The Business License Tax Standardization Act of 2020, or Act 176, established an ongoing process that cities and towns in South Carolina must maintain to keep their business licensing practices compliant with state law.
The ongoing requirements involve cities updating their class schedules every odd-numbered year to comply with the most recent statistical profitability data from the Internal Revenue Service and for cities to use the most current North American Industry Classification System codes, also known as NAICS codes.
Updating the class schedule and NAICS codes
Act 176 requires jurisdictions with business licenses to use a standard class schedule for categorizing businesses accurately. A standardized class schedule promotes clarity by providing businesses with an understanding of their licensing requirements based on their specific business activity.
The Municipal Association of SC provides a sample ordinance for every update. Municipalities must adopt this class schedule by ordinance every two years, with the next update required by December 31, 2025. This class schedule will be used for the business licensing year running from May 1, 2026, to April 30, 2027, as well as the license year running from May 1, 2027 to April 30, 2028. Once completed, cities and towns will not need to complete this process again until December 2027.
The U.S. Office of Management and Budget updates NAICS codes every five years to keep the classification system current with economic changes, and released the most recent NAICS codes in 2022. The next update will be released in 2027 to be used beginning with the May 1, 2028, to April 30, 2029, business license year. The update to the NAICS code does not require an ordinance or approval by council.
Keep up with business licensing issues
The Municipal Association of SC offers “Business Licensing Essentials,” a quarterly virtual session for business license officials to learn about difficult licensing topics. Find future dates and topics on the Association's website.
The Association also offers membership in the SC Business Licensing Officials Association, which offers its members training in administering and enforcing local business license taxes. BLOA members may earn an Accreditation in Business Licensing and a Master in Business Licensing, and BLOA offers a listserve for members to ask questions and provide insight.