Entrepreneurs in St. Louis have access to very little online information from the city on how to start a business. There are no clear walkthroughs of the basics of starting common business types. The city’s tiered licensing system requires some businesses to obtain both a basic business license and a graduated business license. It is not always clear when both licenses are required, leading to confusion and redundancy.
In St. Louis, 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.
St. Louis uses a revenue-based license fee structure that provides flexibility to fledgling businesses, but the fee schedule has no maximum cap, meaning fees can reach extremely high amounts as businesses grow. For example, our model restaurant business would owe a business license fee of $3,750, which is the most expensive business license of any city we have studied.
Restaurants, food trucks, and barbershops each require six in-person visits. A general lack of information online can make the process more complicated than it seems. Some requirements are vague, such as “receiving approval from the comptroller’s office” after obtaining a health permit, with little instruction on how to do this. St. Louis scores only two out of five on our one-stop shop criteria.
Home-based businesses require 14 total steps to get started while a restaurant requires 35 steps. They also require five and 11 separate forms to be submitted, respectively. Multiple business licenses are required for certain businesses. Restaurants, for example, must obtain a business license and graduated businesses license, and register with the license collector’s office in person.
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 who owe taxes to the city cannot apply for a business license. This includes delinquent personal property taxes, earnings taxes, payroll taxes, license taxes, and permit and certificate fees due to the city. This can be a potential roadblock, especially for low-income entrepreneurs and entrepreneurs who may not even realize they owe the city money due to the city’s confusing business licensing regime. Late fees cost 5% of the license tax, charged every month delinquent.
Home-based businesses provide an accessible way for entrepreneurs to start small, but those working from home cannot make sales to clients at their home unless they obtain a conditional use permit.
Accommodations for New or Small Businesses
St. Louis has a Business Assistance Center that helps new businesses get started by walking them through the regulatory process.
Officials and policymakers have the opportunity to make it cheaper, faster, and simpler to start a business in St. Louis. City officials should:
Lower fees, especially the business license fee. The fee is 1.5% of revenue, which can add up quickly as businesses grow. A flat fee or clearly defined revenue brackets with corresponding fees, similar to Seattle’s business license system, would simplify the process and make it easier for all St. Louis entrepreneurs to realize their dreams.
Create a one-stop shop so entrepreneurs can apply and pay for licenses and permits in one place online. Add more complete online guides to start common business types that include zoning and building permit information.
Remove duplicative requirements and simplify license requirements, starting with requiring only one type of business license and no graduated businesses licenses. Remove additional business-specific tax registrations and consolidate them to be part of the licensing processes.
st. louis, missouri
Tameka Stigers was born and raised in St. Louis. Since 2008, she has owned and operated Locs of Glory, a natural hair braiding shop and wellness center. Her business has grown from a small operation out of her home to a full-fledged salon providing services like hair braiding, massage therapy, facials, and more. In 2018, Tameka and the Institute for Justice teamed up to pass legislation that exempted hair braiders from Missouri’s cosmetology licensing law. The law had required them to attend cosmetology school (which can cost up to $30,000) to learn how to use chemicals and heat—practices braiders reject. With the exemption, braiders employed in Tameka’s shop and across Missouri can more easily start their careers without needing to acquire an expensive cosmetology license. But they still must navigate local red tape to open up shop. Many times, St. Louis city offices lost Tameka’s paperwork as applications must be submitted by paper. “This frustrates the heck out of you because they do so much by paper. You have to submit everything in person; if you mail it, you can’t trust that they won’t lose it.” Often, business owners can make payments online for these applications, but still must submit them in person. “A lack of cohesive online resources is definitely an impediment to being a successful business owner. I shouldn’t have to spend countless hours from my day to go downtown to submit forms when I should be running my salon and seeing clients.”