A City Tax Registration Certificate, commonly known as a ‘Business License’ is required of most individuals or companies providing a service or product for payment. A business license grants you permission to conduct business in the city or county that you are operating in. Independent consultants are included in the list of persons required to register this license. Business Licenses are how the city keeps track of city business tax.
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If you are a business owner or independent contractor charging for your time, service or product, you are required to register a business license. This license will require annual reporting on the account. If you register your business license and wind up making no sales or income, you can simply report $0 on your yearly return.
Once you’ve registered a business license the account will remain open until you close it.
You are required to renew your business license every year by February 28th. This “renewal” is another term for reporting. The city requires you to ‘renew’ your business license each year by reporting your gross earnings for the year before. Once you’ve taken care of your renewal there is no other maintenance required until the following year.
The city of LA has great tax incentives for small businesses that make under $100,000 annually. If your business makes under $100,000 for the year and you file your renewal in time, you will not end up owing any money.
*If you are a transportation business there is a minimum annual fee that you will owe, based on the amount of miles driven. Feel free to give us a call if you have any specific questions about this.
In most cases, all businesses who fail to file their renewal, or file their renewal late, a penalty fee will be applied to the account. This fee can vary based on various factors.