SANTA CLARA COUNTY BUSINESS LICENSE FEES AND TAXES

What is a Business License Tax?

First, it is important to understand what a business license is. In Santa Clara County, all 15 cities require that a business register and pay a tax or a fee for engaging in business activity within that city. Usually there is a time frame of 90 days or so in which yo are required to register your business. Large corporations, small businesses, and independent contractors alike are required to obtain a business license in cities that have them. As independent contractors REALTORS® often fit into different categories for each city. In San Jose you may be considered an employee under your broker. In other cities you may have to pay separate from your broker. While the rules and regulations for business licenses vary by city, they are mostly similar in the sense that they require a business tax or fee to be paid before receiving the licence. These taxes are annual and must be paid in order to conduct business within a city. Regardless if you think your broker is covering you, as an independent contractor is is YOUR RESPONSIBILITY to know the law and ensure you are compliant.

How Is It Structured?

A business tax as it relates to the real estate profession usually has three components: a base tax, a per employee tax, and if you owner or manage a rental property =a per unit tax. The base task is determined city by city. Prices across different cities in California vary depending on cities. Per employee taxes differ as well and a broker may be required to pay for the agents they oversee, but these are usually determined on scales of how many employees (agents) are working. A rental property tax is typically determined per unit.

What If I Already Pay In One Jurisdiction, Do I Have To Pay In Another?

Most cities will require you to pay in each location in which you you have a physical location for you business and where you help a client buy, sell, or manage property. This does however vary by city.

Exemptions?

Some cities will have exemptions from the license tax. For example, a city may have an exemption if a business earns less than double the poverty line.

How Do I Pay My Tax?

Each city will usually have a website with the forms needed in order to register your business and pay the taxes in order to obtain a business license. In some cases you may have register in person. Most cities will have online registration forms and once those are completed a business tax can be paid online we we have included in this article below.

San Jose

Base Tax: $195

Per Employee Tax:

The amount of business tax payable by a broker who submits an agent listing form shall be calculated by adding the number of real estate agents identified by name on the agent listing form to the average number of employees of the broker who are not real estate agents. The sum shall be the basis for calculating the broker’s business tax.

A minimum business tax of one hundred fifty dollars per year, plus an additional tax in the amount of eighteen dollars per employee based on the average number of employees over eight employees, not to exceed a maximum of twenty-five thousand dollars.

Rental Property Tax Per Unit:

1. Businesses in categories classified as table I: a minimum business tax of one hundred fifty dollars per year plus an additional tax in the amount of five dollars per rental unit over thirty rental units not to exceed a maximum of five thousand dollars.

2. Businesses in Categories Classified as Table II: a minimum business tax of one hundred fifty dollars per year plus an additional tax in the amount of one cent per square foot for every square foot in excess of fifteen thousand square feet not to exceed a maximum of five thousand dollars.

3. Businesses in Categories Classified as Table III: a minimum business tax of one hundred fifty dollars per year plus an additional tax in the amount of five dollars per lot over thirty lots not to exceed a maximum of five thousand dollars.

Exemptions: If your business earns less than double the double the poverty line

Jurisdiction:

This certificate does not indicate clearance for zoning, fire code, occupancy, or any other City, county, state or federal permit or license, which may be required for your type of business.

Link: http://www.sanjoseca.gov/index.aspx?NID=5599

Phone Number: 408-535-3500

Santa Clara

Base Tax: N/A

Per Employee Tax: 1 = $15, 2-5=$30, 6-10 = $70, 11-15 = $90, 16-20 = $115 21 – 25 = 175.00, 26 – 30 = 225.00, 101+=
500.00

Rental Property Tax Per Unit:

Three dollars ($3.00) per annum for each rental unit;

Exemptions:

provided, however, that no tax shall be payable, unless the person engaged in such business operates three or more rental units in the city

Jurisdiction:

Businesses located outside of the City but conducting business activity within city limits are also required to have a Santa Clara business license

Link: http://santaclaraca.gov/businesses/business-services/business-tax-license

Phone Number: (408) 615-2310

Milpitas

Base Tax: $35

Per Employee Tax: 1-10 = $5, $1 additional for each employee

Rental Property Tax Per Unit:

$30 base rate up to 4 units, $2 per additional unit

Jurisdiction:

