Business Licenses Q&A: Closing a Store

Audience Question: Are there licensing issues involved in closing stores? Is it safe to just let business licenses, food licenses, and health licenses expire/run out?

Andrea Jaffe's Response: There are definitely licensing issues involved in closing a store, and we strongly recommend that you do not just let a license lapse and assume that if you have no activity, then there is no risk. Many municipalities require a license to be closed proactively, so that they do not keep the account active. We have seen municipalities impose late filing fees and penalties (and keep accruing them!) if a license is deemed active, even if the location has closed. Additionally, if a new business enters the premises and incurs violations, this could negatively impact your license account because the authority may associate the violation with the open license at the address that belongs to the previous business.

Joe Vitulli's Response: I completely agree with Andrea. There absolutely are issues involved with closing stores. Failure to actively close out licenses may lead to penalties and double taxation for a company. Don’t assume that you can just let a license expire. In many jurisdictions the Authority will not close out an expired license, but simply put it into a “Failure to Renew” state and charge interest and penalties and then contact a collections agency to get the money.

Editor's Note: This question actually helped give rise to a webinar that we are now planning for July 16th, 2014. It's called Launching Locations: How to Avoid Regulatory Fines When Opening Retail Stores and it will cover compliance issues both during the opening and closing of retail locations.

(Author's Note: Business Licenses, LLC hosted a webinar on June 10th, 2014. During the Q&A, the audience submitted questions. We are going to periodically post those questions to this blog along with answers from the panelists.)

By Alan Ruttenberg