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Tue Feb 5, 2013, 04:19 PM

Starting a Business Is a Huge Pain


Last week, having read my own writing about how it’s cheaper to buy a house than rent one in most markets, I decided to take my own advice. My wife and I bought a new place, and instead of selling our old condo, we’re going to rent it out. And thus I became a small-business man.

Or, rather, I’m becoming one. Entrepreneurship—even on the smallest and most banal scale—turns out to be a time-consuming pain in the you-know-what. My personal inconveniences aren’t a big deal, but in the aggregate, the difficulty of launching a business is a problem and it may be a more important one as time goes on.

In the District of Columbia, I need to get a simple Basic Business License to rent out a single dwelling. After puzzling over the Department of Consumer and Regulatory Affairs website for a bit, it became clear that step No. 1 was actually to file form FR-500 with the Office of Tax and Revenue, which you can do online. Then it was time to hustle down to the DCRA (which closes at 4:30 p.m.) to file the paperwork. Once there, I learned that filing the FR-500 online wasn’t good enough—I needed a hard copy. Fortunately, the Office and Tax and Revenue was right across the street, so I went there and refiled. Then it was back to the DCRA to stand in line to get a number, wait for the number to be called, do some more paperwork, wait in another line for the cashier, fork over $100 in fees, then get a slip from the cashier to finalize the paperwork.


Ideology aside, simply putting a little more thought into the process could make things much easier. Shifting as much form-filing as possible to the Web, where it can be accessed 24/7, wouldn’t undercut any legitimate regulatory purpose. In my case, since single-unit rentals are uniformly exempt from rent control in D.C., why should you have to go down to the rent control office to certify that fact? These convenience issues can easily slip through the political cracks. On any given day, it’s not an issue for the vast majority of people. And incumbent, already licensed businesses gain a minor advantage from making new entry difficult. But at a time when a rising tide of robots and other factors are pushing the wage share of the economy to historic lows, the ability to drop out of the workforce and go into business for yourself is more important than ever. And the option should be available to people from all walks of life, in our biggest and most prosperous markets.

This is normally a Republican issue, but I think this is a march we could steal on them, and do some good in the process. It's currently much easier to start a business in most parts of Canada than most parts of the US.

Another pet issue Yglesias (the author) has is with food trucks. DC has a set of regulations for anyone who prepares food for sale, and food trucks have to meet that. In addition to that, they have to get a license, which involves letting every brick and mortar restaurant in the city file objections which delay the whole process until you eventually give up.

These are things we don't have to do. We should be trying to make entrepeneurship easier and multinational corporation formation harder. Instead too many regulations end up doing the opposite (particularly when we outsource the writing of those regulations to big companies).

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Reply Starting a Business Is a Huge Pain (Original post)
Recursion Feb 2013 OP
Warren Stupidity Feb 2013 #1
Recursion Feb 2013 #2

Response to Recursion (Original post)

Tue Feb 5, 2013, 04:40 PM

1. both food trucks and housing rentals have to be regulated and licensed


the problem is not the fact that they are regulated and licensed, the problem is that we have allowed our government to become captured by rent seekers who abuse regulatory agencies for their own benefit. For example, modernizing the licensing process for a small business is deliberately obscured so that local lawyers can extract money from you for performing simple acts.

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Response to Warren Stupidity (Reply #1)

Tue Feb 5, 2013, 04:41 PM

2. Well said

We need to have government that regulates strongly but isn't a shield for rent-seekers to hide behind.

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