— Oscar Delgado (@DelgadoReno3) March 27, 2015
By Ryan Smith, @rsmithRSJ
This article first appeared on NextReno.org. Republished here with permission from the author.
RENO, Nev. – A group of ten small business owners met at The Jungle in downtown Reno Friday morning to talk with Assemblywoman Teresa Benitez-Thompson about Senate Bill 252, which if passed, would double the minimum annual business license fee for small businesses in Nevada from $200 to $400.
The financial impact this would have on the lowest revenue earners was among the biggest concerns.
Benitez-Thompson walked the group through key sections of Governor Brian Sandoval’s senate bill and answered questions along the way.
The assemblywoman held the meeting in hopes of giving more small businesses a voice in the legislative process.
“There were only a couple small businesses that got to speak at the legislature,” Benitez-Thompson said. “I’ve been calling small business owners to hear what they have to say, and I will take your questions with me today.”
Chief among their concerns is whether or not new businesses can handle the proposed increase.
The fee for businesses generating more than $1 billion in gross revenue each year would increase to more than $4 million.
Fee revenue would go in the state’s general fund where it would be earmarked for education, according to comments made by the governor’s Deputy Chief of Staff, Chris Nielsen, during committee hearings last week.
Those who met with Benitez-Thompson Friday morning said they weren’t opposed to the purpose of the new fees, but did express concerns about the bill’s implementation.
Many suggested that businesses that fall within the bill’s lowest revenue brackets should be eased into the new costs.
Under the current proposal, the first revenue bracket ranges from $0 to $31,250 in gross revenue per quarter. That leaves businesses making only a couple thousand dollars a year to pay the same fee as those making up to $83,120 each quarter.
The new fee rates are adjusted for the average cost of goods and services per industry, similar to a margins tax.
“It’s one thing to generate $600,000 in gross revenue, but it’s another to keep any of it,” said Matt Polley, owner of The Jungle. “For small businesses just starting out – trying to break even – I’d like to see the legislature start [the fee] lower and then implement an incremental increase over a couple years.”
Alex Woodley, code enforcement manager for the City of Reno, said he’s worried that an increase in state fees will deter new business owners from legitimizing their businesses with the city if they can’t afford the costs.
Before businesses can apply for a license with the city, they must first acquire a state business license. The city’s license begins at $60 per year for businesses making $0 to $20,000 annually, he said.
“At least four or five times a week we have people come in and think they can just get a business license,” Woodley said. “They come in motivated and excited, but before we can help they find out how much it will cost, and that they have to pay the state first, and they never come back. It’s a barrier of entry. A guy starting out is already priced out.”
Woodley suspects many of those who don’t return to formalize their business start their businesses off the books.
“It’s in the best interest of the community as a whole not to have underground entrepreneurs,” Woodley said. “If I need a babysitter or an adult provider, I want them to be licensed. And if you’re a DJ, you want to be legit because everyone wants to hire someone that’s licensed.”
Woodley said he’d like to see the bill’s first revenue bracket split up to include new brackets as low as $0 to $5,000.
Ultimately, Polley said he thinks the changes are mostly fair, but he’d like to see some of the burden of supporting education placed on other areas of the city, rather than just businesses.
“I don’t think [the fees] are too far off,” Polley said. “But at the same time that I see the importance of funding education properly, it would be great to see some other taxes focused on which could also be good sources of extra revenue.”