Why Waste Time on Research…They’re Only Business Licenses, Right?

I’m surprised at the low level of attention that proper business licensing gets in public companies. I get the fact that this function is under the radar most of the time – a mundane task that is managed by a group of people who are paid to keep any licensing issues from cropping up. But my observation is that most licensing administrators inherit issues that they were not even aware existed. And those issues do raise their heads now and again, embarrassing the organization and costing them money.

How hard can it be to perform research to stay business license compliant? They are just registrations and permits, right? But you have to understand that the issue does not really start with the license renewal activity, which companies view as their “business license compliance process”. It inevitably starts in the very beginning with the initial business licensing and permitting decisions that are likely made by someone else. It’s like the party where the punch bowl has already been contaminated, and the “server” has no idea that they have been set up as the fall guy when they are refilling guests’ cups. No tip for that guy at the end of the night.

Here’s how it happens. A regulatory or tax team has responsibility for getting a new location or product ready to be released in the market. Somebody looks up the licensing requirements online, or even calls a licensing authority with a few questions. Sometimes the website is unclear and often the questions aren’t the right questions. As a result, the license acquisition team gets the licenses they deem adequate, and then they open the store or release the product/service with what they think is the jurisdiction’s blessing. Both are unaware that they are under-licensed or have business license reporting requirements that are undefined. This happens because somebody didn’t commission the appropriate, thorough license research.

So what’s the big deal? What could go wrong and how bad could that be anyway? All I can say is that in almost every case, the license renewal team somehow takes the blame for somebody else’s shortcut. A jurisdiction that requires business license gross receipts reporting comes knocking and finds a six or 7 figure short fall. Or an over-zealous licensing official locks your doors and boasts about his “finding a bad guy” to the media.  Bad stuff…and costly too. All because somebody initially thought this business license research stuff was child’s play.

I know I have a vested interest in seeing this done right. After all, I spend my days (and some nights) helping companies climb out of these holes they’ve dug. Why not get an expert opinion from somebody who has been there before. Sure, I can help you, but you really just need to find a reliable someone who knows how to traverse the curious nexus, reporting, and licensing requirements. They’ll know the truth and they will save you a ton of clean up in the long run. Spend a little time and money now and save a boatload of time, money, and negative PR in the future. That’s a much better plan.