HB132: Freedom from Licensure for Small Businesses

This bill passed the House 57-17 but was not considered in the Senate for lack of time.

Libertas Institute supports this bill.

UPDATE: SEE THE BOTTOM FOR NEW INFORMATION

Utah law currently allows municipalities to license businesses “for the purpose of regulation and revenue.” In other words, merely for raising additional funds for its own budget, a city may require licenses and fees of businesses despite having no regulatory justification for doing so.

The fees required of businesses often exceed over $100 annually, rising in amount for commercial businesses and other high-traffic operations. This burden is onerous on businesses that bring in little revenue, such as a piano teacher, babysitter, craftsman selling wares on Etsy, or MLM consultant. Many part-time operations amount in little revenue, and yet to be compliant with the law such persons would have to divert a large amount of their revenue to pay for these fees.

House Bill 132, sponsored by Representative Jake Anderegg, would repeal the authority to require licensure and impose fees merely to raise revenue. In addition, it would carve out an exemption for most home-based businesses, minimizing the regulatory and financial burden already placed upon them.

Finally, the bill clarifies that nonprofit organizations (many of which operate on a shoestring budget) are not a business as defined by state law, and therefore municipalities may not require licensure and fees of them.

The bill does allow municipalities to require exempt businesses to register with the city, though it prohibits them from imposing any fee or penalty for failure to register.

UPDATE: This bill has been changed from its initial form. The current draft prohibits cities from requiring fees of home-based businesses if their off-site (external) impact is not greater than the impact of normal residential use, but allows cities to still require a (no cost) license of these businesses. Occasional businesses operated by minors are exempted both from licensure and fees. Also, cities will be prohibited from requiring any license for purposes of revenue, or any license from a non-profit organization.