Business License Frequently Asked Questions - Finance Department (2023)

Table of Contents
General Questions What is a business license? Who is required to get a business license? What do I need to know to open a business in Santa Monica? What is my business license tax based on? How is my tax rate determined? How do I know how much I'll have to pay? What is the State CASp $4 fee I have to pay each year? How do I know if my business is allowed where I want to locate it? I conduct business in several cities. Can I get just one license to do business in ALL of them? Is my information confidential? May I register my business from a PO Box or PMB located within Santa Monica? Exemptions and Deductions Are there any exemptions from business license taxation? Can I get a Small Business exemption? If I qualify for the Small Business Exemption, does that mean I don't have to pay anything? How do I apply for the Small Business Exemption? Will I be required to submit documentation to claim the Small Business Exemption? When must I apply to be eligible? Do I need to apply every year? What if I miss the deadline to file or renew? What is a deduction? Renewals How often do I have to renew my license? What information do I need to renew my business license? What are gross receipts? What if I also do business outside of Santa Monica, can I apportion my receipts? What do I need to renew online? What if I don't want to renew online? Why am I not eligible to renew online? What if I do not submit my renewal by July 1st? Why does it seem like I am being 'double taxed' on my renewal? What period of time am I required to report on? Compliance Notices Why did I receive a Notice to Comply? What is the Franchise Tax Board Reciprocal Agreement? What does the City of Santa Monica consider to be a business and why do they think I am operating one? What happens if I do not respond? What if I received this notification and I no longer have a business? I am or have been in business in the City of Santa Monica, but have never been profitable. Am I required to have a business license? I receive a 1099 Form instead of a W-2 from my work. Am I required to have a business license? Do I need a business license if I do part-time work from home? Do I need a business license if I rent out residential space, like an apartment or house? I live in Santa Monica, but my business is located outside of the city limits. Do I need to get a business license? I live outside of Santa Monica but enter into Santa Monica to conduct business. Do I need to get a business license? Commercial Cannabis Business Licensing Can I apply to operate a cannabis business in Santa Monica? Now that Proposition 64 passed, can I sell non-medicinal cannabis in Santa Monica? Is cannabis legal in California? When will Santa Monica begin accepting applications for cannabis related businesses? Can I deliver Medical Cannabis to Santa Monica residents if I do not have a Santa Monica Medicinal Cannabis Retailer permit? Can I add Cannabidiol (CBD) to food without obtaining a state license or a local Medicinal Cannabis Retailer permit? Dockless Shared Mobility Devices How do I apply for a business license to operate as a dockless shared mobility company? As a private company, can I leave my dockless shared mobility device in the public right of way for users? What happens if a device is placed or left in the public right of way? Is the City considering new regulations that will allow Shared Mobility Devices to be docked in the public right of way? Audits What is an audit? Why does the City of Santa Monica conduct audits? What should I expect during an onsite audit? How should I prepare for an onsite audit? What records will I need to have available during an onsite audit? How many years will I be audited? What should I do if I disagree with the auditor's findings? Delinquent Taxpayer List Why am I on the list of delinquent taxpayers? What do I do if I believe I've been placed on the delinquent taxpayer list in error? How do I pay my liability due to the City? How long will my name remain on the delinquent taxpayer list once I satisfy my liability? What if I am closing or have already closed my business? FAQs Videos

General Questions

What is a business license?

A business license is an annual regulatory permit for the privilege of conducting business within City. This license is issued after a business has complied with applicable local, state and federal requirements and has paid the annual gross receipts tax, applicable fees and assessments. Business license taxes, applicable fees and assessments are due and payable prior to commencing business within the City of Santa Monica.

Who is required to get a business license?

Any person or entity who conducts business in or whose business is based in Santa Monica, must obtain a Santa Monica business license. Conducting business without a license can result in penalties, notices of violation, citation and possible criminal prosecution.

What do I need to know to open a business in Santa Monica?

Santa Monica is a vibrant business community and one of the most popular tourist destinations in California. For helpful information on opening a new business or expanding your existing business, visit Santa Monica Economic Development.

What is my business license tax based on?

Business license taxes are based on the tax rate associated with your assignedbusiness classification (see ). With only a few exceptions, business license taxes are $75 plus a percentage of your Santa Monica gross receipts in excess of $60,000 for the calendar year.

How is my tax rate determined?

Tax rates are based on the business activity. For a detailed listing of the tax rate groups, see the summary.

How do I know how much I'll have to pay?

While almost every business in Santa Monica is subject to business license tax, other fees may apply to your application and renewal. Open the Business License Tax Calculator to assist you in calculating your business license tax liability. For more specific information on the City's various fees, see the Business License summary and the City's interactive Fees Database.

What is the State CASp $4 fee I have to pay each year?

On September 19, 2012, Governor Brown signed into law Senate Bill (SB) 1186 which adds a state fee of $1 on any applicant for a local business license, similar instrument or permit, or renewal. The purpose of this fee is to increase disability access and compliance with construction-related accessibility requirements and to develop education resources for business in order to facilitate compliance with federal and state disability laws, as specified.

