Business License Tax Program Update
SOUTH SAN FRANCISCO, CALIFORNIA
May 16, 2024
Table of Contents
1. Background and Considerations for Business License Tax Assessment.......................1
2. BLT Alternatives and Projections......................................................................................... 15
3. Comparative Survey................................................................................................................ 20 Business License Tax Assessment Program Update South San Francisco, CA Matrix Consulting Group 1
1. Background and Considerations for Business License Tax Assessment
All businesses conducting business within the city limits of South San Francisco, including businesses that operate from home, are required to obtain a business license.
Annual business license fees are collected by the City’s Finance Department and are due by January 31 of the calendar year. A business license must be obtained for every new business that is located within the City or doing business within the city limits, and every active business within the City must renew their business licenses every year. All business licenses are due for renewal on January 1st of each year.
The ordinance governing business licenses can be found in Title 6 of the Municipal Code.
It outlines the scope and administration of the program, along with the fee schedule for business licenses of various types issued by the City.
1.1 Current Business License Program
The table below summarizes the current categories and associated charges utilized by the City for licensing businesses. The information is based on the 2024 classifications and rates available via the City’s webpage:
Business License Category Rate:
Auctioneer $150.50 per auction day
Business and Personal Services
Manufacturer
Warehousing
Wholesale/Retail Sales
Distributor and Other Services
Repair and Other Services
$113.50 per year + $23.00 per employee
(including owner), up to $150,886.50 total.
Cannabis 1% of gross receipts - cannabis testing
2% of gross receipts - cultivation and
distribution.
3% of gross receipts - manufacturing
3% of gross receipts - delivery only and other
commercial cannabis businesses
Coin Operated Machines 1% of gross receipts
Commercial Parking Facility 8% of gross receipts
Construction Contractor “A” or “B” $226.25 annually
Subcontractor or “C” Contractor $188.25 annually
Junk Collector or Recycler Higher of $302.25 or 4% gross receipts Medium $755 annually
Pawnbroker $302.25 annually
Peddler or Solicitor $113.50 + $23.00 per employee/owner + $332.25 per vehicle used
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Business License Category Rate:
Peddler – Single Perishable Product $211.75 annually
Peddler – Catering Truck $423 per vehicle annually
Peddler – All Others $423 annually plus $15.25 per day in excess of 2 persons
Professional/Semi-professional $226.25 + $226.25 for each additional associate, partner or member of the professional
corporation
Public Utilities $7,544.75 annually
Bowling Alley $75.25 per alley annually
Circus or similar exhibition
Carnival or similar event
$755 for 1st day + $150.50 per additional day
Other Recreation/Entertainment
Businesses
$150.50
Hotels, Motels, or Apartment House
Trailer and Mobile Home Parks
Rental of Residential Property
$113.50 + $8.00 per unit/space annually
(occupied or vacant)
Temporary Vendors $75.25 per day
Transportation of Persons $377.25 per vehicle + $23.00 per employee annually
In total, the City has 22 unique rate structures that apply to one (and often more) classifications of businesses. Section 6.04.126 of the City’s Municipal Code states that business license fees are subject to annual adjustments based on the percentage change associated with the CPI-W.
1.2. Demographics of Currently Licensed Businesses
The following tables summarize key tables outlining the current demographics of the City’s business license tax program in 2023.
1.2.1 Almost 56% of Licensed Businesses Are Located Inside the City.
The following table shows the number of licensed businesses in 2023 and whether they are located inside or outside the City.
Location
Number of
Businesses Percentage
Inside SSF 1,947 55.6%
Outside SSF 1,556 44.4%
Total 3,503
The City of South San Francisco has a large percentage of firms, slightly over 44%, that are based outside of the City of South San Francisco.
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1.2.2 Revenue and Number of Businesses by License Subtype.
