Ask the Attorney - Topic: Proper Business Licensing


Dear Attorney Cheng, recently I opened up my business in the San Gabriel Valley. I have a very popular SAT school. I went to my accountant and incorporated my business. After 6 months of doing business i was told by my city that I did not get proper licensing and they would shut me down if I did not get it within 6 weeks. I am totally confused. I thought I was doing things legally. Can you please help?
The SAT School Incorporating a business is only one of the many steps one needs to take in tarting a business like a SAT school. Every city across the U.S. also requires a business owner to obtain a business license. A business license essentially is an annual tax required of all businesses. It must be obtained prior to conducting any business, profession, trade, or occupation. To obtain a business license, one must complete an application and pay a license tax. The amount of tax varies from city to city. For example, the City of Walnut charges the base fee of $45 plus an additional amount determined by the number of employees. Home businesses are not exempt from the requirements. Once the business license application is filed and the tax paid, a business license tax certificate is issued by the city. This certificate is generally referred to as the “business license”. This license does not serve to regulate the competence or integrity of a business. It is simply an evidence of the fact that your business has compiled with payment of the municipal business license tax. Remember that this is an annual tax. For new businesses, the business license tax must be paid prior to commencement of any business activities. Once established, each business must renew its business license annually prior to its expiration. Failure to do so may result in penalties. To apply for your business license, simply contact your local city hall. In the city of Walnut, a business that is located within our city limits must also get approval from both the Planning and the Building and Safety Department before the business license application can be processed. The Planning Department determines whether the proposed location is zoned for that type of business. The Building and Safety Department determines whether the structure is safe and ready for occupancy. Your SAT school is a good example of why these departments need to review the application. After all, the safety and welfare of your students should be your top priority. In addition, most businesses will also need to comply with requirements imposed by various County and State agencies. This may include the County Health Department, County Clerk’s Office, the California State Board of Equalization, the Contractors State License Board, and the State Department of Alcohol Beverage Control.

Operating a business without a valid business license is a violation of municipal code. Cities do enforce such code. I would strongly suggest that you contact your local officials immediately to resolve the situation.

Call Attorney Paul Cheng for more information on this topic and to receive the representation you need!

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