It will now be cheaper, faster, and simpler to start a business in the nation’s capital . Last month, Congress gave its final approval to the Business and Entrepreneurship Support to Thrive (BEST) Amendment Act. The new law had passed the D.C. Council unanimously in December and was signed by Mayor Muriel Bowser in January.

The BEST Act’s sponsor, Councilmember Brooke Pinto, announced last November that the new law “reduces the over 100 current licensing categories to just 11, eliminates endorsements, and reduces basic business license fees to $49 for a six-month license and $99 for a two-year license. The bill also waives licensing fees for businesses with under $10,000 in annual revenue.”

While the council will need to fund the changes in 2023, this move signals a long-needed shake-up for the bureaucratic maze that starting a business in D.C. had become.

From our years of work with D.C. entrepreneurs, the Institute for Justice repeatedly found that D.C.’s business start-up process was far too expensive and complex, particularly for first-time entrepreneurs, who likely had limited time, capital, and expertise in local licensing rules. In fact, almost no one, including the policymakers in charge of running the city’s licensing system themselves, really understood the entire process from start to finish.

IJ is a nonprofit, public-interest law firm and advocacy organization working in D.C. to modernize and streamline the regulatory process for entrepreneurs so D.C. residents can pursue their dreams while making the district a more vibrant place for all of us.

Those efforts are particularly important in a city like D.C., where entrepreneurs are easily able to “shop around” for more welcoming regulatory climates in Maryland and Virginia when deciding when and where to open up shop.

Other nearby cities, such as Arlington, already adjust business licensing costs by revenue, ensuring that new, small businesses aren’t expected to pay the same as large, established operations. Unfortunately, data sharing between D.C. agencies remains somewhat behind other cities. The newly formed Department of Licensing and Consumer Protection and the Office of Tax and Revenue don’t actually share enough information to verify businesses’ annual revenue automatically, preventing the city from instituting a truly progressive fee structure. Despite that, eliminating fees for the very smallest businesses and reducing licensing fees for everyone is a vital step toward right-sizing licensing fees.

As vital as these reforms are, however, D.C. still has room to grow if it truly wants to be a city that welcomes entrepreneurs.

The council still needs to fund the bill for this year — failing to do so would make the BEST Act an empty promise to business owners who view these reforms as a key to providing for themselves and their families.

The good news is that other cities have shown you can cut fees without sacrificing revenue in the long run. In 2012, Chicago eliminated 60% of its business license categories, saving business owners millions of dollars. Over the next several years, the number of Illinois start-ups grew, and Chicago’s total business licensing revenue has remained above 2011 levels (even accounting for inflation) every year leading up to 2022. The city’s business tax revenue likewise saw significant, inflation-adjusted growth over the years leading up to the COVID-19 pandemic and has already rebounded above 2011’s levels.

If you make it easier to start a business, more people will start businesses, and cities have shown that losses in revenue are often temporary and quickly offset by new business growth.

With the passage of the BEST Amendment Act, the best days could be ahead for small businesses in the district.

Chad Reese is the assistant director of activism with the Institute for Justice .