As stated in 2.1, the total number of active licensed businesses total 3,503. The current City database categorizes businesses based on “License Subtype”, which generally align with the Standard Industrial Classification (SIC) system. The table below summarizes the current business environment based on these subtypes/codes, showing the number of businesses and total revenue generated in 2023.
License Subtype # Licensed Revenue % of
Revenue
PROFESSIONAL OR SEMI PROF. SERVICES 6500 477 $1,342,995.80 53.5% MANUFACTURING INDUSTRIES 3000 58 $223,668.59 8.9%
BUSINESS SERVICES 6300 547 $154,926.37 6.2%
SUBCONTRACTOR CLASS C 6620 752 $151,925.87 6.1%
GENERAL CONTRACTOR CLASS A OR B 6610 548 $129,611.04 5.2% WHOLESALE SALES AND DISTRIBUTOR 5100 192 $96,606.16 3.8% PERSONAL SERVICES 6200 304 $70,332.15 2.8%
GROSS RECEIPTS BASED BUSINESSES (Combined) 13 $64,543.53 2.6% RETAIL EATING OR DRINKING PLACE 5800 147 $59,941.25 2.4% RETAIL GENERAL MERCHANDISE 5300 145 $52,888.36 2.1%
WAREHOUSING AND STORAGE 6376 54 $26,807.14 1.1%
PUBLIC UTILITY 4830 3 $22,998.05 0.9%
FREIGHT FORWARDING SERVICES 4921 45 $22,948.45 0.9%
REPAIR SERVICE 6400 78 $19,532.07 0.8%
HOTELS 1511 19 $19,086.95 0.8%
RETAIL AUTO OR MARINE OR AIRCRAFT 5500 24 $9,103.34 0.4% CATERING AND LUNCH WAGONS 5350C 19 $8,962.90 0.4%
TRUCKING 4290 18 $7,160.23 0.3%
SECURITY GUARD SERVICES 6390 9 $6,238.61 0.2%
TAXICAB TRANS. AND LIMO SERVICE 4291 4 $4,998.34 0.2%
ROOMING AND BOARDING HOUSES 1210 4 $4,228.19 0.2%
SHORT TERM RENTAL 12 $1,867.43 0.07%
MOTELS AND MOTOR HOTELS 1512 7 $1,731.47 0.07%
AMBULANCE SERVICE 4294 2 $1,601.55 0.06%
RECREATION GYM OR ATHLETIC CLUBS 7425 7 $1,277.57 0.05% MOVING VAN OR TRUCKS 4298 4 $996.17 0.04%
DIRECT SELLING ORGANIZATION 5350 2 $884.50 0.04%
FORTUNE TELLERS 7399E 1 $799.10 0.03%
DANCE HALLS AND BALLROOMS 7396 3 $547.53 0.02%
CHARTER BUS COMPANIES 4215 1 $483.92 0.02%
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License Subtype # Licensed Revenue % of
Revenue
PEDDLER OR RETAIL TRUCK ONE PRODUCT 5350A 2 $295.00 0.01% MASSAGE PARLORS OR STEAMBATHS 6296 1 $168.23 0.01%
FLOWERS AND NURSERY STOCK/FLORISTS SUPPL 5193 1 $4.00 0.0002% Grand Total 3,503 $2,510,159.86
In 2023, the City generated $2,510,159.86 in revenue from its business license program.
Approximately 54% of this revenue was generated from businesses falling under the Professional or Semi-Professional classification which is charged on a per-associate basis. The top ten revenue-generating categories accounted for $2,340,258 in revenue in 2023, or over 93% of the total revenue from business licensing.
There are 26 license subtype classifications that each represent less than 1% of the total revenue. These categories account for 278 businesses (7.9% of the licensed businesses) and generate a combined total of $143,094 in revenue (5.7% of total business license revenue).
1.2.3 The City’s Business Sector is Heavily Weighted Toward Small Businesses.
The following table shows the number of all licensed businesses in 2023 by employee size category. Since employee count is the method used to calculate business license tax for most business types, these figures are highly correlated to BLT revenue.
