based on the critical dates imposed by the various authorities. In addition, all measures should be taken by the expiring company to maintain and renew licenses, so everything is in good standing – allowing transfers to occur cleanly, if allowed.

If your company is contemplating a merger or acquisition, you can bring glory to the Compliance Department by proactively researching licensing requirements for change of structure, change of officer, or qualifier issues. Nobody wants the surviving company to trip over red tape right when they are trying to hit the ground running.

About The Author

Andrea Jaffe currently serves as Vice President of Operations for Business Licenses, LLC where she is responsible for corporate operations and manages a team of licensing professionals. Prior to Business Licenses, LLC, Andrea was the Chief Financial Officer for DoubleTree Hotel- Tarrytown where she was responsible for day-to-day financial transactions as well as compliance with corporate, tax, and other financial reporting requirements. Andrea has also served as the Manager of Operations of the Sales Tax Group of CCH-Wolters Kluwer where she was responsible for operations, human resources, and site management for the Sales Tax Group. The group developed and supported sales tax databases utilized in ERP systems for retail, restaurant, grocery, telecom, and utility companies.

Andrea is a graduate of City University of New York-Hunter College where she received her Bachelors in Economics. She received her Masters in Accounting from Fairleigh Dickinson University.

As we all know, there are a number of municipalities that have licensing requirements, in fact, nearly every single municipality requires a license for at least one thing.

There was a period of time, here, at Business Licenses, LLC, when I was researching the requirements with regards to permits and licenses for alarm installations. I was assigned a number of local municipalities whom I called to discover these regulations. Many times, I could simply read the code which was conveniently posted online and didn’t have to call anyone to discover these requirements.

When on the phone, most of the municipalities were rather forthcoming and offered information and detailed explanations about what to expect, how much it will cost, etc. Some municipalities, however, are not as forthcoming. The ones that were not as forthcoming sometimes acted as extreme as to make one believe that their regulations were ‘top secret’ information. Under the Freedom of Information Act I can request information about the Federal Government including, ‘copies of all records, regardless of form or format.’ (5 U.S.C. §  552 (a)(2)(D) https://www.justice.gov/oip/foia_updates/Vol_XVII_4/page2.htm) Many things are no longer ‘top secret’ under the law and, most certainly, a municipality’s codes should not be treated as such.

Also, The Electronic Freedom of Information Act Amendments of 1996 requires that all agencies make ‘certain types of records, created by the agency on or after November 1, 1996, available electronically.’ (https://en.wikipedia.org/wiki/Freedom_of_Information_Act_(United_States)) However, most of the municipalities with the ‘top secret’ attitude typically haven’t amended, changed or created any new amendments since 1996 thereby allowing them to keep their records only in books that have to be purchased or looked at in the office or library in the given municipality.

These municipalities, protecting their codes and alarm licensing procedures, usually come out and say: ‘if you want to see the code you will need to file a Freedom of Information Request. The application is on the website and the fee is $10 initial processing fee and $2 per page of information.’ Or they will say, ‘you can come into the given office and read the code for free.’ In today’s business world, this is unduly onerous. A municipality with this policy is damaging the viability of new business in its jurisdiction. Instead of offering to provide the information these municipalities adopt a new bureaucratic process to clog the system. In a truly business friendly locale the local municipalities would be forthcoming about the requirements rather than hiding behind extra paper work and filing fees. They could simply add this fee into the business license fee as a ‘processing fee’ instead of using the Freedom of Information delay tactic. From experience, it is usually the people in these departments who are unsure about the codes or have little experience applying the codes who immediately fall to the mantra “you can file a freedom of information act request.”

Recently, in Graysville, Alabama I needed to file a business license. I call the Authority to ask how much the fee will be and the woman asks me a few questions and determines that the business license fee will be nearly $4,000! I ask her how she calculated the fee and she indicates her mathematical procedure. The math was correct. Then I asked her where in the code does it say that my business license fee should be calculated that way. I tell her that all of the other surrounding localities have a fee substantially lower. She shares with me the Ordinance number and sections. I ask her if I can find a copy of the Codes on the internet or if she can email or mail me a copy of the ordinance. She refuses to mail me a copy and states that the ordinance is not online, alternatively, she indicates that I can come down to the office and read the ordinance. I tell her that I cannot come there and she tells me that if I want a copy of the code I can file a Freedom of Information Request at the prescribed $10 initial fee and the $2 per page!

The Freedom of Information Act, in my experience, has actually impeded the free flow of information which is exactly the opposite of the intentions of the legislation as it now gives these local municipalities more reasons to block the flow of information and therefore blocking business activities in the respective jurisdictions.

About The Author

Jessica Taylor is a certified paralegal with significant experience in criminal prosecution, corporate compliance, business law, homelessness policy, environmental law and family law. She currently serves as a Corporate Associate at Business Licenses LLC where she oversees the licensing of various companies across the United States. She takes pride in her client centered service and in executing timely licensing strategies.

Her background includes internships with a Family Law Firm in Nottingham, UK, The Environmental Law Foundation in London, UK, TEMPO Networks in Newark, NJ and as an employee with the St. Louis Circuit Court in St. Louis, MO. She has experience with both the US legal system and UK legal system. Prior to her work with Business Licenses, LLC, Jessica completed Law School at City University in London, UK where she completed a dissertation on US and UK homelessness policy, earning an LLM in Legal Practice.