On October 11, 2017, Governor Brown signed into law Assembly Bill (AB) 1379, which changed the State CASp fee starting January 1, 2018. This bill accomplishes the following:

  • Removes the sunset provision for the CASp fee, establishing it as a permanent fee.
  • Increases the fee to $4 for six years from January 1, 2018 through December 31, 2023. The fee then reverts back to $1 beginning January 1, 2024.
  • During the six-year period of the increased fee, the municipality will retain 90% of the fees collected, remitting 10% to the State. When the fee reverts back to $1, the municipality portion will also revert to 70%, with 30% remitted to the State.

Under federal and state law, compliance with disability access is a serious and significant responsibility that applies to all California building owners and tenants with buildings open to the public. You may obtain information about your legal obligation to comply with the disability access laws at the following agencies:

How do I know if my business is allowed where I want to locate it?

Please check with the City's Planning Division to determine if your business’ use is permitted in a particular zone. The City of Santa Monica has various land uses or zones that are defined in the City's Municipal Code that allow for various types of business uses.

I conduct business in several cities. Can I get just one license to do business in ALL of them?

No, there is no universal business license. If you are conducting business in multiple jurisdictions, you will need to contact each jurisdiction to determine if a business license is required. It is important to know that most California cities and counties have a Business License tax ordinance. However, each city has its own tax rate, structure, and requirements. Check with the appropriate city or county for theirs.

Is my information confidential?

The City's Municipal Code guarantees the confidentiality of gross receipts information and prohibits revealing the information to anyone not charged with the administration and enforcement of the ordinance. Business name, location, phone number, and owner's name are subject to the California Public Record Act.

May I register my business from a PO Box or PMB located within Santa Monica?

A post office (PO) box or private postal mailbox (PMB) address may be used as the mailing address of record for receiving information regarding a Santa Monica business license; however, a PO Box or PMB address does constitute a business location for business licensing purposes. A PO Box or PMB address cannot be substituted as the business location address for any business, whether physically located within the City of Santa Monica or located outside of the City.

Exemptions and Deductions

Are there any exemptions from business license taxation?

The privilege of engaging in certain businesses and occupations may not be taxed by municipalities by virtue of provisions of the United States Constitution, applicable statutes of the state of California or local law. Some businesses may be exempt from taxation such as Small Business qualifiers, nonprofit organizations, banks and insurance companies that pay the in lieu tax, while others are exempt from procuring a business license at all such as small residential care facilities, small home child care facilities and café musicians.

Not all exemptions are addressed here. The burden of proof of exempt status is on the business claiming the exemption. Acceptable documentation must be provided to support the claimed exemption.

Can I get a Small Business exemption?

Small businesses, defined as a business that earns less than $40,000 in worldwide gross receipts in a calendar year, that are located in Santa Monica can apply for exemption from paying business license tax. Even if an exemption from the license tax is granted, a business license is still required.

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Examples of businesses that do NOT qualify:

    • Corporate headquarters or administrative offices that do not generate gross receipts.
    • Taxicabs; delivery/pickup services and vehicles; lunch trucks.
    • Businesses not located in Santa Monica that come into the City to work temporarily, such as contractors, consultants, gardeners, etc.
    • Businesses whose total worldwide gross receipts at all locations/branches outside AND inside Santa Monica exceeded $40,000 in the previous calendar year.

If I qualify for the Small Business Exemption, does that mean I don't have to pay anything?

The Small Business Exemption applies ONLY to the annual business license tax. Exempt businesses must still pay all other applicable taxes, assessments, and fees.

How do I apply for the Small Business Exemption?

Any person seeking to claim exemption from paying the business license tax must complete the Business License Application and pay the relevant fees to obtain a business license. When completing the Business License Application, follow the instructions therein to claim the exemption.

Will I be required to submit documentation to claim the Small Business Exemption?

A business may be required to provide proof of the declared amount of gross receipts. Verification may include submitting a completed Form 4506-T, authorizing the IRS to provide the City with a transcript of their tax return for the preceding year.

When must I apply to be eligible?

New businesses must apply for a business license and pay all relevant fees within thirty (30) days of starting a business in Santa Monica. Existing businesses must renew their business license and pay all relevant fees by August 31st of each year to remain eligible for the Small Business Exemption.

Do I need to apply every year?

Yes; any person seeking exemption must submit the required documentation on an annual basis.

What if I miss the deadline to file or renew?

To qualify for the exemption youmust file for the exemption and subsequent renewals before the delinquency date (i.e., August 31st of each year). Failure to do so will result in a forfeit of the exemption, and the business must pay both the business license tax and the associated late payment penalties.

What is a deduction?

A deduction is monies received that you can legally deduct from your Santa Monica gross receipts. For an overview, see SMMC section 6.04.010 d(2).