Employee Range
Inside
SSF
% Inside
SSF
Outside
SSF
% Outside
SSF Total %
0-4 employees 1,231 63.2% 1,374 88.3% 2,605 74.4%
5-9 employees 273 14.0% 95 6.1% 368 10.5%
10-19 employees 202 10.4% 44 2.8% 246 7.0%
20-49 employees 149 7.7% 28 1.8% 177 5.1%
50-99 employees 49 2.5% 7 0.4% 56 1.6%
100-249 employees 29 1.5% 7 0.4% 36 1.0%
250-499 employees 6 0.3% 1 0.1% 7 0.2%
500-999 employees 7 0.4% 0 0.0% 7 0.2%
1,000 employees+ 1 0.1% 0 0.0% 1 0.0%
Grand Total 1,947 1,556 3,503
In total, licensed businesses in the 0 – 4 employee range employee range account for
74.4% of all licensed businesses and 84.9% of licensed businesses have 9 or fewer employees.
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1.3 Goals of the BLT Modernization Effort
This study was initiated by the City with specific goals in mind that were used to help guide the development of recommendations found later in this report. The primary goals included the following:
• To streamline internal program administration. The City would like a simplified process that allows for efficient and effective management and auditing of its business license program.
• To streamline the program for external stakeholders (i.e., businesses). The City wants to ensure that its fee structure is easy to navigate for all types of applicants.
A secondary benefit (and goal) is that a simplified process may result in higher enrollment in the program and boost overall compliance. • To ensure that the small business community (which comprises a substantial portion of the current business environment) is protected while increasing contributions from larger companies as well as contractors and subcontractors. • To benchmark the City’s business license rate structure against peer entities to ensure alignment with local jurisdictions.
While these goals are sometimes in conflict, they were used as guidelines when evaluating alternatives for consideration.
4. Typical Business License Tax Rates Approaches.
The following table discusses various business license tax methodologies, examples of comparable cities where they are used, the impact on specific types of businesses, and variations that were considered during the analysis.
Tax Basis Examples Uses Variations
Flat Rate
A dollar amount is
assessed based on the
business type
regardless of its size /
revenue.
Burlingame,
Redwood City,
San Bruno, San
Leandro, San
Mateo
May be used for all
business types, but more
often for contractors or
specific industries like auto
lots, pawn shops, card
readers, etc.
Different rates may be
used for different
business types.
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Tax Basis Examples Uses Variations
Per Employee
A dollar amount is
assessed based on the
business’ number of
employees.
Millbrae, Oakland,
Redwood City,
San Bruno, San
Jose, San
Leandro, San
Mateo, Santa
Clara, Sunnyvale
Used in some cases for all
business types, or for
specific categories like
retail, professional and
administrative services,
sales, manufacturing, or
transportation.
A cap may be used, and
a graduated rate may be
used to apply a different
fee to the first employee
than to the 100th one.
Different rates may be
used for different
business types.
Gross Receipts
A percentage amount
of the business’ gross
receipts for the year is
assessed.
Daly City, Millbrae,
Oakland,
Redwood City,
San Bruno, San
Francisco, San
Leandro, San
Mateo
Used in many cases for all
business types, or as a
default for businesses not
assessed using another
basis. Can also be used for
specific types like
contractors, tow lots,
firearms dealers, etc.
A cap may be used, and
a progressive rate may
be applied to taxing
gross receipts. A
minimum gross receipts
amount may also be
used. Different rates
may be used for
different business types.
Per Unit
A dollar amount is
assessed based on the
number of units or
vehicles owned by a
business, or their
square footage or total
rooms.
Millbrae, Oakland,
Redwood City,
San Bruno, San
Jose, San
Leandro, Santa
Clara, Sunnyvale
Typically used for rental
properties, hotel rooms, and
businesses like taxi or limo
companies which use a
fleet of vehicles.
