MYRTLE BEACH, SC (WBTW) – Business license tax laws could undergo major changes impacting South Carolina businesses if a bill is passed on Wednesday.
Experts tell News13 small businesses composed of five to 10 employees who dedicate a significant amount of time during the year to make sure they comply with each municipality’s business license tax laws would be most impacted.
The Business License Tax Reform Act would make it so that businesses are taxed by the city based on their income instead of gross revenue and would potentially allow business owners to owe fewer tax dollars while creating a more standardized application process.
The South Carolina Chamber of Commerce and local chambers say the current system is “complex, costly, and lacks transparency.” NFIB South Carolina State Director, Ben Homeyer, advocates for small businesses and says local businesses need reformation.
“If businesses knew come January 1st when they had to pay all their business license fees, what the rates were going to be, what the forms had to say so they just had to plug in a different amount for each municipality, that would be so much easier,” Homeyer said.
While most states assess flat license fees, South Carolina business tax laws allow cities to assess the tax based on a business’s gross receipts instead of net income.
If passed, businesses would be taxed by the city based on their net income instead of gross revenue, which is what businesses are taxed currently. Businesses would be able to generate more money to then invest back into their company.
“What you would be paying would be far less and far better for the business because they then have those dollars to reinvest back into the business for hiring and expanding purposes,” Homeyer said.
While the bill may put tax dollars back into small businesses ’ pockets, owners see benefits contributing in more significant ways.
“It’s not about patting the owner’s pockets more, what we can do now is add another person on staff or another two people on staff,” John Cassidy, co-owner of Duplicate INKS tells News13. “So what it would do is increase the economy instead of going to taxes. I think taxes are an important part of our society but wouldn’t it be better to have two more people working that’s contributing to our economic well-being as a community overall because now they are also paying taxes.”
Bill H.4-4-3-1 does not limit a local government’s ability to set rates. The measure goes before the House Business License Fees Ad subcommittee on Wednesday. For more on this bill, click here.