Business licenses getting reworked

Today the Finance and Culture Committee heard a proposal to revise the way business licenses are issued in Seattle. <trigger warning: legal wonkiness>

Today the City of Seattle has two kinds of business licenses:

  • Title 5: this authorizes businesses to collect revenues and sets up a structure for paying taxes on those revenues;
  • Title 6: this is issued to businesses that are regulated in some way, and authorizes them to conduct those regulated activities (e.g. selling marijuana or alcohol).

All businesses are required to have a Title 5 license; only some need the Title 6 license as well. But here’s the problem: now that the city is starting to move forward with new regulatory¬†efforts such as the wage theft ordinance, there need to be a process for revoking the license to conduct business activities. So the proposal is that moving forward all businesses will be required to have some form of Title 6 license which is tied to following appropriate regulations and can be suspended or revoked if necessary for violations.

“But wait,” the keen observer asks, “why don’t they just add those regulatory abilities to the Title 5 license rather than force everyone to get two licenses?” Because by having them separate, if your Title 6 license is suspended you can still collect revenues from your “accounts payable” (i.e. the people who owe you money). If your Title 5 license is suspended, you can’t do that. That’s actually a pretty clever mechanism, particularly in the case of a suspended license that might just take a few days to get reinstated once an issue is resolved. And the existing Title 6 laws have in place procedures for appeals, so no new ones would need to be created.

So it is a little bit more effort in getting your business established (and probably a slightly higher license fee), but then it really makes sense. Apparently Tacoma does business licenses this way, and it’s pretty seamless.

The committee voted to pass it out of committee for the full Council’s approval next week. Here’s a more detailed presentation on the changes.