A cap may be used, and
a graduated rate may be
used to apply a different
fee to the first unit than
to the 100th one.
Business Costs
Percentage of payroll or
the cost of operations
Millbrae Can be used for companies
with large financial
footprint but comparatively
few employees or receipts,
such as startups or
research and development
firms.
A cap or a minimum may
be applied, and a
progressive rate can be
used. Different rates
may be used for
different business types.
Per Day
Businesses are charged
a flat rate for each day
they operate.
Redwood City,
San Leandro
Usually used for temporary
business ventures like
carnivals, pumpkin patches,
auctioneers, and outdoor
markets.
Different rates may be
used based on size of
space used, or for
different business types.
Hybrid
A business may be
assessed based on a
weighted average or the
“greater of” multiple
methodologies.
Millbrae,
Sunnyvale
Can be used to assess
business categories which
may vary widely in other
assessment bases, ensures
capture of appropriate tax
rate.
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There are a variety of tax rate bases that can be used, and are used by many of South San Francisco’s peers, to assess business license taxes. Some of the tax rate bases are specific to the types of businesses, such as carnivals being charged per day, or hotels being charged per unit, whereas others are more overarching – flat rate, number of employees, or gross receipts.
1.4 Advantages and Disadvantages for Different Business License Rate Structures.
The following table shows by tax basis, the key advantages and disadvantages (from the City’s perspective) for the methodologies outlined in the prior subsection:
Tax Basis Advantages Disadvantages
Flat Rate Easy to administer, requires little to no
gathering of data other than business
type.
Inflexible and does not reflect the varying
size or scope of businesses.
Per
Employee
Reflects varying business sizes and rates
can be capped or molded to specific
parameters (i.e., lower rates for smaller
businesses with fewer employees).
Requires companies to self-report employee
count, which would then require auditing
using data from State Employment
Development Department (EDD).
Does not accurately reflect businesses with
comparatively small employee counts or
large numbers of contract staff.
Does not account for revenue generation of
individual businesses.
Gross
Receipts
Reflects varying business sizes and rates
can be capped or molded to specific
parameters (i.e., identifying small
businesses based upon revenue
generated).
Requires companies to self-report gross
receipts, and submit tax filings, which would
then require auditing and verification using
the tax filing information.
Does not accurately reflect businesses like
startups with large footprint but small
revenues.
Per Unit Reflects a metric which is specific to, and
accurately captures the scope of,
particular business types.
Requires companies to self-report unit
counts. Auditing may be difficult as a result
Business
Costs
Accurately captures the scope of certain
business types which may not be reflected
in their gross receipts or employee counts.
Requires self-reporting of business
expenses, which would then require auditing
and verification using tax filings.
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Tax Basis Advantages Disadvantages
Hybrid Ensures a more complete capture of
business size and scope for license tax
purposes.
More complicated to administer, requires
collection of multiple data types.
All of the different tax rate bases have key advantages and disadvantages. For ease of administration, the flat fee is the simplest, but all other bases would require the City to conduct auditing (in-house or outsourced) to ensure that the tax rate basis is being reported accurately. Additionally, with per employee and gross receipts there can be further nuances regarding if it is referencing only employees located within the city or total employees or similarly gross receipts generated within the city or overall gross receipts.
Ultimately, for most business classifications a per-employee (or per associate) business license tax will provide the most utility to the City and achieve the goals for streamlining and modernizing the business license tax program. It more effectively enables the implementation of a progressive per employee rate charge that protects smaller businesses. Additionally, it can be easily audited with payroll tax filings or data from the State EDD. For this reason, a per-employee basis for business license tax has been recommended for additional categories and used in future projections later in this report.
1.5 Proposed Tax Rate Approach by Business Type
The table below shows the current tax basis associated with the license subtypes currently represented in the City’s business environment. The final column (Proposed) shows any potential adjustments suggested by the project team and utilized in developing projections for future revenue.
