Very few businesses in Phoenix need a city business license, which significantly reduces barriers to entry and the local red tape that entrepreneurs face. But officials should streamline zoning and permitting rules for starting a business and create step-by-step guides to ease the process of getting to opening day.
In Phoenix, the cost, delays, and complexity imposed by the regulatory process for small businesses make it difficult for entrepreneurs to start up.
Fees to start a business in Phoenix add up. For example, barbers must pay 10 different fees totaling $1,944 to open a barbershop. To start a restaurant, applicants must pay 11 fees totaling $4,546.
Phoenix fails to provide entrepreneurs with centralized information and sufficient step-by-step guides for starting a business, forcing entrepreneurs to spend valuable time researching requirements when they could be focusing on their business. The city meets just two out of five one-stop shop criteria.
The process to apply for building and zoning permits is lengthy and, at times, opaque. For example, restaurateurs must submit seven sets of plans and drawings with their building permit application. For a bookstore, having to apply for a conditional use permit adds significant delays to the start-up process.
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.
Phoenix has a number of regulatory roadblocks that target specific kinds of businesses. For example, to get a street vendor license, applicants’ criminal histories must be evaluated and approved by the police department. This deters returning citizens trying to get back on their feet from applying for licensure. Furthermore, a single food truck owner is not allowed to manage more than one mobile vending operation.
Home-based businesses that are approved by right cannot receive client visits or make on-site sales. Even after receiving a conditional use permit, these businesses still cannot occupy more than 25% of the home’s total area and may not employ non-residents.
At the state level, applicants for a barber license must submit documentation showing legal residency in the United States, as well as proof of at least two years of high school education. These requirements erect unnecessary roadblocks for entrepreneurs from vulnerable backgrounds, such as lower-income or immigrant communities.
Accommodations for New or Small Businesses
Some city licenses are valid for a full calendar year after the date they are issued, which accommodates applicants who receive licenses mid-year. Other licenses expire annually at the end of the year, but the fees are prorated for mid-year applicants.
Officials and policymakers have the opportunity to make it cheaper, faster, and simpler to start a business in Phoenix. City officials should:
Consolidate steps and fees for businesses that are required to obtain business licenses either locally or from the state, and work with state officials to do the same. Ensure that steps for acquiring tax permits are streamlined and that filing requirements are explained through clear, step-by-step guides.
Create a true one-stop shop for starting a business, with step-by-step guides and information that cover city, county, and state requirements for getting up and running.
Reduce complexity around building and zoning permits, combining steps and paperwork while reducing fees for smaller-scale operations.
Eliminate unnecessary restrictions on occupations best suited for those seeking to start small, like mobile and home-based businesses.
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