Why is it so hard to open a business in Philadelphia?


Philly is known for a lot of things, some good, some bad. On the bright side, Philly is home to cheesesteaks and the signing of the Declaration of Independence. On the not so bright side, Philly is known for being home to far too many homicides, a stubbornly high poverty rate, and an overly burdensome regulatory landscape that thwarts business creation and economic growth. 

It turns out that the poverty rate and the difficulties of doing business in Philly are linked. A recent Inquirer report put it well: “Philadelphia ranks among the worst U.S. cities to do business, with high taxes and burdensome regulations. Most major cities face similar complaints. But Philadelphia is particularly unwelcoming to new and transplanted businesses, academics, business owners, and public policy experts said, helping to ossify Philly as the nation’s poorest big city.”


MORE ON DOING BUSINESS IN PHILLY


How hard is it really to open up a small business in the City of Philadelphia, though? And how does the process stack up against other big cities like, say, New York? 

To answer these questions, we dove in to try to understand the City’s requirements. Posing as a potential sit-down, family-style Italian restaurant owner, I followed the steps the City laid out for what I need to do to open my doors to customers. Here’s what I learned.

Online

  1. I went to the Philadelphia Department of Commerce homepage.
  2. I clicked on the “Business & self-employment” tab towards the top of the page.
  3. I clicked on “Starting a business” in the left sidebar. Three additional tabs immediately appeared: Find location and zoning information; Trade licenses; and Business licenses, permits, and approvals. So far, so good!
  4. These resources provide a few industry-by-industry specifics on setting up a business. After getting an overview, I was ready to click on the “Register a business” tab. 
  5. At the top of the page, it says this: “To register your business with the City of Philadelphia, you’ll need to determine your business structure, obtain a business tax account number from the City, and apply for a Commercial Activity License. The City offers detailed resources for business owners and those who are planning to launch a new business. See the Business Services site to learn more.”
  6. I decided I needed to learn more, so I clicked on the “Business Services site” tab.
  7. On the Business Services site, I was welcomed by this encouraging note: “This is your one-stop shop for resources to plan, launch, and manage your business. We are a city built by entrepreneurs. Your success is our success.” Great!
  8. Of the three tabs offered, I click on the first one, the “PLAN” tab for detailed information on Philadelphia business regulations, how to obtain a business income and receipts tax ID, how to formulate a business plan, and legal resources.
    1. To obtain a business income and receipts tax (BIRT) ID, the site linked me to this page here. It’s not self-explanatory and pretty confusing, but after I clicked “File or Pay Now,” I found “Apply for a PIN” on the left sidebar. To apply, I would need to input my SSN, e-mail address, and Philadelphia Tax Account Number. 
    2. But how do I get a Philadelphia Tax Account number? Do I have one already? Hmm. I Googled “Philadelphia tax ID registration,” and luckily this explainer page from the City’s Department of Revenue popped up. That page linked me to the application form.
  9. I then went back to the Business Services site homepage and clicked the “LAUNCH” tab. 
  10. Here, I was asked what specific type of business I’m hoping to start. I clicked the “Food & Drink” tab and then the “Restaurant/Bar” subheading.
  11. I clicked on the “Starting Your Food-Related Business” subheading listed under “Required.” It lists the following seven steps to setting up a food-related business in Philadelphia:
    1. Confirm your location is properly zoned for your intended business with the Department of Licenses and Inspections.
      • To complete this step, I first read through the Department of Health PDF that provides step-by-step instructions on each of these steps. It says that with this zoning portion of the process, the first step would be to consult the City’s zoning map and zoning code. 
      • But the two hyperlinks in the PDF didn’t work! Well, that’s frustrating.
      • So, I Googled “Philadelphia zoning map,” and the first result was the city’s Atlas mapping tool. Here, I searched the address of my would-be restaurant to access its zoning information and history. The key here is to ensure that my desired zoning classification is allowed at this particular address. 
      • But what zoning classification/category fits my would-be restaurant? To figure this out, I noted that the Department of Health PDF refers me to §14‐602 of the Zoning Code. Since that Zoning Code hyperlink doesn’t work (*insert eye-roll emoji*), I Google “§14‐602 Philadelphia Zoning Code,” and I come across this link to section 14-602 as my first result. There, I can scroll through the relevant tables to find what sorts of zoning categories restaurants can fall into. 
      • The Department of Health PDF links me to the Application for Zoning/Use Registration Permit from the Department of Licenses & Inspections. This link works! It also sends me to a lengthy checklist of materials and information I’ll need to have on hand to apply for the permit, including approvals from all or some of the following departments: Streets Department for (among other things) parking or overhangs; City Planning Commission for several things including “facade changes within the Center City Control District” (?!), landscaping around parking areas, and applications for wireless service; Art Commission for any signs that extend more than 12 inches beyond the property; Fairmount Park Commission; Water Department.
    2. Discuss the facility plans with the Health Department’s Office of Food Protection.
    3. Submit a Plan Review Application with the Office of Food Protection. This is a key step. 
      • The cost of submitting an application varies with the size of the business. For example, the plan review fee for an establishment of 1,000 square feet or less is $375. For an establishment of 1,001–5,000 feet, the fee is $875. 
      • Having reviewed the plan, the Office of Food Protection mails or e-mails the would-be owner a Plan Review Worksheet and Fee Assessment Letter within 30 business days. The worksheet will indicate if additional information is required. (This process can be expedited for an additional fee.)
      • As part of the application, I would have to submit a site plan, facility plan, sanitary structural facility information, electrical system information, light fixture information, plumbing system information, toilet room information, equipment design and construction information, equipment installation information, ventilation information, refuse and recyclables information, and menu and food handling information.
      • If my plan is reviewed and approved, I would go through a pre-operating inspection, which costs $190. 
    4. Obtain a City of Philadelphia Food Establishment Personnel Food Safety Certificate.
      • The application for the personnel food safety certificate, which costs $30, can be found here.
      • Certificates are valid for five years.
      • To apply, I would first have to complete a food safety training course and include my course certificate in my application materials. A list of city-certified food safety training course providers can be found here.
    5. Respond to the Office of Food Protection’s feedback from the preliminary plan review. Schedule and pass an inspection of your facility.
    6. Apply for and receive a Commercial Activity License required of all businesses in the City of Philadelphia from the Department of Licenses and Inspections.
      • The homepage for the license application can be found here.
    7. Obtain the appropriate food license for the specific type of food-related business.
  12. It…



Read More: Why is it so hard to open a business in Philadelphia?