License Subtype Current Tax Basis Proposed Tax Basis
AMBULANCE SERVICE 4294 Per Employee Per Employee
BUSINESS SERVICES 6300 Per Employee Per Employee
CATERING AND LUNCH WAGONS 5350C Per Vehicle Per Vehicle CHARTER BUS COMPANIES 4215 Per Vehicle + Per Employee Per Vehicle + Per Employee COMMERCIAL PARKING FACILITY 4600 % Of Gross Receipts % Of Gross Receipts DANCE HALLS AND BALLROOMS 7396 Flat Per Employee
CANNABIS BUSINESSES % Of Gross Receipts % Of Gross Receipts DIRECT SELLING ORGANIZATION 5350 Per Employee Per Employee DISTRIBUTION Per Employee Per Employee
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License Subtype Current Tax Basis Proposed Tax Basis
FLOWERS AND NURSERY STOCK AND
FLORISTS SUPPL 5193 Per Employee Per Employee
FORTUNE TELLERS 7399E Flat Per Employee
FREIGHT FORWARDING SERVICES 4921 Per Employee Per Employee GENERAL CONTRACTOR CLASS A OR B 6610 Contractor % of Permit Value HOTELS 1511 Per Unit Per Employee
JUNK DEALER 5938 % Of Gross Receipts % Of Gross Receipts MANUFACTURING INDUSTRIES 3000 Per Employee Per Employee MASSAGE PARLORS OR STEAMBATHS 6296 Flat Per Employee
MISCELLANEOUS VENDING MACHINES 5342 % Of Gross Receipts % Of Gross Receipts MOTELS AND MOTOR HOTELS 1512 Per Unit Per Employee
MOVING VAN OR TRUCKS 4298 Per Employee Per Employee
PAWNBROKER 6123 Flat Per Employee
PEDDLER OR RETAIL TRUCK ONE PRODUCT
5350A Per Vehicle + Per Employee Per Vehicle + Per Employee PERSONAL SERVICES 6200 Per Employee Per Employee
PROFESSIONAL OR SEMI PROF. SERVICES
6500 Per Associate Per Associate
PUBLIC UTILITY 4830 Flat Flat
RECREATION BOWLING ALLEYS 7417 Flat Per Employee
RECREATION GYM OR ATHLETIC CLUBS 7425 Per Employee Per Employee
RECREATION ROLLER SKATING RINK AND
MISC 7415 Flat Per Employee
REPAIR SERVICE 6400 Per Employee Per Employee
RETAIL AUTO OR MARINE OR AIRCRAFT 5500 Per Employee Per Employee RETAIL EATING OR DRINKING PLACE 5800 Per Employee Per Employee RETAIL GENERAL MERCHANDISE 5300 Per Employee Per Employee ROOMING AND BOARDING HOUSES 1210 Per Unit Per Employee
SCRAP AND WASTE MATERIALS 5193 % Of Gross Receipts % Of Gross Receipts SECURITY GUARD SERVICES 6390 Per Employee Per Employee
SHORT TERM RENTAL Per Unit Per Unit
SUBCONTRACTOR CLASS C 6620 Contractor % of Permit Value TAXICAB TRANS. AND LIMO SERVICE 4291 Per Vehicle + Per Employee Per Vehicle + Per Employee TRAILER CTS AND MOBILE HOME PARK 1400 Per Space Per Space TRUCKING 4290 Per Employee Per Employee
WAREHOUSING AND STORAGE 6376 Per Employee Per Employee
WHOLESALE SALES AND DISTRIBUTOR 5100 Per Employee Per Employee The proposed changes drastically simplifies the approach used to assessing business license fees, one of the City’s primary goals for undertaking this study. Most businesses Business License Tax Assessment Program Update South San Francisco, CA Matrix Consulting Group 10
currently being charged a flat or per-unit fee would transition to the existing (or proposed, if adopted) per-employee fee structure. As shown later in this report, these changes either result in a minimal decrease in business license revenue or actually increases the income from these license subtypes.
