Entrepreneurs in Atlanta face serious regulatory hurdles when trying to get their businesses off the ground. While city websites do a fairly good job of providing detailed information to applicants—making it easier to understand the overall regulatory process—officials must streamline the actual rules for starting a business. This will encourage job creation and ensure that entrepreneurship is accessible to all residents.
In Atlanta, the cost, delays, and complexity imposed by the regulatory process for small businesses make it difficult—or sometimes even impossible—for entrepreneurs to start the ventures of their dreams.
Based on our analysis of five specific, common business types, opening a business in Atlanta can be an expensive endeavor. Starting a restaurant involves completing 20 forms and 76 steps, and paying 14 different fees that total $5,308. Opening a barbershop requires 20 forms and 68 steps, and paying 12 fees totaling $2,462.
On average, entrepreneurs must make more in-person visits to government agencies in Atlanta than in other cities studied. For example, starting a restaurant and a barbershop, respectively, involves 12 and 14 in-person steps. In both cases, Atlanta requires more in-person steps than most of the cities studied.
Atlanta’s business licensing requirements are complex and burdensome. In addition to requiring a tax certificate for all businesses, the city licenses 82 categories of business activities, which erects additional barriers as entrepreneurs must navigate complicated red tape to figure out which licenses apply to their businesses.
We calculated this metric by totaling the fees for all the licenses, permits, and registrations each business needs to get started.
Number of Fees
We calculated this metric by counting how many fees governments impose on each business for completing registrations and paperwork.
We calculated this metric by totaling the number of agencies entrepreneurs must work with in order to get up and running—whether in the form of submitting paperwork to an agency’s staff, or in terms of abiding by regulations that an agency has promulgated.
We calculated this metric by counting the number of compliance activities each entrepreneur needs to complete in person, rather than online or by mail.
Number of Forms
We calculated this metric by counting the various forms and applications each business needs to submit
Number of Steps
We calculated this metric by totaling the discrete tasks an entrepreneur must complete to start each of the business types.
Entrepreneurs in Atlanta are often required to undergo several background checks that not only seem unnecessary and duplicative, but also pose significant barriers to vulnerable residents, such as returning citizens and lower-income entrepreneurs. At the city level, the issuance of certain business licenses is contingent upon the applicant having a clean criminal record. The state also forces business owners to submit affidavits that prove lawful presence in the country. Other state permits require additional verification of residency or criminal history information.
Late fees for failure to renew a business license by January 1st are high. Atlanta charges a $500 fee if applicants do not renew by February 15th. Being late by more than a month-and-a-half results in a fee of 10% of the total license fee, plus a 1.5% per-month interest charge.
Terms for business licenses are inflexible, operating off the government’s calendar rather than an entrepreneur’s. All licenses expire on December 31st, regardless of when during the year the license was issued. Entrepreneurs engaging in our five common businesses studied face serious roadblocks. Home-based businesses are prevented by zoning restrictions from having more than one employee or conducting sales at the home. They are also limited by square-footage caps, which prevent these businesses from occupying more than 25% or 500 square feet of the home’s floor space—whichever is less. Food trucks also face unique barriers: They cannot operate within 200 feet of a stationary business selling the same or similar products.
Accommodations for New or Small Businesses
Atlanta instituted a New Small Business Occupation Tax Waiver in 2018, waiving occupation taxes for up to five years for small businesses seeking to open in areas the city has targeted for commercial development.
Fees for a city tax receipt are based on, among other things, gross receipts, thus accommodating smaller-scale businesses.
Officials and policymakers have the opportunity to make it cheaper, faster, and simpler to start a business in Atlanta. City officials should:
Reduce late fees.
Streamline the number of business license categories and simplify the process to obtain building and zoning permits.
Reduce the number of times an entrepreneur must complete a regulatory requirement in person or make a trip to agency offices to complete paperwork.
Eliminate unnecessary background checks that may deter vulnerable would-be entrepreneurs from starting their ventures. Work alongside state officials to remove similar barriers that single out returning citizens and disproportionately impact entrepreneurs of color.
Base the terms of business licenses on the entrepreneur’s application date, not the calendar year, or prorate fees based on when the application was filed.
Allow home-based businesses to conduct sales from the home and have more than a single employee. Remove square-footage caps that limit these businesses to only 25% or 500 square feet of the home’s floor space.
Eliminate restrictions on the operation of small businesses that are based on protectionism instead of public health and safety, like the proximity restriction for food trucks.
In 2019, Joey and Emily Ward opened Southern Belle in Atlanta, a restaurant that serves farm-to-table cuisine in an historic building—with a second speakeasy restaurant, Georgia Boy, hidden inside. For Joey, a seasoned veteran of the restaurant industry, it was an opportunity to enjoy the creative freedom that running an independent restaurant provides. His wife, Emily, a practicing lawyer, handles the legal and regulatory side of the business, while her father, an MBA, contributes his business acumen.
But despite their level of expertise, Joey and Emily found the process of starting up so complicated that they had to hire two teams of expediters—one to manage local permits, and the other to manage liquor approvals with the state. At the outset, Emily tried to research the permitting requirements for starting a restaurant on her own, but she quickly realized that it would be a full-time job. She notes that when she could not find an answer online, she would call agency officials, only to be told that she needed to talk to a lawyer. “It was so frustrating not knowing what to do other than to hire somebody to make things magically happen.”
Joey adds that the single most difficult part of the process for him was not knowing what to do and exactly when and how to do it: City approvals alone range from historical-preservation and parking requirements to abiding by fire codes and earning the support of neighborhood associations. For someone looking to start small, the level of uncertainty involved in applying for licenses and permits could prevent them from opening at all if they do not have the resources to pay thousands for paperwork and hire lawyers to shepherd them through the process. “If you have to hire expediters, that means the system is broken; . . . you shouldn’t have to guess and then hope you guessed right.” To make things easier, city officials in Atlanta should create a true one-stop shop for starting a business—a single location with step-by-step guides for completing the steps needed to get to opening day.