City of Los Angeles Business Tax: Registration and the Annual Renewal
Every business engaged in business in the City of Los Angeles needs a Business Tax Registration Certificate from the city's Office of Finance and files a renewal every year, whether or not it had revenue. The 2027 renewal is due by the last day of February; because February 28, 2027 is a Sunday, under the Office of Finance's rule it is on time through Monday, March 1, 2027. A registered business with worldwide gross receipts of $100,000 or less pays no city business tax, but only when it files the renewal on time.
MangoBooks, a Los Angeles CPA firm in Woodland Hills, keeps books and prepares business returns; how that work supports the renewal, and the fees, are at the end.
Who Needs a Business Tax Registration Certificate
The city treats a person as engaged in business in the City of Los Angeles if they, or their employees:
- keep a fixed place of business in the city;
- own or lease real property in the city for business purposes;
- regularly keep a stock of goods in the city for sale;
- regularly solicit business in the city;
- work or provide services in the city on 7 or more working days a year, counting the days of all employees together;
- use the city's streets with motor vehicles for business.
A self-employed person based outside the city who works in the city on 7 or more days in a calendar year registers too. Receiving only dividends or interest from passive investments is not engaging in business (Los Angeles Municipal Code Section 21.00(h)). To check whether an address is inside the city, see Inside the City or a Separate City below.
Registering a New Business
Registration is fastest online; a registration form can also be emailed or brought to a public counter. The checklist asks for:
- a Social Security number for a sole proprietor, or an employer identification number for a partnership, corporation or LLC;
- a description of the business activity;
- the legal name and any DBA;
- the date the business started in the city;
- the business and mailing addresses, and contact details.
When registration is complete, the business receives a temporary certificate or a registration number, and the permanent certificate is mailed within 4 to 6 weeks. A business may also need police, fire or tobacco permits, and some business classes pay a minimum tax when they register.
The First-Year Back Tax
The first year in business is not exempt. Its tax, which the city calls back tax, is paid with the renewal in the second year. A business that closes during its first year still files a statement of the first year's gross receipts and pays the first year's tax. The first and second years' tax are both measured by the first year's gross receipts, so the two amounts are the same.
The Office of Finance's worked example: a profession with $237,461 of gross receipts in its first year rounds up to $238,000, and 238 × $4.25 gives $1,011.50 of tax for the year. The second-year renewal shows $1,011.50 for the current year, $1,011.50 of back tax and the $4 state fee, $2,027.00 in all.
The 2027 Renewal: Due Date, Filing and Payment
- Every business files. A renewal is required every year, regardless of whether the business generated revenue.
- The due date. The tax is due January 1 and becomes delinquent if it is not paid by the last day of February. The Office of Finance moves the deadline to the first Monday after the last day of February when that day falls on a Sunday. February 28, 2027 is a Sunday, so under that rule the 2027 renewal is on time through Monday, March 1, 2027.
- How 2026 worked. In 2026, when February 28 fell on a Saturday, the instructions set the deadline at Monday, March 2, 2026, and a renewal was on time if it was received at a public counter by 4:00 pm, postmarked, or e-filed by 11:59 pm that day.
- Paying late is filing late. A returned check or a rejected payment can bring interest, penalties and returned-item fees.
- Filing and paying. Renewals are filed through the Office of Finance's online e-filing system, and paying online by e-check carries no transaction fee. Online, a tax of $50,000 or more is directed to the e-check payment option. By mail, the address is Office of Finance, P.O. Box 102654, Pasadena, CA 91189-2654.
- The form. The renewal form has seven sections; at a minimum, a filer confirms Section I and completes Sections III and IV.
- An extension. The Director of Finance can extend the filing date by up to 45 days when asked before the deadline, but an estimate of the tax must still be paid by the deadline. Paying at least 90 percent of the tax by then avoids penalties; paying less brings a 20 percent penalty on the unpaid tax. Interest runs during the extension.
How the Tax Is Figured
- The measure. Gross receipts for the prior calendar year, or a designated fiscal year, including reimbursed expenses, on the cash or accrual method under IRS guidelines.
- The calculation. Gross receipts are rounded up to the next $1,000, divided by 1,000 and multiplied by the rate for the business class. A $4 state fee under AB 1379 is added when any tax is due.
