According to the city of Chicago's Department of Business Affairs and Consumer Protection, "every business operating in the City of Chicago requires a City of Chicago business license." There are 66147 active business licenses in the city's online database. However, at the time of the the most recent economic census from 2007, there were 255,502 firms in Chicago. While the recent recession certainly caused many of those to end, we can still consider it a reasonable assumption that a large percentage of Chicago businesses are operating without licenses.
The need to obtain a business license was broached to us in our very first discussions with our mentor in the fall of 2014. I hadn't really considered it to be a necessity at the time. Right up until we opened I was on the fence about it. Some of our advisors said we needed one. Others said we could try and go without. It became clear that it was really our call and a matter of personal ethics if we decided to pay for the city license.
So I did what I usually do when confronted with major dilemmas, and turned to the search engines. One of the first in-depth pieces of information I found about licenses in Chicago was this very thorough analysis of the licensing process as it was prior to 2012 from Harvard's Ash Center for Democratic Governance and Innovation. What I learned from it was not encouraging. It talked about the struggle small busineses had to endure to get licensed. There were stories of having to fight with aldermen and zoning committees. Some of the case studies involved very successful businesses that were nearly run out of town due to the complexity of the licensing process. While the article implied that the city was trying to improve the business licensing process, I was not encouraged.
It was now February. We were approaching election day for a rather tight race for alderman in my immediate neighborhood. I put the license matter on the back burner until the politicians were reshuffled. If I was going to have to wine and dine assorted aldermen to get RentConfident operating legally, I didn't want to have to get halfway there and be forced to start over. Wine is expensive.
While I waited for the air to clear around the voting booths, it became clear that a license would be necessary for us, not just because of the legal issues but because of what RentConfident does and what it stands for. We work with government data. Our very existence depends on that data remaining accessible. We could not simultaneously hide from the government and rely on it to survive.
Our reports hold landlords accountable for obtaining construction permits for major alterations to their buildings. The process for obtaining a construction permit in Chicago is even more complex than the one for obtaining a business license. It would be hypocritical of us to fault landlords for dodging the permit process if we were ourselves too daunted by bureaucracy to get a license.
Once Jon and I decided that we had to get the license, I started the process at the city's small business center, where a nice tutorial can be found. I learned that we needed either a Home-Based Business License or a Limited Business License. I was hoping we'd be able to qualify for the former, as the requirements would be far simpler for us, but Chicago is very picky about the types of businesses that can be run out of the home and how much space within a home can be dedicated to work.
It was June before I finally crossed my fingers and logged in to the online license application process. We're an internet-based business and quite a long way from downtown. I'm a nerd. The online application process was one of the outcomes of the reforms that emerged after the 2012 Harvard study. Of course I was going to take the online route if at all possible.
They allowed space for probably 1000 words and I filled that text box to the brim. This was, as I found out a few days later, a pretty major mistake.
Most of the web form consists of short fill-in-the-blank questions and true/false questions. It was a bit complicated to get all of the information they wanted, but simple enough to complete. Then I got to the essay question. Having spent several months reviewing the process, I was absolutely certain to provide as much information as possible about the company in the essay box. I was absolutely certain to answer any question they might possibly have about how our company answered to the city's tight home-based business restrictions. They allowed space for probably 1000 words and I filled that text box to the brim. This was, as I found out a few days later, a pretty major mistake.
I filled out the application on a Thursday. It took me about an hour and a half. I received an emailed acknowledgement. I figured I would get another email in a few days with the decision from downtown. After eight days of radio silence, I logged back into the application website out of impatience and found that we had been rejected - "business location disapproved." No further explanation was provided.
I gave a call to downtown and spoke with a very kind young man who said I'd provided way too much information, and that I'd be better off coming in to city hall in person to get things sorted out. It was at that point 10am. I was at city hall by 11:30.
The Department of Business Affairs is located in an airy, open room with large windows, one floor beneath the zoning department. It was set up much like the DMV, but with far fewer people waiting in the chairs. I took a number and waited for about 20 minutes. I was then escorted through the locked door into a larger room full of cubicles, where a nice young lady took down the same information I'd filled in online the previous week.
I expected another 4-5 day wait for approval. In fact, I was so certain that there would be a wait that I hadn't bothered to bring a checkbook with me, nor anything suitable for carrying official documents. But after my clerk had a quick chat on the phone to folks upstairs in zoning, I was told that we were approved for the home-based business license on the spot and that I could immediately head over to the cashier. I had to dash out of the building and down to the bank to obtain a check first. I had to snag a rubber band from the front desk to hold together the rolled up certificate in my purse. But it was done. I was home by 2:30.
So what have we learned from this?
- While the city has made some strides towards simplifying the application process, they still have a few kinks to work out.
- The choice to run your business legally is more loaded of a decision than you'd think.
- When dealing with government bodies, keep your mouth shut.
- If you're running a business, never leave home without your checkbook.
- Some things are better done in person.
