Does the Business Licensing Process Deter Entrepreneurs from Opening Small Businesses?

A recent study by the Institute for Justice, a public interest law firm, has revealed that state as well as local licensing requirements are actually holding back people from launching new businesses. Would-be business owners have complained that the cost and time involved in obtaining the multiple licenses required by the different government levels have deterred them from opening their own businesses.

As reported in the Associated Press, A 2005 study done for the Small Business Administration found that in Kentucky, “each local jurisdiction in which a company did business required separate registration, using different forms and asking for somewhat different information.”

Oftentimes business owners find themselves jumping from website to website in between endless phone calls to government offices in an attempt to obtain the right licenses that would legalize their business. This is especially difficult for business owners of regulated businesses who aren’t sure of what type of food licenses, daycare licenses or contractor licenses are necessary for the opening of their new venture.

Economists who have studied this disturbing trend have concluded that much of the bureaucratic hurdles are in place to limit the competition for large businesses. A license can “create barriers to entry and creates profits for those who are politically well connected,” says Steven Lanza, an economist and editor of The Connecticut Economy, a publication of the University of Connecticut.

Many individuals have by-stepped the licensing hurdles and gone on to build successful businesses by outsourcing their licensing needs to Business Licenses, LLC. Business Licenses’ Outsourced Business License Management Service allows businesses to outsource business license filing, maintenance and renewal for all their required business licenses & permits with every licensing authority in the U.S. Business owners can then rest assured that all the necessary licenses and permits will be obtained with the least amount of effort on their end.

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