Business Tax Information FAQ
The following information has been compiled to assist you with LAMC Section 21.03 (Imposition of Tax). This section requires that every person engaged in any trade, calling, occupation, vocation, profession or other means of livelihood in the City of Los Angeles, must obtain a Tax Registration Certificate (TRC) and pay the required business tax due, specified in Sections 21.41 to 21.199 of the Business Tax Ordinance. You are considered to be engaged in business in the City of Los Angeles when you physically perform work within the City of Los Angeles for seven (7) or more days per year. The Office of Finance is responsible for the collection of business taxes.Who is required to pay the tax?
Every person who engages in business within the City of Los Angeles is required to obtain the necessary TRC(s) and pay the business tax or obtain an exemption If your business is located within an unincorporated area within the County of Los Angeles, you may also be required to obtain a business license from the county and more information on these requirements can be found here.How do I apply for a TRC?
In general, architects, engineers, and consultants, etc., are taxed under LAMC Section 21.49 (Professions and Occupations). Contractors (defined as persons who construct, alter, repair, etc., any building, highway, road or other structure) are subject to tax under LAMC Section 21.188. The minimum tax under Section 21.188 is $153.00 per year or any portion of the year. There are numerous other categories. Please go to the New Business Tax Rates page for more information.When do I have to file a renewal?
The business tax renewal filing is due on January 1st and delinquent on the first business day of March. The amount of business tax due is based on your gross receipts generated during the previous reporting period, subject to applicable reductions under City Clerk Rulings.Why does it seem like I am being 'double taxed' on my renewals?
You may be referring to an additional tax for the first year of business often referred to as the BACKTAX. When a new activity subject to tax is started it is required that the minimum tax be paid with the application. At the end of the first business tax calendar year or when the activity is terminated during the first calendar year of such activity, it is required that a statement of the entire first calendar year's gross receipts be filed and payment made of any tax due in excess of that paid at the time of the application. The tax for the first and second calendar years are each measured by the gross receipts of the first calendar year. Consequently, the tax for the first and second calendar year is always in the same amount.Is there a tax liability for a business located outside the City of Los Angeles doing business within the City of Los Angeles?
Yes. However, the application of certain City Clerk Rulings may lower your total tax liability.I am a new architect and have never been in business before. Are there any business tax exemptions for which I qualify?
Yes. Effective January 1, 2010, any new business (excluding those listed below) established in the City during the period 1/1/2010 through 12/31/2015 shall be exempt from the applicable business tax liability for the first three years of operation provided the taxpayer files a timely renewal for each operating period (LAMC Section 21.30). This tax exemption excludes the following: (1) construction businesses as defined in LAMC Section 21.30 (a) 2; (2) film producers as defined in LAMC Section 21.109)(3) any business which was engaged in business inside of the City of Los Angeles during the preceding tax period and is engaged in business in the City during the current tax period.I am a small business owner. Are there any exemptions available to me?
Yes. Starting on January 1, 2007, a small business with $100,000 or less of taxable and nontaxable gross receipts within and without the City, may qualify for a Small Business Exemption (LAMC Section 21.29).
To obtain the exemption, the Office of Finance must receive a renewal form in a timely manner. For further information on the exemptions and requirements to qualify, please refer to our exemption page.What are the penalties for not paying the business tax or obtaining the exemption?
Failure to obtain the required TRC and/or pay all business taxes in a timely manner may subject the tax due to additional penalty and interest charges. There are also legal remedies that the City may seek.If I obtain the TRC or exemption, will my business then be legal?
The issuance of a TRC and the payment of the business tax does not authorize the conduct or continuance of any illegal business or of a legal business in an illegal manner within the City of Los Angeles. The City has enacted regulatory ordinances in areas such as zoning, building safety, police, fire, hazardous material disclosure, sanitation, health, etc., which must be complied with in order to lawfully conduct a business.
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