Renewals

Go to the Business License Renewals page

How often do I have to renew my license?

Business licenses are generally issued for the fiscal year which commences on July 1st and ends on June 30th of each year and must be renewed annually until the business is no longer operating in the City. Though renewals are due on July 1st of each year, the City's Municipal Code provides a 60 day grace period before penalties are assessed.

What information do I need to renew my business license?

In order to renew your Santa Monica business license, you will need your current business license renewal notice, your Santa Monica gross receipts for the period indicated on your renewal notice, payment and any supplemental forms sent with your renewal notice.

What are gross receipts?

For the definition of gross receipts please see SMMC section 6.04.010 (d)(1).

What if I also do business outside of Santa Monica, can I apportion my receipts?

Business License taxes are based on income producing activity. An apportioning taxpayer may reduce its total receipts from its operation by a percentage that reflects the proportion of the cost of in-city to out-of-city activity. A business may deduct the percentage of gross receipts deemed to be directly attributable to income producing activities carried on outside the City of Santa Monica. You may wish to consult with a tax advisor.

What do I need to renew online?

Eligible businesses need their license number, web PIN, the amount of gross receipts for the reporting period, applicable supplemental forms, and a credit card or e-check to complete the payment.

What if I don't want to renew online?

You can bring the completed forms and preferred form of payment to the Revenue Division office in person, or using the envelope provided mail the forms to our office with a check payment only.

Why am I not eligible to renew online?

You are not eligible for online renewal if:

  • there has been a change of business location, owner, name, or activity over the prior year;
  • your license is delinquent for multiple years;
  • you are a pedicab operator; or
  • you are subject to the Downtown business assessment and you’d like to sign up for the quarterly installmentoption.

What if I do not submit my renewal by July 1st?

The City allows businesses up to a 60-day grace period to submit their business license renewal. Thus, you have until August 31st at 11:59pm before your account will be charged applicable late penalties. See Renewal Penalty Schedulefor a list of when the penalty increases. The unavailability of the online renewal system is not grounds for an extension to the filing deadlines.

Why does it seem like I am being 'double taxed' on my renewal?

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 the business is required to pay the minimum business license tax of $75 (excluding exempt and Small Business Exemption qualifiers) and any applicable fees and assessments for the initial application. At the end of the first fiscal year, the business is required to report the gross receipts applicable for the reporting period indicated on the renewal notice. At the time of the first renewal, business license tax is due for the application year for any amount excess of that which was paid at the time of the application, usually $75. The tax for the first and second fiscal years are each measured by the gross receipts for the reporting period specified. Consequently, the tax for the first and second calendar year is always in the same amount.

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What period of time am I required to report on?

For any tax due on or after July 1st, gross receipts shall be determined based upon gross receipts for the calendar year preceding the license tax period for which the tax is due.

Exception: For licensees of newly established businesses that were not in operation during the preceding calendar year, gross receipts shall be determined based upon gross receipts from the date the business opened through June 30th.

Compliance Notices

Go to the Business License Compliance page

Go to the Unlicensed Business Program page

Why did I receive a Notice to Comply?

Through the sharing of data, predominately the Franchise Tax Board Reciprocal Agreement (other sources include, but are not limited to, sales tax records, business publications, fictitious business name filings, and commercial property tenant lists) the City has identified business entities and sole proprietors that may be operating without a business license.

Information provided to the City indicates that you or the named entity has reported some type of business activity using a Santa Monica address. This indicates that you may be operating a business in the City without a business license.

What is the Franchise Tax Board Reciprocal Agreement?

As a result of State legislation, the California Franchise Tax Board (FTB) is authorized to disclose certain information related to business activities of residents, corporations, and other business entities within the City. By matching the data provided by the FTB to our own records, we are able to identify unlicensed business activity within the City.

What does the City of Santa Monica consider to be a business and why do they think I am operating one?

Section 6.04.010 of the Santa Monica Municipal Code (SMMC) defines business as any business, commercial enterprise, trade, calling, vocation, profession, occupation, or means of livelihood, whether or not carried on for gain or profit.

This requirement applies to self-employed independent contractors and home-based businesses as well as business activity operated from a commercial location.

State law (Business and Professions Section 16300) requires cities to use the manner a taxpayer reported income to the Internal Revenue Service and FTB to determine whether the taxpayer performed services as an employee or as a separate business entity. A person who is an employee and whose compensation is reported on a Federal W-2 is not in business and is not required to obtain a business license.

What happens if I do not respond?

It is a misdemeanor to do business in the City of Santa Monica without a license. Any person convicted of a misdemeanor under the provisions of this Code shall be punishable by fine decided by the Court (SMMC Section 1.08.010). The City may take other actions to gain compliance including California Tax Return audits to establish tax liabilities and administrative citations and fines.

What if I received this notification and I no longer have a business?

If you previously conducted business in the City of Santa Monica and never obtained a business license, please complete the business license application and provide a statement of gross receipts for each year during which the business operated, and a statement of the date on which the business closed.

