City of Los Angeles Business Licenses

September 19, 2011

Los Angeles skylineAre you ready to start or expand your business in the city of Los Angeles?  Just like the county and state, the city of LA has its own rules, regulations, forms, and yes, taxes for a business.  The Los Angeles Office of Finance administers the city’s tax laws, issues tax registration certificates and permits, and collects city taxes and fees.  A business license (called a Business Tax Certificate in LA) is required for all entities doing business within the city limits.  The Los Angeles Business Tax is a privilege tax imposed for revenue purposes only.   Most of the funds collected by the tax go into the City’s General Fund to support essential services such as those provided by the Police and Fire Departments.

Do I need a tax certificate?

Every person who engages in any business within the City of Los Angeles* is required to obtain the necessary Tax Registration Certificate(s) and make payment of the business tax.  You can apply in person to the Main Office of Finance or any branch offices. Or, in many cases, you can file an application by mail.  While you are required to register your business, you may find that your business may be exempt from paying the tax if you are a new business, small business or creative artist.

New Business Exemption

There is an exemption for new businesses that started in the City or businesses that relocated from outside the City on or after January 1, 2010 through December 31,2012.  To qualify, a taxpayer must not have been in business in the city in the preceding tax year, and cannot be a construction or film production business.  This exemption results in no business tax liabilities for a period of three years and there are no restrictions on gross receipts (gross income).

Small Business Exemption

Effective January 1, 2007, a small business with $100,000 or less of taxable and nontaxable gross receipts within and out of the City, may qualify for a Small Business Exemption.

Creative Artist Exemption

A Business Tax Exemption is available for creative artists who generate up to $300,000 in total taxable and non-taxable in-city and out-of-city gross receipts attributable to their qualifying “creative activities”.  This exemption applies strictly, only to individual creative artists (an individual, an individual acting as a corporation, or an individual acting through an LLC), when performing “creative activities” for “entertainment or aesthetic purposes. ”

Ok, how much is the tax?

Most business taxes are based on gross receipts. For those Business Tax Classifications, the tax rate is a specified amount per $1,000 of taxable gross receipts for each tax classification. Some business taxes are based on a flat rate per tax period and others are based on the number of vehicles, machines, devices or equipment used, the number of employees, square footage of the area, seating capacity, or the scale of fees collected.

For more detailed information about the City of Los Angeles Business Tax Certificate, the Office of Finance provides an online Tax Information Booklet.  As always, filing must be made in a timely manner in order qualify for exemptions, and to avoid payment of interest and penalties.  Wallace & Associates is a Los Angeles CPA firm that understands the most current new developments in the tax laws to minimize both your current and future tax liabilities.

* (Districts located within Los Angeles city limits: Arleta, Atwater, Barrington, Boyle Heights, Brentwood, Cahuenga Park, Castellammare, Century City, Cimarron, Del Valle, Dockweiler, Eagle Rock, Echo Park, Edendale, Elysian Park, Encino, Federal, Flint, Fort Macarthur, Foy, Garvanza, Glassell Park, Granada Hills, Green, Griffith, Hancock Park, Hansen Hills, Highland Park, Hollywood, Korea Town, La Tuna Canyon, Larchmont District, Lincoln Heights, Los Feliz, Market, Miracle Mile, Mission Hills, Montecito Heights, Mt. Washington, North Hollywood, North Hills, Oakwood, Pacific Palisades, Pacoima, Palisades Highlands, Palms, Panorama City, Pico Heights, Playa Vista, Preuss, Rancho La Tuna Cyn, Rancho Park, Reseda, Rimpau, Sanford, Santa Western, Shadow Hills, Sherman Oaks, Silver Lake, Studio City, Sun Valley, Sunland, Tarzana, Valley Plaza, Valley Village, Van Nuys, Vermont, West Toluca Lake, Warner Center, West Lake, West Los Angeles, Westchester, Westvern, Wilcox, Wilmington, Winnetka.  To see if your business location is subject to Los Angeles Business Tax, visit the Los Angeles Office of Finance.)