Who needs a business license and tax certificate?

The City of San Luis Obispo Municipal Code 5.01 requires that any person that is conducting business within the City, unless otherwise exempt, shall obtain a business license and tax certificate. Please note that a business operating in the City shall obtain a business license and tax certificate even if the business location is outside of the City limits.

Per section 5.01.103, A ‘business’ shall mean and include professions, trades, vocations, rentals, leases, enterprises, establishments and occupations, and all and every kind of calling, any of which is conducted for the purpose of earning in whole, or in part, a profit or livelihood, whether or not a profit or a livelihood actually is earned thereby, whether paid in money, goods, labor or otherwise, and whether or not the business has a fixed place of business in the city.

Common business examples include the selling of goods, the offering of services, and renting of commercial and residential property.

Who is Exempt from obtaining a business license? (Chapter 5.01.106)

1. Businesses owned and conducted by minors under the age of eighteen years shall be exempt from the business license provisions of this chapter where all of the following conditions exist and legal documentation is provided to support that:
   • All persons engaged in the operation of the business are under the age of eighteen years.
   • All persons engaged in the operation of the business have a bona fide ownership interest in the business.
2. Any institution or organization recognized by the California Department of Tax and Fee Administration with a “Statement of Domestic Nonprofit Organization” or the Internal Revenue Service of the United States, which is conducted wholly for the benefit of charitable, religious or nonprofit purposes, and from which profit is not derived, either directly or indirectly, by any person. 

   The nonprofit organization must still apply for a business license and tax certificate, but will be exempt from the payment of fees. A copy of its Federal 501(c) exemption must be included with the application. The business is still subject to other regulatory fees such as building, planning, and stormwater water permits.

3. The provisions of Chapter 5.01 shall not be construed to require a person to obtain a business license prior to doing business within the city if such requirement conflicts with the applicable statutes, laws or constitution of the United States or the state of California or other contractual obligations or franchise agreements. The finance director may develop administrative guidelines concerning exemptions, apportionment, and any other matters which she or he determines as necessary for the lawful and effective implementation of this chapter.

This is not to be confused with conducting business with State and/or Federal agencies. Businesses within the City limits conducting business exclusively with State and Federal agencies must still procure a business license and tax certificate

 

Why does the City require a business license?

The primary focus of the City’s business license regulation is to provide reasonable assurance that businesses operating in the City are doing so in compliance with the City’s planning and building policies, regulations and ordinances, in compliance with the City’s business tax provisions as set forth in Chapter 3.01, and in compliance with the City’s storm water quality ordinance, set forth in Chapter 12.08.

 

How do I acquire a Business License?

You can apply using this link: https://businessrenewal.slocity.org/PrimeWeb/Apply/GettingStarted/BusinessLicense

You can also apply by printing out and submitting this form to 990 Palm Street, San Luis Obispo, CA, 93401: https://www.slocity.org/home/showpublisheddocument/25293/637159977765670000

Business Licenses are also available in office at 990 Palm Street. Go to the Finance Front Counter on the ground level.

What is the cost of a business license and tax certificate?

The current cost is $126.89.

Additional fees may apply based on the location and type of business. Below are the most common costs, fees, and dues associated with opening up a business:

Minimum Business Tax	$25.00
Application Fees	$100.83
Casp Fee	$4
Total Minimum Fee	$129.83

 

 

Annual Downtown Association Dues	$150.00
Zoning Building and Clearance Form Cost	$209.07
Change of Location/Rezoning Fee	$209.07
Home Occupation Permit Application Costs	$310.99
Homestay Permit Costs (Referred to as "Director's Action - General" on fee schedule)	$3,051.99

 

 

What are businesses taxes?

A business tax is an excise tax on people or entities for the privilege of conducting business within the City.  The City of San Luis Obispo Municipal Code Chapter 3.01 requires a business tax certification and the provisions of the chapter are enacted solely to raise revenue for general municipal purposes.

What is subject to business taxation?

Gross receipts of business conducted within the City are subject to business taxation. Per chapter 3.01.104, gross receipts shall mean and include the total amounts actually received or receivable from sales, services, rentals, or leases in the total amounts actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or a credit allowed, whether or not such act or service is done as a part of, or in connection with, the sale or rental of materials, property (real or personal), goods, wares, or merchandise. Included in “gross receipts” shall be receipts, cash, credits, and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, rented or leased, the cost of the materials used, labor and service costs, interest paid or payable, or losses or other expenses whatsoever. Items that are exempted from gross receipts can be found here: https://sanluisobispo.municipal.codes/Code/3.01.104.

What is the business tax rate and basis? (Chapter 3.01.201 & 3.01.202 & 3.01.203)

The business tax rate is fifty cents per thousand dollars of gross receipts, or 0.05%. The minimum tax per year is $25, which represents the minimum cost to the City of issuing or renewing the certificate.

The business tax basis is measured by gross receipts from the preceding completed calendar or fiscal year. For a new business, which has no gross receipt history, the applicant is required to pay the minimum tax

When do I pay for my business taxes? When do I pay for my business license and tax certificate?