I am or have been in business in the City of Santa Monica, but have never been profitable. Am I required to have a business license?

Yes, all businesses in the City of Santa Monica, whether or not they realize a profit or are carried out for profitable purposes, are required to obtain a business license. Business license taxes are not income-based taxes.

I receive a 1099 Form instead of a W-2 from my work. Am I required to have a business license?

Yes, individuals that work as independent contractors within the City of Santa Monica and report from an Internal Revenue Service 1099 Form instead of a W-2 are required to obtain and maintain a business license.

Do I need a business license if I do part-time work from home?

Yes, businesses both large and small are required to obtain and maintain a business license to be in compliance with the City's Municipal Code. If part-time work is conducted from a location within City limits, such as your residence, you are required to obtain and maintain a business license.

Do I need a business license if I rent out residential space, like an apartment or house?

Yes, any person or business renting, leasing or sub-leasing residential space is required to obtain a business license regardless of the number of units. Even if you rent out a house or condo that you own, you are required to obtain and maintain a separate business license for each property.

I live in Santa Monica, but my business is located outside of the city limits. Do I need to get a business license?

As long as your business location and all business activity are conducted outside the City, there is no need to obtain a business license. If you are conducting business from your residence, or your residence is your business location, you will need to obtain and maintain a business license.

I live outside of Santa Monica but enter into Santa Monica to conduct business. Do I need to get a business license?

Yes. Even though you may not have a physical location in Santa Monica, if you conduct business within the Santa Monica city limits, you are required to obtain and maintain a business license. Examples of such work are contractors, consultants, out-of-town doctors, gardeners, pool cleaners, domestic help, and any other type of business that takes place within the City of Santa Monica.

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Commercial Cannabis Business Licensing

Go to theCommercial Cannabis Business Licensing page.

Can I apply to operate a cannabis business in Santa Monica?

The Medicinal Cannabis Retailer Request for Application process opened on December 21, 2017 and closed February 28, 2018. Once the selection process is complete, up to two (2) Medicinal Cannabis Retailer licenses can be issued.

The application for Medicinal Cannabis Light Manufacturing businesses is now available. Please continue to check the Commercial Cannabis Business Licensing page for updates.

Now that Proposition 64 passed, can I sell non-medicinal cannabis in Santa Monica?

No. The City has adopted a prohibition on adult-use non-medicinal cannabis commercial activities, including sales. This prohibition is considered to be temporary so that the City can complete a community process to evaluate what types of activities should be allowed and where.

Is cannabis legal in California?

Under the Adult Use of Marijuana Act (AUMA), a person 21 years of age or older may now possess, process, transport, purchase or give away to persons 21 years of age or older not more than 28.5 grams of cannabis in the non-concentrated form and not more than 8 grams of cannabis in a concentrated form including cannabis products (like edibles and extracts).

A person 21 years or older may cultivate non-medicinal cannabis within a private residence for personal use. AUMA provides that local governments can reasonably regulate, but cannot ban the personal indoor cultivation of up to six non-medicinal cannabis plants per private residence. A “residence” is defined as a house, an apartment unit, a mobile home, or other similar residential dwelling. No matter how many persons over 21 years of age are living in a “residence,” only six living plants may be cultivated at one time.

This includes cultivation in a greenhouse that is on the property of the residence but not physically part of the home, as long as it is fully enclosed, secure, and not visible from a public space. Because this activity is not subject to state licensing requirements, individuals may engage in personal indoor cultivation beginning November 9, 2016, unless a city enacts an ordinance imposing a reasonable regulatory scheme that would preclude them from doing so before complying with the city’s regulatory requirements. At this time, Santa Monica has not imposed any regulations on personal cultivation.

When will Santa Monica begin accepting applications for cannabis related businesses?

For medicinal cannabis retailers: The Request for Application process opened on December 21, 2017 and closed February 28, 2018.

For medicinal light manufacturing: Applications for Medicinal Cannabis Light Manufacturing businesses is available on theCommercial Cannabis Business Licensing page.

Can I deliver Medical Cannabis to Santa Monica residents if I do not have a Santa Monica Medicinal Cannabis Retailer permit?

Currently, the City of Santa Monica does not prohibit deliveries by state licensed Medicinal Cannabis dispensaries physically located outside of Santa Monica to qualified patients within Santa Monica. A licensed Medicinal Cannabis dispensary wanting to deliver in Santa Monica must provide the proposed Retailer Delivery Plan as required by the State of California and Department with their delivery business license application.

Can I add Cannabidiol (CBD) to food without obtaining a state license or a local Medicinal Cannabis Retailer permit?

No. Currently CBD is regulated no differently than any other cannabis product under local law and therefore may only be sold by a licensed medicinal cannabis retailer. The City is currently reviewing its policies related to CBD only products.

Dockless Shared Mobility Devices

How do I apply for a business license to operate as a dockless shared mobility company?

