Article II — Business License Requirements

Each person doing business in the city is required to have a business license, unless the business is exempt under PHMC § 5.05.240. The following factors are prima facie evidence that a person is conducting business in the city:

• A. The person advertises, holds out, or represents that he or she is in business in the city; or

• B. A person holds an active license or permit issued by a governmental agency indicating that he or she is in business in the city; or

• C. A person fails to deny by a sworn statement given to the collector that he or she is not conducting a business in the city, after being requested to do so by the collector.

Each person conducting a business in the city shall pay the amount designated by city council resolution, as either: (1) an annual license tax measured by gross receipts from the preceding completed 12-month period (or, for a new business which has no gross receipts history, based on a reasonable estimate); or (2) the specific tax for a designated activity. (1991 code § 6-3.1; Ord. 754 § 1, 2000)

• A. Required. A person required to have a license under this chapter shall file a written application with the collector on a form prescribed by the collector. The application shall be in the form of a sworn statement.

• B. Contents. The application shall contain:

  1. Business name, address, telephone number. (The address must be the physical location where the business is conducted. However, at the city's discretion, a post office box or mail drop may be used for some home-based businesses, if the actual location is provided for the city's internal records.)

  2. Type of ownership.

  3. Nature of the business.

  4. Applicant's name, residence address, and residence telephone number. For a corporation, this includes the name, residence address, and residence telephone numbers of the officers, and the federal employer identification number. For a sole proprietor or partnership, this includes the name, residence address, and residence telephone number of the owners or partners, their social security numbers, and federal employer identification number.

  5. The year for which the application is made.

  6. Financial and other information necessary to determine the amount of the tax. In the initial application, the applicant shall provide an estimate of the annual gross receipts or other data upon which the tax for the particular business is based, for the period covered by the license.

7. Such other information as the collector prescribes. (1991 code § 6-3.2; Ord. 754 § 1, 2000)

• A. When a person first applies for a business license, the applicant shall provide the information set forth in PHMC § 5.05.040. The estimate of gross receipts or other data, if accepted by the collector as reasonable, shall be used in determining the amount of tax to be paid in advance by the new applicant. The amount of the tax is tentative.

• B. Within 30 days after the end of the period for which the first license was issued, and before the issuance of a renewal license, the person shall furnish the collector with a sworn statement showing the actual data upon which the license tax is based during the period of the license, and the tax for such period shall be finally ascertained and paid, or a refund given, after credit is given for payment of the tentative tax.

• (1991 code § 6-3.3; Ord. 754 § 1, 2000)

• A. It is the responsibility of the licensee to ensure timely renewal of the business license and payment of the tax.

• B. When a licensee applies for renewal of his or her license, the licensee shall file a written statement on a form prescribed by the collector, setting forth the information concerning the business during the preceding year which the collector requires to fix the amount of the tax.

• C. If a licensee fails to file a required statement, or, if after demand by the collector, a licensee fails to file a corrected statement, the collector may determine the amount of license tax due, using the information he or she is able to obtain.

• (1991 code § 6-3.4; Ord. 754 § 1, 2000)

Each licensee shall display his or her license by posting the license in a conspicuous place upon the premises where the business is carried on. If the license is for carrying on business which has no fixed place of business, the licensee shall keep the license upon his or her person at all times while carrying on business. If the license is for the rental or leasing of residential or commercial property, the licensee shall keep the license in the files of the business. (1991 code § 6-3.5; Ord. 754 § 1, 2000)

Each person subject to this chapter shall keep complete records of business transactions, including sales, receipts, purchases and other expenditures, and shall retain them for examination by the collector. Records which shall be maintained for audit purposes include state and federal income tax returns, schedules and records included in such returns, the state sales and use tax return (if applicable), and any additional records used to calculate the business license tax. The records shall be maintained for a period of at least three years. Each person required to keep records under this section shall allow authorized representatives of the collector to examine the records at reasonable times and places. (See also PHMC § 5.05.280.)

(1991 code § 6-3.6; Ord. 754 § 1, 2000)

A license issued under this chapter is not transferable except for a change in the business location under PHMC § 5.05.100.

(1991 code § 6-3.7; Ord. 754 § 1, 2000)

If a licensee holds a license for the transaction of business at a specified location, and the licensee changes the place of business within the city, the licensee shall apply to the collector for the transfer of the license to the new place of business within 60 days after the change in location. The fee for the transfer is set by city council resolution. If a licensee fails to notify the city in writing of a change of address within 60 days of the change, the license terminates and expires at midnight of the sixtieth day. Upon termination and expiration of a license in this manner, there is no prorated refund of the tax paid.

