Running the Business · Part 1
City business licenses: every city you work in, the Los Angeles business tax, and the seven-day rule
California has no statewide business license, so the license lives at the city level, and a contractor needs one in every city where the work happens, not just where the shop is. The biggest example is Los Angeles, which taxes contractors on gross receipts, counts you as doing business in the City after seven days of physical work in a year, and exempts small businesses under $100,000 only if the renewal is filed on time. This lesson covers how city licenses work statewide, the Los Angeles rules in detail because most C-36s will touch the City eventually, and the calendar that keeps the licenses from becoming penalties.
What the full lesson covers
- A city business license, often called a business tax certificate, is required in each city where you perform work, and most building departments will not issue a permit to a contractor without one for that city.
- Los Angeles: seven or more days of physical work in the City in a year means you are engaged in business there and must hold a Tax Registration Certificate; contractors are taxed under LAMC 21.188 on gross receipts, with a minimum tax even at zero.
- Los Angeles small business exemption: $100,000 or less in worldwide gross receipts (taxable and nontaxable) exempts you from the tax, but only if the renewal is filed on time; a late renewal loses the exemption for that year.
- The Los Angeles renewal is due January 1 and delinquent the first business day of March; the new business exemption ended in 2017 and never covered construction; the first and second year's tax are both measured by first-year receipts.
- Every local business license application and renewal in California carries a $4 state disability-access fee (Gov. Code 4467).
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More lessons in Setting Up the Business
- 1The entity is a one-way door: why you decide sole owner, LLC, or corporation before the license issues
- 2Sole owner vs. LLC vs. S corporation for a plumbing contractor: liability, tax, cost, and the small claims limit
- 3EIN, the business bank account, and separating the money: the first bookkeeping setup that survives an audit and a lawsuit
- 4City business licenses: every city you work in, the Los Angeles business tax, and the seven-day ruleYou are here
- 5The insurance stack: general liability, commercial auto, the bond, and workers' comp. What each covers, what each does not, and who will demand it
- 6Sales tax for contractors: materials vs. fixtures. The CDTFA rule most plumbers get wrong
- 7Quarterly estimates, self-employment tax, deductions, and mileage: the tax calendar for a first-year contractor
- 8Hiring readiness: what has to exist before the first helper's first day
- 9Template: the business setup checklist, from pass letter to first invoice
- 10Template: the insurance requirements matrix. Who demands what, and the certificate that satisfies each one