Prior to commencing business within the City, operators must apply for a business license and a vendor permit. If all of the appropriate City Department approvals are received, a business license and vendor permit will be issued. Separate licenses are required for office locations or storage facilities. The link below provides more details on the application requirements.

As a private company, can I leave my dockless shared mobility device in the public right of way for users?

No. Privately operated dockless shared mobility devices must be placed on private property locations specified within the business license application. It is the operators’ responsibility to ensure that they receive authorization from the property owners and associated businesses before commencing operations.

What happens if a device is placed or left in the public right of way?

Dockless devices that are left in the public right of way (e.g. sidewalk, crosswalk, street, curb) in a manner that presents an immediate hazard are subject to impound. If a device is impoundeda fee of $60 per device will be assessed to the operator to retrieve the device.

Is the City considering new regulations that will allow Shared Mobility Devices to be docked in the public right of way?

At its March 6, 2018 Council Meeting, City staff was directed to establish a pilot program to assist with the development of a regulatory framework. The pilot program is expected to be presented to Council in Fall 2018. The pilot program is being led by the City’s Mobility Division.

For more information, please click here. If you have any questions about the Shared Mobility rules or pilot program contact the Mobility Division in the Department of Planning and Community Development at:kyle.kozar@smgov.netand (310)458-8341.

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Audits

Go to the Business License Audit Program page

What is an audit?

A business license audit is an examination of the financial records of a business by the Finance Department or its contracted 3rd party agent to determine whether the business has remitted the proper amount of business license taxes and is operating in compliance with provisions of the Santa Monica Municipal Code.

Why does the City of Santa Monica conduct audits?

Audits are very important to the public interest and the efficient administration of the self-assessed business license taxes. Audits help ensure that taxes and fees are administered in a fair and uniform manner throughout the business community. Audits provide businesses with enhanced understanding of the business license laws so they can more accurately self-assess taxes and fees and better comply with the business license regulations. Audits often result in the early detection of matters requiring attention or correction by a business before they become a more significant problem.

What should I expect during an onsite audit?

It is always our desire to conduct audits in a professional and courteous fashion with minimum disruption to the business and its accounting activities. We also strive to keep businesses well informed during an audit. The Finance Department will provide prompt and thorough responses to questions and provide reasonable up-front estimates of how long audits will take. The Finance Department will explain tax and compliance findings as well as audit appeal rights. All audit working papers and audit results are reviewed by supervisory personnel before they are finalized.

At the conclusion of every audit, businesses have an opportunity to provide written feedback to the Department regarding the conduct of the audit and any issues or concerns that may have arisen as a result of the audit.

How should I prepare for an onsite audit?

The auditor will contact you to schedule a mutually convenient date and time for the audit. You will receive written correspondence confirming the details of the appointment. Audits are usually performed at the business location; however, if circumstances make it impractical for the audit to be conducted at the business location, an alternate off-site location, such as a bookkeeper's office may be acceptable. Regardless of where the audit work is conducted, the auditor will make an appointment to tour the business in order to become familiar with your operations, products and/or services, and facilities.

What records will I need to have available during an onsite audit?

The type of records required for an audit will vary depending on the type of audit.

The auditor will discuss the records requirement with you when the audit is scheduled. This discussion will allow the auditor to create a list of required documents that is tailored to your business and accounting system. As a general rule, however, the following types of documents may be required:

  • Copies of license renewal forms with supporting worksheets, calculations, and documentation of amounts reported for the audit period
  • Audited financial statements for the most current fiscal/calendar year
  • Monthly income statements for periods covered under the audit
  • Month end general ledger reports or subsidiary ledgers listing gross revenues
  • Monthly sales journals listing detailed transactions
  • Revenue worksheet summarizing revenues by reporting period (the auditor will send this form to you to be completed prior to the commencement of the audit)
  • Daily register summaries, sales invoices, z-tapes, and/or other supporting data for selected sample dates
  • Chart of accounts
  • Three most recent Federal income tax returns
  • Copies of bank statement for periods covered under the audit
  • Internal control questionnaire (the auditor will send this form to you to be completed prior to the commencement of the audit)

How many years will I be audited?

A typical audit will include three years of reporting history.

What should I do if I disagree with the auditor's findings?

Simply discuss any unresolved issues with the Finance Department. Due to the numerous different types of accounting systems and methods of recording revenues, it is possible that there may be factors that may have affected the outcome of the audit. The City is always willing to consider any relevant and material information in an attempt to resolve any disputed issues.

Delinquent Taxpayer List

Go to theDelinquent Taxpayers List

Why am I on the list of delinquent taxpayers?

