Taxpayers conducting business in various cities in northern California, including San Francisco, San Jose, Oakland, Berkeley, and Mountain View, may be subject to annual business license taxes based on gross receipts, payroll, and/or employee headcounts for the privilege of conducting business within their city limits.
These business license taxes may be a trap for the unwary due to broad nexus standards and challenges for compliant filers due to antiquated ordinances, lack of published guidance, and inconsistent audit practices.
Although each city has its own rules and practices, there are many common elements that are highlighted below.
The rules surrounding each of the local business license taxes are complex, and careful consideration should be given as to whether a filing obligation exists, what gross receipts are subject to taxation, and how such gross receipts should be apportioned.
The issues and concerns taxpayers should consider include: