Q: "What types of businesses require a business tax?"
A: Generally, all businesses operating within the City of West Hollywood [PDF] are required to obtain a Business Tax Certificate and pay an annual Business Tax. If your business began operations in the City of West Hollywood prior to January 1, 2004, additional forms may be forwarded to you as needed. To request those additional forms, you can call and leave a message at the Business Tax Hotline at: (323) 848-6554.
Q: "Are there any tax benefits for new businesses?"
A: The City of West Hollywood has provided for reduced tax rates for businesses in their first two years of business operations within the City. After payment of the initial fee of $29, the first 12 months of business operations are exempted from the Business Tax with exception to the minimum tax. The second 12 months of business operations are taxed at one-half (50%) of the normal rate.
If a business that qualifies for new business credits is sold during the first 24 months of operations, any unused months of new business tax credits are transferable to new owners only if the prior owner filed a final Business Tax form and paid all business tax liabilities when disposing of the business.
Q: "Are certain businesses exempt from the business tax?"
A: The following business activities are exempted from the City's Business Tax:
- Home occupations that do not employ or retain services of any other person(s). A home occupation is defined as "the activities of an individual who engages in a business operated in his or her personal residence that is permissible under applicable land use regulations and who does not employ, or otherwise retain the services of, any other person in the operation of the business." Thus, to qualify for the home occupation exemption the following conditions must be met:
- The business must be owned and operated by an individual. Partnerships, corporations and other forms of business association do not qualify.
- The business must be operated in (not based out of) the personal residence of the person claiming the exemption.
- Examples of Qualifying Businesses: the making of handicrafts and creative enterprises such as writing and painting
- Examples of Non-Qualifying Businesses: house painting, gardeners and general contractors or the sale of handicrafts outside the home and other businesses where the performance of personal services occurs outside of the personal residence of the individual.
- The business activities must be permissible under the applicable zoning ordinance and other land use regulations.
- The business must not involve the services of any person other than the individual who claims the exemption.
- Charitable organizations and activities.
Entertainment events, concerts, exhibitions and lectures which are fund raisers for religious or benevolent purposes.
- Entertainment events, dances, concerts, exhibitions and lectures for non-profit organizations for which no individual profits either directly or indirectly.
- Employee services to his or her employer.
- Management of self-owned residential real property.
- Franchise agreement exemptions.
- Public utilities for telecommunications services.
- Anyone whose payment of taxes would be in violation of the laws or Constitution of the or the laws or Constitution of the State of California.
Q: "How do I file for an exemption?"
A: All businesses claiming an exemption from the Business Tax must file a statement of exemption with the City of West Hollywood Finance Department. A one-time filing fee of $29 is charged for home occupations that qualified for the exemption.
Download and fill out the Exemption Form [PDF].
Q: "I have multiple business activities and locations. How does the business tax certificate process affect me?"
A: A separate tax certificate is required for each type of business activity conducted at a single location and for each branch or location of a business. Business Tax Certificates shall be displayed for each business activity and at each branch or location.
A combined Business Tax form can be filed if two or more business activities at a single location are taxed at the same rate and on the same basis. A combined Business Tax form can be filed when two or more business activities at a single location are taxed on the same basis but at different rates if:
- The tax is calculated at the highest rate applicable for any of the activities; or
- The tax is calculated separately for each activity.
Q: "How are taxes calculated?"
A: How are taxes calculated? [PDF]