Businesses are placed on the delinquent taxpayer list when they have an unpaid tax obligation to the City, are delinquent for more than 90 days and meet one or more of the following criteria:

  • A taxpayer with a tax delinquency in excess of $5,000
  • A taxpayer that is delinquent in filing the City Business License tax return for more than one fiscal year
  • A taxpayer that is delinquent in filing the City Business License tax return in which the prior year's reporting yielded tax due in excess of $5,000

A business is placed on this list only after repeated attempts to collect the debt, or bring the business into compliance, have been unsuccessful. Businesses are also notified that they will be included on the list, providing a final opportunity to resolve the matter and avoid being placed on the list.

What do I do if I believe I've been placed on the delinquent taxpayer list in error?

Contact the City's Business License office.

How do I pay my liability due to the City?

Contact the City's Business License office for assistance. Please be aware that at the time of payment, additional amounts may be due for one or more of the following: accruing interest, penalty, collection fees, additional tax periods or audited amounts.

How long will my name remain on the delinquent taxpayer list once I satisfy my liability?

Five business days.

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What if I am closing or have already closed my business?

Taxes are still due for any periods when the business was operating.

FAQs

What is OFAC license? ›

A license is an authorization from OFAC to engage in a transaction that otherwise would be prohibited. There are two types of licenses: general licenses and specific licenses. A general license authorizes a particular type of transaction for a class of persons without the need to apply for a license.

What can happen if you operate a business without a license? ›

Operating a business without a license can be considered to be fraudulent activity, so some jurisdictions might decide to arrest the parties responsible. Additionally, if you're in a field like medicine or law, practicing without a license is illegal and can result in arrest.

How important is licenses and permits in business? ›

In addition to protecting your business legally, licenses can boost credibility and allow you to apply for citywide funding. Moreover, if your company has staff or sells taxable products or services, you also need to register with the taxing authorities.

What kind of licenses do you need to apply for in order to run your business? ›

Licenses Required for Business
  1. Company or LLP Registration. ...
  2. GST Registration. ...
  3. Udyog Aadhar Registration. ...
  4. FSSAI License or Registration. ...
  5. Import Export Code. ...
  6. Shop and Establishment Act License. ...
  7. Gumastha licence. ...
  8. Other Licenses and Registrations.

What are the 4 types of sanctions? ›

Contents
  • 1.1 Reasons for sanctioning.
  • 1.2 Economic sanctions.
  • 1.3 Diplomatic sanctions.
  • 1.4 Military sanctions.
  • 1.5 Sport sanctions.
  • 1.6 Sanctions on the environment.
  • 1.7 Sanctions on individuals.

What are the 3 types of OFAC sanctions? ›

OFAC Sanctions Lists
  • Specially Designated Nationals List.
  • Consolidated Sanctions List.
  • Additional OFAC Sanctions Lists.

What are the 5 main risk types that face businesses? ›

Here are five types of business risk that every company should address as part of their strategy and planning process.
  • Security and fraud risk. ...
  • Compliance risk. ...
  • Operational risk. ...
  • Financial or economic risk. ...
  • Reputational risk.
16 Jun 2021

Who is exempt business permit? ›

Professionals who are employed exclusively by the government are exempted from paying professional tax “unless he or she has been duly authorized to practice the profession outside of one's official functions”.

What is the purpose of business permit? ›

The Business Permit is a key compliance document which entitles and enables a business to legally operate and do business in the area in which the business is registered. In short, the Business Permit can be considered as a “licence to operate” within that specific area.

What is the purpose of licenses? ›

Licensure provides permission to practice in a particular field. Careers which require licensing typically require a specialized skill, are deemed dangerous or affect the general public. Examples of careers requiring licensure are physicians, dentists, nurses, pilots, lawyers, accountants and psychologists.

Why is licensing needed? ›

Often, licensing is a more lucrative choice for certain products and industries, especially when considering the costs of starting a new business (both time and money), and because licensing gets your product or or service in front of an already established customer base and much wider audience (Abedi, 2018).

What are the benefits of licensing in business? ›

Advantages of Licensing
  • The licensor being able to utilize the licensee's distribution network to quickly enter into new geographical regions and foreign markets.
  • The licensor facing lower capital requirements and lower costs due to not having to invest in distribution.
2 Nov 2022

What are the basic legal requirements to start a business? ›

What Are the Legal Requirements for Starting a Business?
  • Create a LLC or Corporation. ...
  • Register Your Business Name. ...
  • Apply for a Federal Tax ID Number. ...
  • Determine If You Need a State Tax ID Number. ...
  • Obtain Business Permits and Licenses. ...
  • Protect Your Business with Insurance. ...
  • Open a Business Bank Account. ...
  • Consult the Professionals.
28 Mar 2019

What legal documents do I need to start a business? ›

Whether it's forms, contracts, agreements, letters, notices, or policies, there are so many types of legal paperwork that you will encounter depending on your business structure and sector.
...
Tax
  • Bank statements.
  • Invoices.
  • Record of expenses.
  • Past tax returns.

How do you get a business permit? ›

Fill out the application form. Submit the application form and the initial requirements. An assessor will assess your application for tax and fees. Pay the necessary taxes and fees.

