Finance Jobs

Business License Compliance

On July 16, 2011, The Blaze website reported that police in Midway, Georgia shut down a lemonade stand run by three girls trying to save up for a trip to a water park because they didn’t have a business license[1]. About once a year, a news story will air about some poor kid’s lemonade stand closed for a lack of proper licensing. People express outrage at the petty actions of city officials, wonder what the world is coming to, and the news cycle moves on.

This familiar story, however, has implications for anyone running or acquiring a business. There is a lesson to be learned here: While ensuring compliance with the myriad of business licensing and tax registration requirements is becoming increasingly complicated, the need to remain in compliance is more important than ever. There are over 74,000 governmental authorities in the U.S., each with its own rules, parameters, and requirements that can apply to a given business. Determining which authorities have jurisdiction over a particular business operating in a certain location and maintaining compliance with those requirements can be burdensome, to say the least. The South Carolina Chamber of Commerce estimates that it takes 47 hours for a typical new business to comply with licensing requirement just in its state. At the same time, cash strapped governments are stepping up their enforcement efforts as fees, penalties and fines can be an important source of revenue. Additionally, the Sarbanes Oxley Act has raised awareness regarding the importance of compliance among suppliers, banks and boards of directors. Business license compliance requirements are often written into important contracts and are a key part of due diligence in merger and acquisition transactions.

For a company operating in many locations, licensing requirements can be very onerous. One nationwide retailer reports that it has to manage 180,000 business licenses and permits each year, and that number is likely to increase. The number of professions requiring licensure is increasing each year, often driven by the people in those professions hoping that regulation “will boost the prestige of the professions, provide oversight and protect consumers from shoddy work.” [2] A study done in 2008 found that the percentage of professions requiring licensure has risen from 5% in 1950 to 23% in 20082. In many cases when a firm engages in a business purpose requiring a licensed professional, the business must obtain its own license in addition to ensuring that the professionals it employs are properly licensed. The incentive for state and local governments to start licensing cat groomers, tree trimmers and shampoo artists, to name a few, is the revenue generated. License fees, penalties and fines usually more than cover the costs to administer the licensing process and are generally revenue generators for government.

The problem is compounded by the concept of nexus. While nexus is most typically applied to determine whether tax registration and filings are required, it can be applied to licensing in some industries. The application of nexus means that, in some cases, even companies without a physical presence in a given location still must comply with licensing requirements when doing business there. Businesses whose employees perform on-site services, trucking companies, leasing companies and real estate management companies are some examples of industries subject to licensing requirements even when they are not located in a given jurisdiction. At the same time, the penalties for non-compliance can be severe. Businesses can be subject to hefty fines and can lose substantial business and revenue when their operations are shut down for lack of proper licensing. They can also face bad publicity and suffer increased insurance costs.

Whether you are currently operating a business in multiple locations, or performing due diligence on a target company in an acquisition, ensuring that the company has all the required permits/licenses and is properly registered everywhere it is doing business is a critically important task. It is also a daunting one, as each state, county and municipality has its own rules regarding which activities need to be licensed, how and by what authority the activities are licensed and how often the licenses must be renewed. Ensuring that the company remains in compliance both by renewing all licenses in a timely fashion and guaranteeing that new company activities are licensed appropriately add to the difficulty.

Handling the Complexity

As the complexity and importance of business license compliance continues to grow, companies need to dedicate the appropriate staffing, resources and systems to effectively manage the process. Developing internal systems and expertise can be costly, but may be an effective approach for larger companies that can dedicate the needed resources. Smaller companies and law firms concerned with the due diligence aspects of business licensing may find that their needs are best met by working with a knowledgeable service company that can provide reliable, cost effective solutions.

Tags: Acquistion Transactions, Business License Compliance, Business Licensing, Proper Licensing, Water Park

Business Name and License

In this article I want to cover a sub topic of the Ontario business registration process in detail, registering for your business name as well as registering for your business license.

If you want to incorporate in Ontario to conduct business, you must first register a business name and obtain what’s called the Master Business License.

You can do this in one of three ways, either by person by visiting a Service Center, by mail or online through a third party service provider.

You can also hire an attorney to execute the Ontario business registration process for you, but this is a longer process on average and more expensive.

The entity you want to register with is the Ministry of Government Services’ Companies and Personal Property Security Branch. This is the entity that issues the Master Business License that shows your registration number as a proof that you can legally do business in Ontario.

As already covered on this website in other sections, the first step in the Ontario business registration process is to select a name for your business that is in accordance with the Business Names Act and the Business Regulations Reform Act of 1997. Basically, for a sole proprietorship, you can use your own name, but any slight variation or addition will require filing a separate legal entity name for your business. There is more information on what you can and cannot do on the Canada Ontario Business Services Center website or in a local office / branch.

