What Is a Business Tax Receipt?

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A business tax receipt is a document issued by a local city or municipal government that proves a business is allowed to operate in that area.

Key Takeaways

• Business tax receipts are required by some local governments to show proof that a business tax payment was made and/or a business is able to operate within a certain city or county.
• Business tax receipts require an application and a fee payment that typically ranges from $25 to $500.
• Some required information you’ll need in order to apply for a business tax receipt is an employer identification number (EIN) or Social Security number, owner name, business name, and contact information, and description of the business.
• You can obtain business tax receipts by applying in person at your local tax collector’s office, by mail, or online.

Business Tax Receipt Definition

Business tax receipts are local city and municipal receipts issued to businesses as proof that the company has registered, paid local taxes, and is approved to operate in the local area.

Each city requires that a business register with the local government for taxation purposes, and acquiring a business tax receipt is one of the first steps. This receipt grants permission to the business owner to sell goods and services in that locality. In fact, many cities and counties require you to have a business tax receipt before you even open your doors.

Alternate names:

• Local business tax receipt (LBTR)
• Business tax certificate (BTC)
• Gross receipts

How a Business Tax Receipt Works

Whether you’re starting a business from home, operating as a sole proprietor, or taking over an existing business, most businesses that sell products or provide services need a business tax receipt. In fact, getting a tax receipt is one of the first steps in registering a business and many cities require one before you even open your doors. However, each city has its own application process and fee requirements. Business tax receipt fees typically range anywhere from $25 to $500, depending on the city, and the receipt must be renewed on a yearly basis.

Note

Business tax receipts can sometimes work as a type of business permit, but not always. Some cities may require business licenses and business permits along with a business tax receipt in order for a business to operate.

Here are examples of how business tax receipts are processed in different cities.

Miami, Florida

For businesses setting up shop in Miami, Florida, the business tax receipt application is submitted to the Miami-Dade County Tax Collector’s office. Business tax receipt costs are assessed by business categories including administrative, adult daycare, and construction.

As shown below, for an administrative business in the city, for instance, fees would start at $45 for a company with 10 or fewer employees. However, if that same administrative business had more than 10 employees, the company would pay $4.50 for each additional employee. Adult day care facilities have similar fees.

Lompoc, California

In Lompoc California, business tax receipts are called business tax certificates (BTCs) and are issued by the City Clerk's Office. Business owners here will need to submit a BTC application along with a Business Inspection for Fire Department form. Fees are based on the company’s annual gross receipts. However, new businesses operating in Lompoc will need to estimate the gross receipts to process payment for a BTC, which typically has fees ranging from $30 to $475.

Note

Business tax receipt fees are usually based on the type of business being run and gross sales. Businesses will need to pay a minimum fee plus a tax percentage based on the gross receipts for the calendar year. These fees usually pay for local and city institutions like fire and police departments.

Do I Need a Business Tax Receipt?

You’ll need a business tax receipt if the county or city your business operates in requires one. For example, many counties and cities in Florida require business tax receipts. If you plan to open a business in an area that requires business tax receipts, you’ll need to apply with the appropriate municipality. If your jurisdiction doesn’t require a business tax receipt, it probably requires a similar business permit or business certificate that needs to be renewed annually. In either case, procuring a business tax receipt ensures you have taken care of registration and addressed local tax regulations.

However, some exemptions apply for charitable, religious, fraternal, youth, civic service, or other organizations that make occasional sales or engage in fundraising projects. There are also exemptions for permanently disabled people, among others.

How to Obtain a Business Tax Receipt

To obtain a business tax receipt, there are some key steps you should follow.

1. If you’re operating as a limited liability company (LLC), you’ll need to first register your business with state and local governments as a distinct legal entity. If you’re a sole proprietor or partnership, you will not need to register, but you could also be missing out on liability protection and legal and tax benefits.
2. Whether your register or not, you should have the following information ready (if applicable):

• Employer identification number (EIN) or Social Security number
• State taxpayer ID
• Owner name
• Business name
• Business address
• Description of business
• Contact information

3. Once you have your information in tow, you can apply in person at your local tax collector’s office, download the application form and mail it in, or apply directly online. You will also need to pay any application fees and city and/or county fees for the receipt itself.

It may take several business days to a few weeks to go through the approval process and acquire a business tax receipt.

Note

Depending on local laws, you may need to apply for both a city and county business tax receipt.

Business tax receipts are also necessary if you purchase an established business in an area where business tax receipts are necessary. In this case, you would need to apply for a business tax receipt transfer and pay a transfer fee. Since business tax receipts are renewed annually, you can expect to pay a business tax renewal fee specified by your locality each year.