What is the 50% rule for sanctions? ›

401. OFAC's 50 Percent Rule states that the property and interests in property of entities directly or indirectly owned 50 percent or more in the aggregate by one or more blocked persons are considered blocked.

What are financial sanctions? ›

Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may also be imposed for a variety of political, military, and social issues.

What is a Level 1 sanction? ›

Level 1 sanctions are one or more of the following: documented verbal warning issued in conjunction with the ACO, requirement to re-do an assignment, a failing grade on an assignment or reduction in the final grade in the course by one letter grade.

What is an OFAC red flag? ›

Essentially, the rule requires businesses to protect themselves and their customers against identity theft by defining “red flags” (i.e. any suspicious account activity, informational inconsistencies, or other signals that may be indicative of identity theft), putting systems in place to detect and act on those red ...

What transactions apply OFAC? ›

Every transaction that a U.S. financial institution engages in is subject to OFAC regulations. If a bank knows or has reason to know that a target is party to a transaction, the bank's processing of the transaction would be unlawful.

What triggers OFAC? ›

Referral to a Law Enforcement Agency for criminal investigation and/or prosecution. Other Administrative Actions such as denial, suspension, modification or suspension of a License as well the issuance of a Cease and Desist Order to a Subject of an investigation.

What is financial business risk? ›

Business risk is the exposure a company or organization has to factor(s) that will lower its profits or lead it to fail. Anything that threatens a company's ability to achieve its financial goals is considered a business risk.

What are financial risks in business? ›

Financial risk is the possibility of losing money on an investment or business venture. Some more common and distinct financial risks include credit risk, liquidity risk, and operational risk. Financial risk is a type of danger that can result in the loss of capital to interested parties.

How do you overcome financial risk? ›

To best confront and resolve these challenges to your financial close processes there are five best practices you can observe and follow.
  1. Avoid Your Own Status Quo. ...
  2. Understand Your Risk Profile. ...
  3. Ensure a Solid Financial Risk Mitigation Foundation. ...
  4. Know Where Your Money is Going. ...
  5. Leverage the Right Financial Close Technology.

Does small business need permit? ›

All businesses, whatever the legal form, are required to secure a mayor's permit or municipal license from the city or municipality where they are located. Permits or licenses are required to ensure that the standards are met and that business complies with the specific requirements of the business locale.

Who needs a business permit? ›

1. Department of Trade and Industry (DTI) All businesses, including single proprietorships, partnerships, corporations, and cooperatives should register for a business name with the DTI to begin the business permit application process.

What is business eligible? ›

“Eligible business” means:- any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE; and.

How long does business permits last? ›

The permit is valid for one calendar year i.e. from January to December upon which an applicant ought to apply for renewal.

Who process the permit of the business? ›

A business permit is usually obtained at the City or Municipal Hall's Business Permit and Licensing Office, and the entire process takes around one to two weeks. Along with the permit, you will get a business plate and sticker, which need to be prominently displayed at your company's premises.

What are the two types of licenses? ›

The first one is for light vehicles and the second is for heavy vehicles. The written examinations are almost similar except for the fact that there are more questions that relate to big, heavy vehicles under the "heavy" exam category.

What are the 3 types of licensing agreements? ›

Standard Documents: Copyright License Agreement (Pro-Licensee) Copyright License Agreement (Pro-Licensor) Book Publishing Agreement (Trade Books)

What are the different types of licenses? ›

The different types of software licenses
  • Permissive. Permissive licenses contain minimal restrictions on how the software can be modified or redistributed. ...
  • Weak copyleft. ...
  • Copyleft. ...
  • Commercial or proprietary. ...
  • Dual. ...
  • Public domain. ...
  • Unlicensed.
27 Jul 2022

What is the process of licensing? ›

The licensing process involves the granting of authorizations during all stages of the lifetime of the nuclear power plant: siting, design, construction, commissioning, operation, decommissioning and, finally, release of the site from regulatory control.

How licensing is done? ›

Licensing involves obtaining permission from a company (licensor) to manufacture and sell one or more of its products within a defined market area. The company that obtains these rights (the licensee) usually agrees to pay a royalty fee to the original owner.

What are the conditions involved in licensing? ›

The licensee being responsible for production, marketing, selling, etc. The licensee potentially being dependent on the licensor's intellectual property. The licensee having to pay an upfront fee and/or royalty to the licensor.

What are the 4 main licensing objectives? ›

The 4 licensing objectives

the prevention of crime and disorder. public safety. the prevention of public nuisance. the protection of children from harm.

What is a business risk of licensing? ›

Licensing has many of the same advantages and disadvantages of franchising. Advantages include avoiding barriers to entering a foreign market, such as tariff and production costs. The major risk is that the licensor trusts their brand to an outside partner, and that partner may eventually become a competitor.

What is a major disadvantage of licensing? ›

A disadvantage of licensing is: the licensee may decide to use the expertise you have developed, break the agreement, and begin producing the product on his/her own.