1.5.1 Current Distribution of Businesses by Annual Amount Paid The following table shows the count of licensed businesses by Business License Fee Amount paid in FY2023:
Fee Range Number of
Businesses %
$0 - $99 57 1.6%
$100 - $199 1,549 44.2%
$200 - $299 1,120 32.0%
$300 - $499 353 10.1%
$500 - $999 191 5.5%
$1000 - $2499 121 3.5%
$2500 - $4999 51 1.5%
$5000 - $9999 29 0.8%
$10000 - $24999 21 0.6%
$25000 - $49999 5 0.1%
$50000 - $99999 3 0.1%
$100000 - $249999 3 0.1%
Grand Total 3,503
77.8% of all licensed businesses – both inside and outside of the City – paid less than $300 in business licenses fees in 2023.
1.5.2 Revenue by Tax Basis Under Current Business License Program.
The table below shows the total number of companies and revenue associated with each rate structure:
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Tax Basis Count Revenue % of Revenue
Revenue per
Business
Per Associate 477 $1,342,995.80 53.5% $2,815.50
Per Employee 1,637 $754,916.51 30.1% $461.16
Contractor 1,300 $281,536.91 11.2% $216.57
% Of Gross Receipts 13 $64,543.53 2.6% $4,964.89
Per Unit 42 $26,914.04 1.1% $640.81
Flat
8 $24,512.91 1.0% $3,064.11
Per Vehicle 19 $8,962.90 0.4% $471.73
Per Vehicle + Per Employee
7 $5,777.26 0.2% $825.32
Grand Total 3,503 $2,510,159.86 $716.57
Currently, 84% of business license revenue is generated from two tax bases - 54% from firms paying their tax on a per associate basis and 30% from businesses charged on a per-employee basis.
1.5.3 Current Revenue by Business Size within each rate category.
The following tables further break down each unique tax basis to understand how each rate category is composed based on the size of businesses paying license tax according to each structure.
(1) % of Gross Receipts
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 10 $6,421.99 0.3%
5-9 employees 2 $57,668.74 2.3%
20-49 employees 1 $452.80 0.0%
Grand Total 13 $64,543.53 2.6%
(2) Contractor
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 1,146 $241,047.13 9.6%
5-9 employees 68 $14,413.64 0.6%
10-19 employees 45 $11,948.07 0.5%
20-49 employees 27 $9,876.04 0.4%
50-99 employees 8 $2,984.53 0.1%
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Employee Range
Number of
Businesses Revenue % of Total Revenue
100-249 employees 5 $1,037.25 0.0%
250-499 employees 1 $230.25 0.0%
Grand Total 1,300 $281,536.91 11.2%
(3) Flat
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 8 $24,512.91 1.0%
Grand Total 8 $24,512.91 1.0%
(4) Per Associate
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 341 $121,162.08 4.8%
5-9 employees 43 $64,479.75 2.6%
10-19 employees 35 $100,432.63 4.0%
20-49 employees 28 $199,745.90 8.0%
50-99 employees 14 $189,587.52 7.6%
100-249 employees 9 $253,717.34 10.1%
250-499 employees 2 $135,753.70 5.4%
500-999 employees 5 $278,116.88 11.1%
Grand Total 477 $1,342,995.80 53.5%
(5) Per Employee
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 1,050 $182,378.97 7.3%
5-9 employees 253 $74,399.63 3.0%
10-19 employees 162 $74,577.65 3.0%
20-49 employees 116 $98,922.49 3.9%
50-99 employees 33 $56,078.88 2.2%
100-249 employees 17 $63,275.13 2.5%
250-499 employees 3 $22,392.87 0.9%
500-999 employees 2 $28,957.66 1.2%
1000+ employees 1 $153,933.23 6.1%
Grand Total 1,637 $754,916.51 30.1%
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(6) Per Unit
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 24 $10,820.22 0.4%
5-9 employees 2 $378.78 0.0%
10-19 employees 4 $2,072.36 0.1%
20-49 employees 5 $1,858.09 0.1%
50-99 employees 1 $1,523.81 0.1%
100-249 employees 5 $7,178.41 0.3%
250-499 employees 1 $3,082.37 0.1%
Grand Total 42 $26,914.04 1.1%
(7) Per Vehicle
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 19 $8,962.90 0.4%
Grand Total 19 $8,962.90 0.4%
(8) Per Vehicle Plus Employee
Employee Range
Number of
Businesses Revenue % of Total Revenue
0-4 employees 7 $5,777.26 0.2%
Grand Total 7 $5,777.26 0.2%
1.5.4 Contractors and Subcontractors
