Finance director reports 10,569 business licenses; 55% submitted online

Finance Director Zach Korach presented an informational report on the City of Carlsbad business license process, explaining how licensing is administered, the underlying municipal code, and recent application data.

Korach said the finance department issued 10,569 business licenses during fiscal year 2025'26, counting both new licenses and renewals, and estimated that roughly 55% of license applications were submitted online. He warned that it is difficult to precisely measure extra staff time spent processing physical submissions because some mailed or in-person applications are incomplete and require follow-up. That follow-up increases staff time relative to fully completed online submissions.

Korach reviewed how the municipal code (chapter on business licenses and regulations) addresses gross-receipts-based license payments. He said estimates of gross receipts are required for new businesses that lack prior-year gross receipts; at the first renewal there is a "true up" or reconciliation so any underpayment or overpayment is adjusted and future renewal amounts are based on the prior year's actual gross receipts.

Councilmembers asked whether low estimates by new businesses result in penalties. Korach said the ordinance sets a minimum license payment level and the estimate cannot be below that floor; there are no separate penalties for providing a low estimate, but the true-up will correct the payment at renewal.

Councilmembers also discussed whether the city should incentivize online submissions to reduce staff follow-up and considered whether fee or tax-structure changes would require ordinance amendments and possibly voter approval under Proposition 218. Staff said they have not yet evaluated incentive options.

Next steps: staff will continue to coordinate between business license, finance and economic development teams and may explore process improvements to encourage online submissions and reduce manual follow-up.