What are the 4 most common legal structures for a small business? ›

The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a business structure allowed by state statute.

What is legal compliance in business? ›

Generally, compliance in business or in a company means adhering to government laws, health and safety standards, or data and security requirements. It is an “action” if there's a conscious recognition of the said rules and policies.

What are the three basic legal forms of business? ›

The three major forms of business in the United States are sole proprietorships, partnerships, and corporations. Each form has implications for how individuals are taxed and resources are managed and deployed.

What are the 4 legal forms of business ownership? ›

An overview of the four basic legal forms of organization: Sole Proprietorship; Partnerships; Corporations and Limited Liability Company follows. Please also review this summary of non-tax factors to consider.

How do you prove you are a small business? ›

The documents that are often used as proof of business ownership when certificates are not available include the following:
  1. IRS form K-1.
  2. Business emails.
  3. Business meeting minutes.
  4. Business resolutions.
  5. Other business records.

What are five items that should be included in business documents? ›

The five key documents include profit and loss statements, balance sheets, cash-flow statements, tax returns and aging reports.

How much do licenses and permits cost for small business? ›

A business license could cost anywhere from $25 to several hundred dollars, depending on what you do and where you conduct business. Some states will have a general statewide business license while others will have local or county-based business license requirements on top of that.

What is business license and permit? ›

What is a Business License? A business license grants the owner the right to start and run a particular type of business in the city, county, state, or country that issues it. It is a type of permit indicating the company has the government's approval to operate.

Where do I register my business? ›

Most states require you to register with the Secretary of State's office, a Business Bureau, or a Business Agency.

How do I verify a OFAC license? ›

Basic Information on OFAC and Sanctions

To verify a specific license, please contact the OFAC Licensing Division at 1-202-622-2480. To verify an SDN removal letter, please email ofac.reconsideration@treasury.gov. To verify another OFAC document, please contact the OFAC Compliance Division at 1-202-622-2490.

Who has to run an OFAC? ›

11. Who must comply with OFAC regulations? U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches.

Are OFAC specific licenses public? ›

When OFAC grants specific licenses, it does not make them public. If someone has an interest in learning what specific licenses OFAC has granted, that person has to file a Freedom of Information Act (FOIA) request, a notoriously slow-moving process.

Do I need an OFAC license to travel to Cuba? ›

No. A general license authorizes persons subject to U.S. jurisdiction to provide carrier services by vessel or aircraft to, from, or within Cuba, in connection with authorized travel, without the need for a specific license from OFAC.

What are OFAC violations? ›

OFAC Sanctions Violation Penalties

OFAC considers non-compliance with sanctions to be a serious threat to national security and foreign relations and therefore an OFAC sanctions violation. Consequently, those who breach OFAC sanctions without obtaining the proper license can face severe legal repercussions.

What are three of the five essential components OFAC? ›

In the guidelines, OFAC identifies five key components that are not unlike the BSA program requirements that financial institutions have been implementing for years.
  • Management commitment. ...
  • Risk assessment. ...
  • Internal controls. ...
  • Testing and auditing. ...
  • Training.
2 Mar 2022

How long are OFAC records kept? ›

Banks must keep a full and accurate record of each blocked or rejected transaction for at least five years after the date of the transaction.

What is the 50% rule OFAC? ›

401. OFAC's 50 Percent Rule states that the property and interests in property of entities directly or indirectly owned 50 percent or more in the aggregate by one or more blocked persons are considered blocked. How does OFAC interpret indirect ownership as it relates to certain complex ownership structures? 5.

What are OFAC rules? ›

OFAC regulates economic trade with foreign countries and administers the statutory economic trade sanctions and embargoes imposed on specific foreign countries based on foreign policy, national security concerns, or international treaty obligations.

What are prohibited transactions under OFAC? ›

Prohibited transactions are trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute. Because each program is based on different foreign policy and national security goals, prohibitions may vary between programs.

Are OFAC checks required? ›

This means that while there are no federally mandated OFAC screening requirements, financial institutions must create their own system of checks with an effective OFAC compliance program to ensure they do not violate U.S. sanctions.

What country is subject to OFAC restrictions? ›

The Office of Foreign Assets Control (OFAC) is part of the United States Treasury Department.
...
Countries Subject to Prohibition on Military Exports.
AfghanistanSudan
BelarusSyria
BurmaVenezuela
Central African RepublicVietnam
5 more columns

Can you send a wire to an OFAC restricted country? ›

Wires to OFAC prohibited countries will be automatically disallowed by Bank of America.

Which countries are on the US sanctions list? ›

Embargoed and Sanctioned Countries
  • Embargoes sanctions (CRIMEA - REGION OF UKRAINE, CUBA, IRAN, NORTH KOREA, and SYRIA) prohibit ALL transactions (including imports and exports) without a license authorization.
  • Targeted sanctions prohibit certain exports of items, data and/or software without a license authorization.

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