In some cases a conditional use permit or zoning variance is required. To determine if the business activity you are planning can be carried on at the location you have selected, you should contact the Planning Division. It is absolutely necessary that you provide them with all the facts about the type of business activity you plan to operate now and in the future. For further information please contact the Planning Division at (408) 586-3279

Link: http://www.ci.milpitas.ca.gov/milpitas/departments/finance/business-license-center/

Phone Number: (408) 586-3279

Campbell

Base Tax: NA

Per Employee Tax:

1 to 3 Employees 119.00, 4 to 10 Employees 217.00, 11 to 50 Employees 379.00, 51 or more Employees 541.00

Rental Property Tax Per Unit:

Rental Dispute Fee (Each Unit) 11.00   

Jurisdiction:

Businesses operating out of a residential location or home are also required to obtain a business license.

Link: http://www.cityofcampbell.com/152/Business-Licenses

Phone Number: (408) 866-2174

Morgan Hill

Base Tax:  $45

Per Employee Tax:

Full time Employee > 30 hrs/wk (2 FREE) $5.00 Part time Employee <30 hrs/wk (2 FREE) $2.50

Rental Property Tax Per Unit:

$3 per rental unit

Jurisdiction:

Your Business License is valid only within the city limits of Morgan Hill – while doing business from your commercial / professional location, your residence, or when you are providing services to a resident or business within the city limits.

Link: https://www.morgan-hill.ca.gov/577/Business-Licenses

Phone Number: (408) 779-7237

Gilroy

Base Tax: $100

Rental Property Tax Per Unit:

Number of Units 0 – 2 $ 0.00 3 – 5 $ 40.00 annually 6 – 20 $ 80.00 annually 21 – 40 $ 120.00 annually 41 – 60 $ 160.00 annually 61 – 80 $ 200.00 annually 81 – 100 $ 240.00 annually 101 – Over $ 280.00 annually

Link: http://www.cityofgilroy.org/207/Business-Licenses

Phone Number: (408) 846-0420

Los Altos

Base Tax: NA

Per Employee Tax:

$180 up to 5 non-professional and 1 professional, including owner/manager

$75/additional professional

$10/additional non-professional

Rental Property Tax Per Unit

$75 up to 5 units, $5 per unit thereafter

Link: https://www.losaltosca.gov/financeit/page/business-licensing

Phone Number: (650) 947-2618

Los Altos Hills

Varies, no set rate

Cupertino

Base Tax: 137

Rental Property Tax Per Unit:

Square Footage Rates 0-5,000 0.0370 5,001 – 25,000 0.0323 25,001 – 75,000 0.0279 75,001 – 100,000 0.0231 100,001 – 150,000 0.0184 150,001 & Above 0.0047

Jurisdiction:

Businesses that are located outside of Cupertino, but doing business in Cupertino (such as vendors, consultants and contractors) are required to apply and pay for a Cupertino business license.

Link: http://www.cupertino.org/our-city/departments/finance/forms-fees

Phone Number:  (408) 777-3221

Mountain View

Base Tax: $31

Per Employee Tax: None

Rental Property Tax Per Unit:

$12 with $2 per unit in excess of 5

Jurisdiction:

Must pay in other jurisdictions

Link: http://www.mountainview.gov/depts/fasd/revenue/business/default.asp

Phone Number: (650) 903-6317

Palo Alto

Base Tax: $51

Per Employee Tax:

26% FTE Employees = $60/50 (Zone A/B) 2-4 FTE = 110/90 5-9 = 170/130 10+ = 225/170

Exemptions:

Less than 25% of employees are FTE

Jurisdiction:

Must pay in all jurisdictions

Link: http://www.cityofpaloalto.org/business/business_registry/default.asp

Phone Number: (650) 329-2100

Saratoga

Base Tax: $100

Per Employee Tax:

$10 up to $300

Rental Property Tax Per Unit

$5 unit over 4 units, up to 40 units  

Jurisdiction: Must pay in all jurisdictions

Linkhttp://www.saratoga.ca.us/cityhall/admin/forms/business_license_forms.asp

Phone Number: (408) 868-1260

Monte Sereno

Base Tax: $106

Link: http://www.montesereno.org/2161/Business-License

Phone Number: 408-354-7635