- A primary class. When one activity brings in at least 80 percent of taxable receipts, the business can elect it as its primary class (Los Angeles Municipal Code Section 21.06.1).
- Several activities and receipts outside the city. Someone with several service activities combines them on one certificate. A service business may apportion its receipts between work inside and outside the city under City Clerk's Ruling No. 15. Out-of-state shipments, sales taxes, returns and cash discounts are excluded from retail and wholesale receipts.
- Overpayments. An overpayment can be applied to the current tax within three years.
Rates for common business classes:
| Business class | Tax per $1,000 of gross receipts |
|---|---|
| Professions and occupations | $4.25 |
| Retail sales | $1.27 |
| Wholesale sales | $1.01 |
| Rental of commercial property | $1.27 |
| Rental of dwelling units | $1.27 |
| Rental of personal property | $2.55 |
| Miscellaneous services, such as advertising and public relations agencies, temporary help, travel agencies and music teachers | $3.56 |
| Multimedia, including computer programming services and website design | $1.01 |
| Commission merchants and brokers | $3.15 |
| Child care | $1.01 |
| Contractors: a flat $153 for the first $60,000 of gross receipts, then this rate for each $1,000 above $60,000 | $1.01 |
The full list of classes is on the Office of Finance's Know Your Rates page.
Exemptions That Depend on Filing on Time
- Small business exemption. The $100,000 limit counts worldwide gross receipts, taxable and nontaxable, and all of them must be reported to claim the exemption. A business that renews late is delinquent, loses the exemption and pays the tax. In the Office of Finance's example, a retailer in the city with $107,000 of worldwide receipts does not qualify, even though only $45,000 of it is taxable. The exemption is for registered businesses only.
- Creative artists. A registered creative artist pays no business tax on receipts from creative activities of $300,000 or less when the renewal is filed on time; the exemption is not available to a new business. The exemption is available to an individual, to a corporation whose only shareholder and only employee is one individual, and to an LLC whose only member and only employee is one individual.
- The former New Business Exemption. It expired on December 31, 2017.
- Nonprofits. See Nonprofits.
Late Renewals: Penalties and Interest
A late renewal loses the small business and creative artist exemptions, and the unpaid tax carries a penalty that grows with time:
- 5 percent from the day after the deadline;
- 10 percent from April 1;
- 15 percent from May 1;
- 20 percent from June 1;
- 40 percent, the maximum, from July 1.
Interest is charged each month on the tax owed, at a rate reset each year to the average federal short-term rate plus 3 percentage points; the current rate is on the Office of Finance's interest rates page. Once all tax, interest and fees are paid, a business can ask for penalties to be waived with the online Penalty Waiver Request.
Businesses That Never Registered
The Office of Finance uses information from the Franchise Tax Board to find businesses that may owe city tax and writes to them; these are its AB 63 letters. A business that has never registered and has not yet been contacted can apply for the city's Voluntary Disclosure Program, whose look-back limit is set out on CPA in the San Fernando Valley. Under the program:
- the business can stay anonymous through a representative and receive a written opinion before it is named;
- within 30 days of signing, it files the renewals and pays the tax and interest;
- it then files a renewal every year.
The gross receipts for the missed years come from the business's books; see Catch-Up Bookkeeping and Unfiled Returns.
Selling, Closing or Changing the Business
- No transfers. A Business Tax Registration Certificate cannot be transferred; whoever buys a business applies for a new certificate.
- Selling or closing. The owner cancels the certificate with the Taxpayer Information Update Form.
- Public records. The business name, DBA, addresses, including a home address used for the business, and business activity are public records and appear on the city's Open Data Portal.
Inside the City or a Separate City
- Checking an address. The Office of Finance points to the city's Neighborhood Information tool for checking whether an address is inside the City of Los Angeles.
- Valley neighborhoods of the city. City Planning's community plans include Canoga Park–Winnetka–Woodland Hills–West Hills, Encino–Tarzana, Sherman Oaks–Studio City–Toluca Lake–Cahuenga Pass, Van Nuys–North Sherman Oaks, Reseda–West Van Nuys, Northridge, Chatsworth–Porter Ranch, North Hollywood–Valley Village, Granada Hills–Knollwood, Arleta–Pacoima and Sylmar.
- Burbank and Glendale. Both cities have their own business registration; their rules are on CPA in the San Fernando Valley.
- Calabasas. The city does not require a business license.
