Doing Business in San Francisco? Understand Your Company's Potential Registration Requirement and Upcoming Tax Return Deadline

San Francisco's business tax structure can be complicated to navigate and easy to overpay. Thankfully, BD Consultants specializes in this area and assists many taxpayers with their San Francisco tax compliance, registration filings, and refund claims. Please contact Brian Doolan at [email protected] or book an introductory meeting here.

San Francisco Business Registration Requirement

Below is a list of a few types of activities that San Francisco considers as "engaging in business" within the City, generally triggering a San Francisco registration requirement. Contact BD Consultants to discuss the full list of activities:

• Taxpayer maintains a fixed place of business within San Francisco
• An employee, representative, or agent of the taxpayer maintains a fixed place of business within the City for the benefit or partial benefit of the taxpayer
• The taxpayer or one or more of the taxpayer’s employees, representatives, or agents owns, rents, leases, or hires real or personal property within the City for business purposes for the benefit or partial benefit of the taxpayer
• The taxpayer or one or more of the taxpayer’s employees, representatives, or agents regularly maintains a stock of tangible personal property within the City, for sale in the ordinary course of the taxpayer’s business
• The taxpayer or one or more of the taxpayer’s employees, representatives, or agents solicits business within the City for all or part of any seven days during a tax year
• The taxpayer or one or more of the taxpayer’s employees, representatives, or agents performs work or renders services within the City for all or part of any seven days during a tax year
• The taxpayer has more than $500,000 in total gross receipts sourced to San Francisco based on the City's applicable apportionment rules

San Francisco Business Taxes and Annual Tax Return Requirement

The City imposes a variety of business taxes based on certain types of activities. This article will not go in depth on each type. Generally, the two most common types of San Francisco business taxes are the Gross Receipts Tax and the Commercial Rents Tax. Other examples include the Homelessness Tax, Overpaid Executive Tax, Administrative Office Tax, Commercial Vacancy Tax and Sugary Drinks Tax. The 2023 annual business tax return and payment is due February 29, 2024.

Gross Receipts Tax and Sourcing Methods

For the 2022 tax year, non-exempt taxpayers engaging in business within the City that had more than $2,090,000?of combined taxable San Francisco gross receipts were generally subject to the Gross Receipts Tax.

The City also generally implements three types of gross receipts sourcing methodologies that are based on a taxpayer's primary business classification. These methodologies are commonly referred to as the Allocation, Apportionment, and Combination method. Contact Brian Doolan to understand how each method works and which one your business is required to use.

Once your San Francisco taxable gross receipts are determined, the City imposes a progressive tax rate bracket which differs by your selected business classification. Here are some examples of classifications and the range of Gross Receipts Tax (GRT) rates each imposes:

• Retail - GRT rates from 0.053% to 0.224%
• Manufacturing and Food Services - GRT rates from 0.088% to 0.665%
• Biotechnology - GRT rates from 0.181% to 0.689%
• Private Education & Health Services, Administrative Services - GRT rates from 0.761% to 0.943%
• Construction - GRT rates from 0.420% to 0.630%
• Financial Services, Professional, Scientific and Technical Services - GRT rates from 0.6% to 0.84%

Conclusion

The City's business registration requirement can be easily triggered and the Gross Receipts Tax rates and sourcing formulas create additional complexity. It is important to stay on top of your San Francisco compliance obligations.

For questions or potential assistance with your upcoming filing obligations, please email Brian Doolan at [email protected].