(1991 code § 6-3.8; Ord. 754 § 1, 2000)

A business owner shall notify the city in writing within 60 calendar days of the last day of operation in the city. If the owner fails to notify the city, the license terminates and expires at midnight of the sixtieth day. When the license terminates in this manner, there is no prorated refund of the tax paid.

(1991 code § 6-3.9; Ord. 754 § 1, 2000)

The collector may issue a duplicate license to replace one which is lost or destroyed. The licensee shall file a statement of loss or destruction. The fee for the duplicate license is established by city council resolution.

(1991 code § 6-3.10; Ord. 754 § 1, 2000)

• A. Separate places of business. A separate license must be obtained for each branch establishment or separate place of business in which business is carried on.

• B. Several businesses at same location. A separate license must be obtained for each separate type of business at the same location if the basis for the tax is not the same for each type of business. A person conducting two or more types of businesses at the same location and under the same management, but with a single set or integrated set of books and records, may pay only one tax if all business types are licensed in the same way (i.e., all gross receipts). That tax will be calculated according to the category of the business type which received the highest percentage of gross receipts. The calculation must be based on taxable activity in all business types being combined.

(1991 code § 6-3.11; Ord. 754 § 1, 2000)

The payment of the license tax and the issuance of the license do not entitle the holder to carry on a business unless he or she complies with all the requirements of the city, conducts the business in a zone where it is allowed, and complies with all applicable laws. (1991 code § 6-3.12; Ord. 754 § 1, 2000)

The rate of the license tax shall be adjusted annually as follows: The Consumer Price Index (CPI) published as of June 30, 1967, by the U.S. Department of Labor, Bureau of Labor Statistics for San Francisco, California, area shall be used as the base year. The CPI used for the computation for the succeeding year shall be the preceding June to June, all Urban Index, San Francisco/ Oakland/San Jose Index. One hundred percent of the change in the CPI shall be applied to all of the classifications, rounded to the nearest dollar. (1991 code § 6-3.13; Ord. 754 § 1, 2000)

• A. New businesses. The license tax for each new business is due on the date the business begins and is payable within 30 days.

• B. Renewals. The license tax is due and payable in advance after the first year in which the tax is paid, as follows:

  1. Annual. The tax which is payable annually is due on January 1st, or annually based on the effective date of the business license, at the city's discretion;

  2. Semiannual. The tax which is due semiannually is due six months after the effective date of the license;

  3. Quarterly. The tax which is due quarterly is due three months after the effective date of the license;

4. Daily. The tax which is due daily is due each day.

(1991 code § 6-3.14; Ord. 754 § 1, 2000)

• A. Only the annual tax may be prorated. The tax shall be based on the proportionate number of months the business was in operation during a year. Any part of a calendar month the business operates shall be considered a full month under this section.

• B. The following are not eligible for prorated taxes: a business which elects to use an annual tax when a shorter term license is available; a business that pays the minimum tax; and a business which fails to notify the city within 60 days of closing, under PHMC § 5.05.110.

• (1991 code § 6-3.15; Ord. 754 § 1, 2000)

The license tax is delinquent as follows:

• A. In the case of a new business, or an annual or semiannual license, if not paid within 30 days of the due date;

• B. In the case of a quarterly license, if not paid within 15 days of the due date;

• C. In the case of a daily license, if not paid by 5:00 p.m. of the due date. In all cases, when the due date for a license falls on a weekend or a city holiday, the nonpenalty period is extended to include the next city working day. For payment sent through the mail, a postmark on the working day is sufficient to avoid the penalty. (1991 code § 6-3.16)

• A. The collector may add a penalty for payment after the date specified in PHMC § 5.05.180 equal to 20% of the unpaid tax due for each month or portion of a month that the tax remains unpaid, up to a maximum of 100% penalty. Interest in the amount established by council resolution may apply after the delinquent charge reaches its maximum.

• B. The collector may not issue a new license or reinstate a former license to a person indebted to the city for penalties. If a person ceases one business, when taxes or penalties are owed, and starts another business which is essentially the same, the taxes and penalties from the former business will apply to the new business, unless the owner provides sufficient written evidence that the business is different.

• C. In addition to the payment of the basic license tax, a fee in the amount established by city council resolution is due from any person who knowingly engages in business without first obtaining a business license. For failure to obtain a business license within 15 days of notice, the new business is subject to all the penalty provisions of this section.

• D. The collector may agree in writing to accept installment payments of the amount due over a period not exceeding one year. The agreement to accept installment payments may include provisions for:

  1. Payment of simple annual interest on the unpaid balance, in the amount established by city council resolution;

  2. Acceleration in case of default;

  3. Payment of attorney's fees and court costs for collection; and

  4. Revocation of the debtor's existing business license upon 30 days' notice in the event of default under the agreement.

(1991 code § 6-3.17; Ord. 754 § 1, 2000)