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Repeal and Replace: Adopting the Model Business License Ordinance in 2021

Last year, the General Assembly passed Act 176, the SC Business License Standardization Act, which adds many specific standardization requirements for the cities and towns that administer this tax to implement by January 1, 2022. 

The law requires that these taxing jurisdictions now all use a single due date — April 30 — and a standard license year period of May 1 to April 30. Other licensing practices must be standardized as well, including the method of calculating a business’s gross income, the setting of rate classes, as well as acceptance of a standard license application and acceptance of payments from a statewide  online payment center.

To assist with the process of complying with the law, the Municipal Association of SC created a revised model business license ordinance. The revised model ordinance addresses the specific requirements found in the new law. Because of the new law’s complexities, the Association strongly encourages municipalities to repeal their existing ordinances and replace them with the revised model ordinance, rather than altering and correcting their current ordinances. Adoption of business license ordinances that comply with Act 176 must take place by January 1, 2022.

The Association’s revised model ordinance includes the current standard business license class schedule required by law, which cities and towns must update at the end of every odd-numbered year. It also contains a comprehensive definition of a business’ gross income as required by Act 176. 

Here are some other business license issues covered by the model ordinance:

  • Applicability to businesses lacking an established location in the municipality
  • Requirements for display or carrying of a license
  • Inspections
  • Audits
  • Assessments
  • Penalties for nonpayment
  • Denials, suspensions and revocation of licenses 
  • Violations 
Next steps to comply with new law
Adopting the model ordinance is one of several steps that cities and towns will need to take throughout 2021 to comply with Act 176, and the Association will be offering guidance throughout the process. Some other critical early steps include making sure that licensed businesses are assigned a North American Industry Classification System code, or NAICS code, and exporting business license records into an Excel spreadsheet so that municipal staff and the Association’s staff can work to review the records for compliance with the law.

 For questions, contact Melissa Harrill at mharrill@masc.sc and 803.933.1251, or Caitlin Cothran at ccothran@masc.sc and 803.354.4786.