- Working across the line. A business based in any of these cities still needs a Los Angeles certificate when it meets one of the tests above, such as working in the City of Los Angeles on 7 or more working days a year.
Office of Finance Offices and Contacts
- City Hall: 200 N. Spring St., Room 101.
- Van Nuys Civic Center: 6262 Van Nuys Blvd., Suite 110.
- Hours, by appointment only at both offices: Monday and Tuesday 8:00 am–4:00 pm, Wednesday 9:00 am–4:00 pm and Thursday 8:00–11:30 am, closed daily from 11:30 am to 12:30 pm and closed on Friday.
- Phone and email: (844) 663-4411, Monday–Thursday 9:00 am–3:00 pm and Friday 9:00 am–2:00 pm; Finance.CustomerService@lacity.org.
How MangoBooks Helps
Our part of the renewal is the books and the return behind it:
- Books for the gross receipts figure. When we keep the books, the prior year's gross receipts the renewal is figured on come from the same year-end books the business return is prepared from. See Bookkeeping.
- Books that are behind. Catch-up bookkeeping brings the books current, and the gross receipts the city tax is figured on come from the caught-up books. See Catch-Up Bookkeeping and Unfiled Returns.
- A new business. LLC or S corporation setup includes a first-year calendar of California payments with the City of Los Angeles registration and renewal dates. See Business Formation.
- The business return. We prepare the federal and California business return from the same books. See Business Tax Preparation.
| Service | Typical Fee | Factors Affecting Fees |
|---|---|---|
| Monthly bookkeeping | $650–$1,400 per month | The number of bank and credit card accounts, how many transactions come through each month, and how organized the records are. |
| Catch-up bookkeeping | From $1,500 | How many months are behind, the number of accounts, and the condition of the existing records. |
| LLC or S corporation setup | From $950 plus state fees | The type of entity, the number of owners, and whether an S corporation election is included. |
| Business tax return (1120-S, 1065, 1120 with California return) | $2,000–$3,500 per year | The type of entity, the number of owners, whether the books are complete at year end, and how much activity there is to report. |
Fees depend on the scope of work and are set out in a written engagement letter before work begins. See the Fee Guide. Other local rules for Valley businesses are on CPA in the San Fernando Valley, and the books, payroll and returns we prepare for a business and its owner on Small Businesses and Their Owners.
Frequently Asked Questions
When is the 2027 Los Angeles business tax renewal due?
By the last day of February. The Office of Finance moves the deadline to the first Monday after that day when it falls on a Sunday, and February 28, 2027 is a Sunday, so under that rule the 2027 renewal is on time through Monday, March 1, 2027. Paying late counts as renewing late.
Do I have to renew if my business earned under $100,000, or nothing at all?
Yes. Every registered business files a renewal each year, whether or not it had revenue, and the small business exemption for worldwide gross receipts of $100,000 or less applies only when the renewal is filed on time and reports all receipts, taxable and nontaxable.
What happens if I renew late?
The business loses the small business and creative artist exemptions and pays the tax, with a penalty on the unpaid tax of 5 percent from the day after the deadline, rising to 10 percent from April 1, 15 percent from May 1, 20 percent from June 1 and 40 percent, the maximum, from July 1. Interest is charged monthly. Once all tax, interest and fees are paid, a penalty waiver can be requested online.
Why is the second-year renewal about twice the normal tax?
Because it includes the first year's tax, which the city calls back tax. Both years are measured by the first year's gross receipts, so the two amounts are the same: in the Office of Finance's example, a profession with $237,461 of receipts owes $1,011.50 for each year, and with the $4 state fee the renewal comes to $2,027.00.
Does a business based outside the City of Los Angeles need to register?
It can. A business is engaged in business in the city if it or its employees regularly solicit business there, keep a fixed place of business or a stock of goods there, or work or provide services there on 7 or more working days a year, among other tests, wherever the business is based. Burbank and Glendale have their own registration and Calabasas requires no business license, but a business in any of them can still need a Los Angeles certificate. See CPA in the San Fernando Valley.
Can I get more time to file the renewal?
Yes, up to 45 days, if the Director of Finance is asked before the deadline. An estimate of the tax must still be paid by the deadline: paying at least 90 percent avoids penalties, paying less brings a 20 percent penalty on the unpaid tax, and interest runs during the extension.
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