If you want to take the most streamlined approach to an Ontario business registration, I highly recommend you register online through the Service Ontario site so that you can register your business’ name and at the same time register with other authorities to obtain relevant account numbers such as the Ontario Ministry of Revenue, tax account numbers, permits, etc.

Using online services can mean a relatively quick turnaround as well in terms of getting your Master Business License. You can get this in electronic PDF format. If not, you get a hard copy through mail. But before doing anything else, you need to do a name search to see if your contemplated business name is already registered.

TIP: For a more comprehensive search select the “Enhanced Business Name Search” option. It costs a little more but it is worth it as it does a comprehensive check. You can do this under $12 typically online with a credit card.

Again, you can register for your Ontario business license online as well, which is a legal requirement in order to do business in Ontario. Remember, if you are not comfortable transacting online or don’t want to do it in person, you can do so via mail by downloading the required forms online (Service Ontario website) and then mailing it to them at the address stated on the forms.

All Ontario business registration forms are owned and managed by the Companies and Personal Property and Security Branch in Toronto. If all else fails, visit the nearest Service Ontario branch where you can use a self-help workstation and completing the forms there. You can contact Service Ontario at 1-800-565-1921.

Registering the business name is the first step. Once you have that out of the way, you can proceed to incorporating your business and then obtaining the other relevant licenses and certifications needed that are specific to the nature of your business.

Read more about why incorporate in Ontario Canada. Read more about the Ontario business registration process step by step here. I hope you found this brief run down on registering a business name in Ontario. Please let me know if I can be of further help to you.

Tags: Account Numbers, Business Names Act, Business Regulations, Business Services Center, Canada Ontario, Government Services, Legal Entity Name, Local Office, Master Business License, Ministry Of Revenue, Ontario Business Registration, Ontario Ministry Of Revenue, Personal Property Security, Reform Act, Security Branch, Separate Legal Entity, Service Ontario, Sole Proprietorship, Streamlined Approach

Budgeting Credit

One of the most frustrating aspects of suffering from bad credit is that it becomes extremely difficult to gain better credit to improve your rating. Without access to better forms of credit, you end up paying more on worse types of credit facilities, which means that you have less money available to pay off your regular outgoings and tackle outstanding loans. It’s clear that it is very easy to enter into a vicious circle where you are constantly trying to get your head above water.

The good news is that it is possible to improve your credit rating, it just takes a lot of work. That doesn’t mean it can’t be fun however, and that doesn’t just apply to the satisfaction of ultimately improving your rating: making sure you are getting the best deal and value is a useful skill and one that your friends are likely to wish to utilise!

Firstly, make sure that any and all financial obligations in the month can be met. Your first target should be to reduce any high interest debts, whether this is a mortgage, a credit card bill or other outstanding loan. Making sure the money is available and paid to the creditor on time may involve making some adjustments to your lifestyle or foregoing a few luxuries or evenings out, however this is only for a short period of time and won’t be something you will have to do forever.

If you have a number of loans, you may be able to consolidate these into one loan, and pay a single interest rate on this as opposed to multiple loans at various rates; you will need to go through these and add up what the costs are to determine which method is cheapest.

To free up more money, always shop around for your services. Things like insurance policies can often come ‘packaged’ with a mortgage, but should be reviewed every year to make sure they are competitive. Some policies include too much cover or for situations you don’t need… you can find that looking at different quotes may save you up to half your current payment. Prepare a list of items and their cost and go through this with an advisor from different companies to see which works out best.

Do the same with your energy suppliers, you can find that getting both gas and electricity from the same supplier may entitle you to discounts, or often there is a ‘locked’ rate you can apply for which caps prices for a year. Given that energy costs have only risen in recent years, fixing the cost is a good way to avoid sudden rises and also allows you to know what the exact amount will be.

Be careful when you shop for groceries too, the consumer index has seen some of the biggest rises in household items, and supermarkets are trying their best to get shoppers to increase their spending at a time when people have less money. Try to prepare a meal planner so you can re-use ingredients that you can buy in bulk (and so save money and reduce wastage). Be prepared also to shop around for the best deals on the ingredients you need, rather than opting for the convenience of the nearest or largest supermarket.

Once you have some breathing room in your budget, try to overpay on the largest or most expensive debt that you have. It doesn’t have to be by much, but this will have two bonus effects for you. Firstly you will pay off the capital of the debt faster, which means overall you will pay less on the interest on the outstanding debt that you owe. Secondly, it will send a signal to the credit companies that you are paying off you debt, rather than maintaining a ‘holding pattern’ with minimum repayments. For a large debt such as a mortgage, overpaying by as little as £50 per month can knock years off the overall term of the mortgage and end up saving thousands of pounds in the long term.

By strategically tackling your debts you will reduce the overall amount that you owe, and by having to allocate progressively less disposable cash to settling payments you will have more funds available to put into savings for a rainy day.

Tags: Budgeting Credit, Credit Rating, Outstanding Loans, USeful Skill, Vicious Circle