DC’s Department of Consumer and Regulatory Affairs (DCRA) on December 31, 2008, launched a new license category: the Basic Business License for General Business or the General Business License, a new category of the Basic Business License (BBL) which already covers many existing business categories. Does your business need it? Well, what I’ve discovered is, regardless of what the DCRA materials say, if you don’t already have a license, then the answer is “Yes”. Probably.
The Capitol Hill Association of Merchants and Professionals has hosted two information sessions at Hill’s Kitchen with DCRA representatives (who arrived 30 and 45 minutes late for the respective sessions) in as many months but it is still difficult to determine who really needs the license and the deadline for applying before a hefty $2000 fine is imposed.
Do you have a DCRA licensing story to share?
The initial cost to get the license is $295 with a $100 yearly fee and renewal required every two years. The program has rolling application deadlines based on zip code. The first licensing deadlines were December 31, 2008 – the same day the program went into force. But the lack of publicity for the program and inaccuracies in how the requirements are communicated has led many to miss deadlines or determine their business does not need the license until attending a CHAMPS-organized information session, where they discover that may not be the case.
For example, the first sentence of the DCRA-issued flier says “… the District of Columbia will require all business that pay business taxes to have a District of Columbia Basic Business License”. Perfectly clear. Then two of the common forms of corporate organization for small businesses, the Sole Proprietorship and Limited Liability Company (LLC) are not included because all profits and losses are passed through to the owner(s) and, therefore, taxes are paid via individual tax returns, not through the business. (A technical note to satisfy the CPAs and tax attorneys out there: LLC’s may elect to be treated as corporations for tax purposes but, oftentimes, do not.) My own business is an LLC and when I made this point at the first CHAMPS information session I was told to ignore that discrepancy because, since I was in the business category of “consultant”, I did indeed need to get the license. Conclusion: either someone at DCRA does not understand the legal and tax implications of the various forms of business organization or the point is simply to rope in business owners to pay a fee from which, heretofore, they were exempt.
Equally disappointing is DCRA representatives’ cavalier approach and lack of information during the “information” sessions. As noted previously, featured DCRA speakers have arrived embarrassingly late to these sessions and been woefully unprepared to answer legitimate questions. In my experience, we were told repeatedly to refer to the one-page information flier to answer questions – the same information flier carrying the first sentence we were told to ignore because it is inaccurate. Also, as a business owner I am not loathe to pay the appropriate taxes and fees. The taxes and fees should support the smooth operation of city services. Which is why I was disappointed when DCRA could not tell me where the new licensing fee revenue would go. I can be consoled somewhat if it goes back to DCRA, and especially if it goes back to specific budgetary line items that support the growth and improvement of the business environment in the city. If, however, it goes to a general fund, then I’d like to speak to my Councilman about that. Despite my direct question and subsequent attempts by phone and Twitter, I still don’t have the answer to that question nor have I been steered towards someone who can help.
The real kick in the gut is that I think DCRA has a great website. Everything is there, its easy to navigate (for a website with so much content), and you can print all the forms – though online filing is woefully missing. I actually thought it was a very friendly site so when I went to file all my paperwork while setting up my business a year ago, they had made a good impression on me before I even went in the door. Sadly, that lasted about 5 minutes. If only the reality lived up to the virtual.