Red Tape Restricts D.C.

DC’s small business regulations are too numerous and too burdensome, and they’re hurting hard-working Washingtonians just trying to earn a living. The Institute for Justice is working with business owners across the District to fight for simpler regulations.

The current licensing process is difficult for both business owners and Department of Consumer and Regulatory Affairs staff to navigate, and results in lost revenue, frustration, and negative interactions between residents and government officials. It also creates an unfriendly environment for business that drives entrepreneurs to explore opening up shop in Virginia and Maryland instead.

For example, according to DC law, if you want to become an interior designer, you must pay $1,485 in fees, and complete a 6 year training requirement–and this is before you have made a dime or served a single customer. That is just for the license that allows you to call yourself an interior designer and it doesn’t even count the fees and waiting time associated with getting your business license if you plan to operate your own interior design business.

When governments set high barriers to entry for entrepreneurs, many will decide not to go into business at all, or to operate illegally. Neither of these options are favorable, and governments should work to make it easier for residents who will contribute taxes, innovative ideas, and jobs to our neighborhoods. Plus, barriers to entry tend to hurt people on the lower rungs of the economic ladder, like single parents, immigrants, and those with criminal records trying to get back on track.

The District should enact reforms to address the following goals:

  1. Streamlining the process by removing licenses and licensing requirements that do nothing to protect health and safety. This can be done through sunset reviews.
  2. Offering fee abatement or progressive fee structures for new businesses so that the owners can make sure they actually have a business before pouring hundreds and sometimes thousands into licensing fees.
  3. Better communicating with business owners about compliance, wait times, and deadlines. One example would be text or email reminders when license terms are ending or fees are due.
  4. Better communicating between departments to avoid conflicting information and duplicative processes. This can be done by establishing a “one-stop shop” where business owners have the opportunity to meet with representatives from relevant city departments (e.g. DCRA, DOH, DCOZ) about all of their licenses and permits in one visit.

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