When Julia Tried To Start A Small Business

I already had this column at Forbes in the works, but I could not resist switching the protagonist from myself to Obama's Julia.  Every tax, license, and story here are real ones I have experienced in my business.  Here is just a small sample:

So twelve registration numbers and 12 monthly/quarterly/yearly reports later, surely Julia has fulfilled all her obligations to the government.  Unfortunately, no, because she has not even begun to address licensing issues.  To begin, the County will require that she get an occupancy permit for her campground, which must be renewed annually.  This seemed surprisingly easy, until someone from the County noticed she had removed an old rotting wooden deck from the back of her store that had been a safety issue and an eyesore.   It turns out she was in violation of County law because she did not get a removal permit first.  She was required to get a permit retroactively, which eventually required payments to seven different County agencies and at one point required, for a reason she never understood, the collection and testing of a soil sample.

Because she will be selling packaged foods in her store (e.g. chips and pop-tarts), she also has to get a health department license and inspection.  She had originally intended to keep some fresh-brewed coffee for customers in the store, but it turned out that required a higher-level health license and eight hours training in food handling.  She might have been willing to pursue it, but the inspector told her that to make coffee, she would need to install a three-basin stainless steel wash-up sink plus a separate mop sink in her store, and she decided that coffee would have to wait.

Once through the general health licensing process, she then needed to obtain licenses for individual products.  She wanted to sell aspirin, so she had to get a state over-the counter drug sale license.  She knew that customers would want cigarettes, so she had to obtain a tobacco sales license.  One day as she was setting up, a state inspector noticed she had a carton of eggs in her cooler, and notified her she needed  a state license to sell eggs  (as Dave Barry would say, I am not making this up).  And then there was the problem of beer.

  • Don

    All I can say is, I'm glad I'm in Texas (without employees).

  • me

    I do admire you for not just throwing in various towels but persistently fighting your way through all this unnecessary idiocy.

  • Arthur Felter

    Oh how I wish you were making that crap up...

    Let me guess, this is about a campground in California?

  • Matt

    For some reason, I found the bit about an application getting sent back for not having a hand-drawn drawing the most disturbing.

  • http://www.papadeltabravo.com/blog pdb

    And this is why I'm a former small business owner.

  • Voolfie

    The regulatory environment is what is killing jobs in this country, far more so than taxes and like pdb I wish I'd not seen this post as I have been considering starting a business. What's the point when you'll spend all your time complying with regs instead of actually, you know, growing a business. No wonder so many businesses fail.

  • joe

    You have some good points, but some of the rules you're bitching about actually make some sense

    Permits for work done on buildings open the the public?
    Soil testing to confirm that the land under a structure isn't contaminated?
    Basic training to handle and sell food?
    A separate sink for mop water?

    Is this really that crazy and intrusive? I mean, you seem pretty smart. I'm sure you would never knock down a wall and weaken a structure. Or miss the fact that a deck was built over an underground fuel tank that leaked. Or leave perishables out to spoil over night. Or mop the bathroom floor and spill the water on a food prep area when you dump the bucket. I'm also sure you'd never hire a manager who hired someone to who did some of the above.

    as for the multiple separate taxing systems...seems to me to be unavoidable given local control. Maybe a larger federal system could simplify things...but is that really what you want?

  • Ted Rado

    I don't understand why, in this computer age, ALL government agencies can't get together and list all the requirements to run a particular type of business. Then issue a single permit once these clearly stated requirements were met. Every petty beaurocrat seems to revel in showing he is important and harrasing the business owner.

    Government policy should be to grease the skids for business and industry, NOT to obstruct. After all, we all benefit from a smooth running, low friction, economy.