The business license and tax certificate and minimum tax is paid after the application is accepted. The business license and tax certificate will be active until June 30^th and it expires on July 1^st. Businesses are able to renew their business license and tax certificate beginning May 1^st.  Business taxes are paid with the renewal of the business license and tax certificate.

A business has until July 31^st to renew is business license and tax certificate and pay its taxes. If not paid by then, penalties and citations will be incurred on the account.  Chapter 3.01.302 states, “It shall be the responsibility of the applicant to ensure renewal of the business tax certificate.” 

 

Business Tax	$25 or .05% of the gross receipts earned in the previous calendar year
Renewal Fee	$43.28 (includes $1.28 IT Surcharge)
State CASP Fee	$4

 

How do I renew my business license and tax certificate and pay business taxes?

Businesses can utilize the City’s online renewal portal.  The portal will be open on May 1^st. The City will also send out renewal forms in June. Businesses can fill out this form, include a check, and mail it back to the City’s Finance Department.

Gross Receipt Verification Requirement

Business are required to verify its gross receipts every few years. Click HERE for more information

What planning and building requirements do I need to be aware of?

There are three main planning and building forms. Below will explain each one, and which businesses must fill out this form.

1. Zoning Clearance Form- Fill out this form and submit with your business license application if your business location is zoned as a commercial address in the City of San Luis Obispo. This form needs to be filled only once, unless your business location is changed to another commercial location in the City limits. The Zoning and Building Clearance Form will take about five business days to approve. City planners may reach out to you if they have specific questions.
2. Home Occupation Permit Application- Fill out this form and submit with your business license application if your business location is zoned as a residential address in the City of San Luis Obispo.This form needs to be filled only once, unless your business location is changed to another residential location in the City limits. The Home Occupation Permit Application will take about two weeks to approve. City planners may reach out to you if they have specific questions. In addition, signs will temporally be placed at the business location to alert neighbors of the business opening. More information can be found on the Community Development Department’s webpage
3. Homestay Permit Application- Fill out this form if you are planning on offering short-term rentals at your residence. The Homestay Permit has specific requirements for obtaining a business license, including payment of Transient Occupancy Tax (TOT), owner occupancy, maximum number of guests, parking, designating a responsible party and limitation of use of accessory structures. More information can be found on the Community Development Department’s webpage

To verify that your address is located within the city limits by clicking here. If you are located within city limits, you will need to submit one of the above forms with your application. Please note that a business operating in the City shall obtain a business license and tax certificate even if the business location is outside of the City limits.

Fire Code Permits: When required 1) Permits are required to maintain, store, use or handle materials, or to conduct processes, which produce conditions hazardous to life or property, or to install equipment used in connection with such activities. An application for a permit may require an accompanying set of plans for review and approval as prescribed by the fire code official. 2) Permits required for new occupancies will be determined by an Inspector prior to final certificate of occupancy. Permit information will be sent by the Fire Department to the Finance Department who will mail your permit along with an invoice for the appropriate amount. Permits are required to be renewed annually. You will automatically receive an annual invoice by the City Finance Department unless your permit has been revoked for cause. Permits are required to be kept on the premises and readily available for inspection by the fire department.

More information can be found here

Does my business need an Industrial User Permit?

There are three types of Industrial User Permits.  Below will explain each one, and which businesses must submit a survey for this permit.

All facilities are evaluated by the information provided on the Industrial Wastewater Discharge Permit Survey before being classified.  Facilities are classified into one of the following categories: significant industrial user (SIU), Class I, or Class II.

Significant Industrial User (SIU) 

An industrial user is consider a SIU if they are subject to federal categorical pretreatment standards under 40 CFR 403.6 and 40 CFR chapter I, subchapter N, or any industrial discharger that:

1. Discharges ten thousand gallons per day or more of process wastewater;

2. Contributes five percent or more of the average dry weather hydraulic capacity of the treatment plant;

3. Discharges either continuously or intermittently to the POTW, process wastewaters containing priority pollutants as determined through analytical procedures or reasonable technical judgment; or

4. Has a reasonable potential, in the opinion of the director, to adversely affect the POTW’s operation or for violating any pretreatment standard or requirement.

Examples: Metal finishing, pharmaceutical manufacturer, university, hospital.

Contact an Environmental Compliance Inspector at (805) 781-7426 if you think your business may be classified as a SIU. 

Class I Industrial User

Any industrial user that has materials and/or wastes on site that if discharged to the sewer may impact the POTW in a negative manner.  these materials and wastes include, but are not limited to, any and all prohibited discharges described in Section 13.08.040 of the SLOMC.

Examples: Car dealership, dry cleaner, brewery, winery, cider manufacturer, zero-discharge user who performs a categorically regulated process.

Class I Survey

Class I Survey (With Food)

Class II Industrial User

Any industrial user that may discharge conventional pollutants to the POTW which may cause interference or pass-through.  These wastes include but are not limited to laundry discharges, nonhazardous solids and oil and grease of animal or vegetable origin.

