Businesses without licenses targeted by city of Myrtle Beach

Myrtle Beach will hire a contractor to ferret out unlicensed businesses, officials said.

The city’s Assistant Finance Director, Mary McDowell, said Myrtle Beach is “planning on moving forward” with NuStrat Analytics, a company based in Charlotte that uses databases to track businesses that operate within city limits without licenses. Some of these businesses may be based in a different place but serve clients in the city, she said.

Nearby cities have also used the contractor.

“We became aware of this particular company and so we were interested, and we’ve heard good things out of the city of Florence,” she said.

Thomas Chandler, finance director for Florence, said the city has so far identified an additional $61,500 in business license fees after signing a contract with NuStrat in May. The contractor takes 35 percent of the missing revenue it identifies as its own fee, Chandler said.

“If we had the staff, we would have a staff person who would be dedicated to do that, but actually, we believe its more cost-efficient to contract that out,” he said.

Chandler added that previous contractors the city had used for the same purpose charged as much as 50 percent of the fees.

In total, Florence took in about $8.2 million in business license fees in the 2016 fiscal year, Chandler said. By contrast, Myrtle Beach officials said that city took in over $22 million in fees in the same time period.

City officials said they did not know how much money might be gained from using NuStrat. McDowell also said that contracting the service would be cheaper than hiring an additional staff member. She declined to comment on what rate NuStrat would charge, but confirmed that the payment would be structured as a percentage of the total fees Myrtle Beach recaptures.

Barbara Willingham, the founder of NuStrat, also declined to comment on the fees she would charge Myrtle Beach. However, she said she was excited for the partnership.

Willingham said she did not know exactly how much money the city might gain.

“We constantly do research in South Carolina at large so that we have quite a database assembled, using public information and purchase information alike,” she said. “I think it’s going to be a very successful project.”

McDowell said that most commonly, companies located outside the city drive vehicles with no company signage on them when they serve clients here if they are not paying license fees. Under state law, companies must report any money made inside a county or municipality for the purposes of a business license.

For example, McDowell said that if a $100,000 roofing company earned $25,000 fixing shingles in Myrtle Beach, it would have to report the $25,000 to the city. Officials would then determine the cost of the city business license based on that amount of revenue, she said. Businesses can be on the hook for unpaid license fees for up to three years.

Companies with ads on their vehicles, however, have a harder time flying under the radar.

“Those would be real easy to spot,” McDowell said.

This story was originally published September 6, 2016 at 5:30 PM with the headline "Businesses without licenses targeted by city of Myrtle Beach."