  • other joe

    Ted,
    I’m somewhat inclined to agree with you…but what you’re really talking about is replacing city, county, and state control with the federal government. Also, It would be a lot of work to make one set of rules that worked from coast to coast, in all conditions. It could be done, but it would be a large and complicated document.
    I do really wish that states would modernize their internal rules though. A set of regulations that made sense 100 years ago might not make sense now that refrigeration and preservatives are so much better and prohibition has been repealed. But that sort of thing takes time and money to do. It will eventually pay for itself, but in the meantime your budget goes up.

  • smurfy

    Your protagonist reminds me of the 17 year old eagle scout candidate who came into the office this week to get our agency to sign off on his permit to construct a planked walkway around a pond as his eagle project. Being an Eagle scout myself I was proud of him, it touched me a bit. But I was also a bit sad to participate in his indoctrination.

  • Keith Waters

    I understand the purpose of writing the story, but this is overstating things. Instead, I would be interested in knowing which states would give her the most and fewest hassles if she did start such a business.

  • Ted Rado

    Other Joe:

    Many years ago, I talked with my No.2 son who is with the IRS. I asked him why all taxing agencies couldn't combine to send a single tax bill to the taxpayer. If the taxpayer listed his sources of income and all the factors related to deductions, etc., there is no reason a computer couldn't calculate the total he owed for federal, state , and local taxes and send him a single bill. The same computer could then distribute the money he sent in to the individual taxing agencies. We are already doing this the hard way. Why not automate it?
    He had no good answer, except for the turfitis that all government agencies suffer from.

    Such a move would prompt agencies to cooperate and simplify their own systems. Everyone benefits except the tax preparers. If I can go through all this crap long hand every year, why can't a computer? The fact that it would be comlicated due to the many taxing agencies in the US is no problem for a computer. Once the programming is done, a push of a button is all it takes.

    In the same way, as I suggested earlier, business permit requirements could be combined as well. Yes, individual government entities would surrender some of their autonomy, but the benefits would be enormous. Again, government should try to grease the skids for business, not throw sand on them.

    My girlfriend ran a retail business before she retired. She had the patience of a saint to deal with all the BS paperwork. I would have told them to go to hell and wound up in jail. Since then, I have admired small business people and loathed the government bureaucrats.

  • DensityDuck

    joe: On the one hand, I agree with you that every one of these regulations grew from a good idea.

    The problem is when their application and extent is determined by a single person's judgement call--which, thereafter, has the entire weight and force of the law behind it. Someone thinks that books are children's products and therefore subject to lead-content laws; and afterwards, the entire Federal government believes it implicitly and will fine you and put you in prison if it finds you selling children's books without testing their lead content. Nobody can point to the actual statement in the law that says "children's books must be tested for lead content", but everyone's gonna act like it's there.

    Even worse is when the regulators declare that they can't tell you whether or not what you've done is allowable until after you've done it. My parents wanted to install a pool. According to the local building codes, if they created more than a thousand square feet of "non-permeable surface" (the pool plus the concrete deck) they had to install a drainage system on their land (which would have cost as much as the pool itself). They tried to get a plan review to ensure that their pool would be less than a thousand square feet, and the inspector informed them that it was not possible to determine in advance the square footage. It could only be measured after the fact. (He helpfully pointed out that if they just went ahead and built the drainage system they wouldn't need the inspection.)

  • markm

    Other Joe: Many of these requirements are from the same level of government. For example, a city will probably require you to go to separate offices for the business license, sales tax, zoning permit, building permit, health permit, and several other licenses. Chances are that no unit of city government can even give you a list of all the city's requirements to start a business - but you'd better not miss one!

    Even three offices (federal, state, and local) would be a huge improvement.

    In contrast, I once went on a three-week business trip to a German military base. There was an appointment to fill out a huge stack of forms from the German army and all levels of their government - but all the paperwork had been pre-assembled in one office, one English-speaking clerk could take me through everything, and it all took only about 15 minutes. No question was asked twice. If any item had to be entered on multiple forms, the clerk must have done this copying after I left - even to filling in my name at the top of each form. The Germans are bureaucracy-mad, but appear to view inefficiency as criminal.

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