Examples: Restaurant, bakery, coffee shop, car wash, auto detail.

Class II Survey (Car Wash)

Class II Survey (Restaurant)

For more information, please call (805) 781-7426.

Expanded Polystyrene (Municipal Code Chapter 8.06)
Food providers within the City of San Luis Obispo are prohibited to sell or distribute any disposable food containers made from expanded polystyrene. 

All food providers within the City of San Luis Obispo using disposable food containers shall use biodegradable, compostable or recyclable products.

No vendor or events promoter in the City of San Luis Obispo may sell or otherwise provide any expanded polystyrene product which is not wholly encapsulated or encased within a more durable material, except as exempted by Section 8.06.050.

Single-Use Utensils Upon Request (Municipal Code Section 8.09.020)
Single-use utensils and foodware accessories (including straws, stirrers, condiment packets, sporks, chopsticks, forks, knives, and spoons) shall only be provided to patrons upon request. More Information

Trash, Recycling, and Organic Waste Ordinances
All commercial businesses in the City of San Luis Obispo shall provide or arrange for recyclable materials, organic materials, and solid waste collection services consistent with Chapter 8.04. 

All commercial businesses must supply and allow access to adequate number, size and location of collection containers with sufficient labels or colors for employees, contractors, tenants, and customers per Code 8.04.213(B)(3). 

All commercial businesses must provide containers for customers for the collection of source-separated recyclable materials and source-separated organic materials in all indoor and outdoor areas where solid waste containers are provided for customers per Code 8.04.213(B)(4).

All commercial businesses shall annually provide information to employees, contractors, tenants, and customers about recyclable materials and organic waste recovery requirements and about proper sorting of waste - this information is available by request from the City of San Luis Obispo Utilities Department. 

All commercial businesses must provide education within 14 days of occupation of the premises to new tenants that describes requirements to source separate recyclable and organic materials.

Commercial edible food generators (Municipal Code Section 8.04.215)
Commercial edible food generators must arrange to recover the maximum amount of edible food that would otherwise be disposed of.

Why am I required to have a Business License & Cannabis Tax Certificate?

Per the City of San Luis Obispo’s Municipal Code, Section 5.01, all businesses conducting any transactions in the City, whether or not physically located in the City, must have a valid business license. Additionally, Municipal Code Section 5.10 establishes a tax on Cannabis related businesses.

My delivery service is located outside of the City of San Luis Obispo. How do I come into compliance?

You will need to apply for a business license and cannabis tax certificate. This can be done filling out the Business License and Cannabis Tax Certificate application. Applicants will also need to include a copy of its State Cannabis License, a copy of the commercial cannabis business license from the City of County in which the business is based, and a copy of the owner’s driver’s license.  Applications can be mailed to the Finance Department located at 990 palm street, or emailed to BT@Slocity.org.

Once the application is accepted, businesses must remit 6% of gross receipts on Cannabis sales located within San Luis Obispo city limits. Cannabis taxes are due each month and must be remitted by the last day of the following month. For example, taxes on goods sold in January are due on the last day of February.

How can a cannabis business pay its taxes?

Payments can be made online. The City Finance Department will also mail all cannabis businesses a monthly remittance form. Businesses can fill out this form and mail it back to the City with payment.

Cash Payments require an appointment. Please contact the City’s Revenue Analyst at 805-781-7148.

How long is my Business License & Cannabis Tax Certificate valid?

The certificate must be renewed annually as it is valid from July 1st through June 30th of each year.

How much in cannabis goods can be carried at once?

As outlined in the State of California’s Regulations: § 5418. Cannabis Goods Carried During Delivery (a) A licensed retailer’s delivery employee shall not carry cannabis goods in the delivery vehicle with a value in excess of $5,000 at any time. The value of cannabis goods carried in the delivery vehicle for which a delivery order was not received and processed by the licensed retailer prior to the delivery employee departing from the licensed premises may not exceed $3,000.

Are there limits on the hours which the deliveries can be made?

Yes. A commercial cannabis business shall not operate between the hours of 10 p.m. and 6 a.m.

 More information on the City’s Cannabis program can be found here: https://www.slocity.org/government/department-directory/community-development/cannabis

What is the Downtown Business Improvement District?

The Downtown Business Improvement District was formed in 1975 to promote economic vitality in the heart of the downtown area. An assessment is imposed on every business in the area and is collected with the business license application fee and annually with the business license renewal fee. The revenue collected from this assessment is allocated only to programs that benefit downtown businesses. The City contracts with the Downtown Association to provide services funded by this assessment. 

Any type of business that is located in this district is required to pay the assessment. This includes independent contractors that rent spaces in the Downtown limits

How do I know if my business is located within the Downtown Business Improvement District?

All addresses can be found in following link: Downtown Business Improvement District Address List

Do I need a business license if I am to participate in the Farmer’s Market?

Yes. All farmer’s markets located in the City are required to obtain a business license.

If your business is going to operate in other local jurisdictions, then you will need a license with each jurisdiction that you travel to. Here is the contact information for other jurisdictions in the county: