TAX — Freelancers and Contractors Don’t Forget LA Business Taxes
Everybody is worried about the IRS, Franchise Tax Board, Sales Taxes and EDD but don’t forget your City of Los Angeles Taxes. Even if you are a home business or rideshare driver. It’s usually a small green card you get in the mail in January and is due 2/28/19 this year.
Cut directly from the Office of Finance (City of Los Angeles):
The City currently provides a Small Business Exemption (SBE) to businesses with total taxable and non-taxable gross receipts of $100,000 or less (or $300,000 or less for individual “Creative Artists”).
Most contractors fit this category so you don’t have to pay any taxes but you still must file. If you don’t file you will have to pay the fees they waived, late fees, and penalties.
https://finance.lacity.org/business-tax-information-faq
Below is a question directly from the Office of Finance
FAQ: I wasn’t notified and I wasn’t aware that I needed a business tax certificate until I had already been in business for over two years. Am I still required to pay back taxes along with penalties?
“The requirement for a business tax certificate and payment of business tax is a uniform requirement for nearly all cities in California. It is the business owner’s responsibility to determine the city’s requirements for taxes, fees, permits, zoning, signage, etc. before starting business. A business is responsible for payment of business tax from the date that they started doing business. If they are delinquent in paying tax, then they are required to pay late payment penalties in addition to the tax obligation.”
Uber and Lift
Direct from Office of Finance — Tax Liabilities for Rideshare Drivers
Question: I am a driver for a rideshare service such as Uber or Lyft. Do I have to register with the City of Los Angeles?
Answer: Per California State Senate Bill 182, drivers for rideshare services need only register and pay taxes within the city they reside and if they drove more than 30 days the prior calendar year. If you reside within the City of Los Angeles, and are a driver for a rideshare services, and drove for more than 30 days the prior calendar year then you would need to register with the City. If you reside outside of Los Angeles city limits, then you are not required to register with the City of Los Angeles.
Question: How may I register with the City of Los Angeles?
Answer: You can register on-line at https://latax.lacity.org/oofweb/eappregc/eappregc_criteria.cfm or by visiting one of our service centers listed at http://finance.lacity.org/locationshours.
Question: I am currently registered with the City of Los Angeles but reside outside of city limits. Do I need to complete my annual 2018 business tax renewal or request for cancellation of my account?
Answer: If you are a rideshare driver currently registered with the City of Los Angeles, and reside outside of the city, you do not need to submit your 2018 renewal or notify us to cancel your account. The Office of Finance will cancel your business tax classification related to rideshare services and eliminate any associated 2018 business tax year liabilities.
Question: Do I need to pay an annual fee or tax as a driver for a rideshare service?
Answer: Per California State Senate Bill 182 drivers that provide rideshare services for more than 30 days during the prior year will be subject to local taxes within the city that they reside.
Question: I am currently registered with the City of Los Angeles and reside within the City limits. How do I complete the annual business tax renewal?
Answer: Registered drivers will be sent an annual renewal form or notification card late-December each year to complete their renewal by February 28 of the upcoming year. A renewal form may be completed and mailed in or the online renewal can be completed here:
Also if you are late, as of today the IRS and the City of Los Angeles do not communicate, however in the future I know that will change. What I mean is if you report $80k with the city because you want to feel like a baller and $35k with the IRS because you don’t want to pay taxes on $80k, the IRS will not know. Again that could change any day.
So whatever amount you estimate for the City of Los Angeles try to keep it close to whatever you file with the IRS because all the figures really should match. Just sayin’…
Need tax help? info@taxpressure.com