Another important consideration revolves around the way that the City will handle contractors and subcontractors. Contractors and subcontractors accounted for 1,300 businesses in total, equivalent to about 37% of all registered businesses. The following table shows the count of general contractor and subcontractor licensed businesses by employee range and the total fees generated by said ranges.
Employee Range
Number of
Businesses Sum of Fees
% of
Total Revenue
0-4 employees 1,146 $241,047.13 9.6%
5-9 employees 68 $14,413.64 0.6%
10-19 employees 45 $11,948.07 0.5%
20-49 employees 27 $9,876.04 0.4%
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Employee Range
Number of
Businesses Sum of Fees
% of
Total Revenue
50-99 employees 8 $2,984.53 0.1%
100-249 employees 5 $1,037.25 0.04%
250-499 employees 1 $230.25 0.01%
Grand Total 1,300 $281,536.91
The City currently receives $281,536 in revenue from contractors and subcontractors.
The current construction valuation for FY23-24 is projected at $650,020,135, and the average valuation for the last three years is $862,098,827.
1.5.5 Missing Businesses.
An additional consideration for this study was the potential revenue impacts related to businesses that are not registered with the City. These “missing businesses” represent missing revenue generated from the BLT program. Later projections contained in this report include estimated revenue increases borne from the City taking a proactive approach in targeting these establishments to ensure their compliance and enrollment in the business license program.
To establish these estimates, the project team referenced California Employment Development Department (EDD) data showing the number of businesses in South San Francisco registered with the state. This information was referenced against the current business environment to show that while this data was not as recent, the local business community had not experience significant change (exclusively in terms of the number of businesses operating in the City).
In total, it can be conservatively estimated that 2,399 businesses are operating within the City, of which 452 may not have received a business license from the City. Capturing these businesses could result in a revenue increase of $370,107. This estimate was based on the estimated average tax revenue per business generated under the current business license model. Not included in this estimate are short-term or other residential rental businesses that could comprise a significant source of missing businesses (and subsequently income).
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2. BLT Alternatives and Projections
The following section outlines a number of scenarios for a revised business license tax assessment methodology, the reasoning behind each, and their likely impacts. The project team has developed a model shows the impacts on revenue for various business types and sizes based on the assessment criteria selected. This model uses the City’s business license data (which has actual employee counts) to project impacts on revenue generation based on various scenarios.
The following table summarizes the criteria of each scenario and provides an explanation for the illustrative value of each.
2.1 Assumptions Utilized in Model and Projections.
All projections developed for this assessment use the City’s database of active licensed businesses for 2023 as a baseline. The model is based upon the following data points and assumptions:
• There are a total of 3,503 businesses that received a business license from the City in 2023.
• Business license revenue (in total) was $2,510,160 in 2023. • The estimated average permit valuation for the last three fiscal years was $862,098,827
• The maximum cap for a business license is removed.
• The City implements the proposed changes for moving certain business categories to the per employee basis.
Currently, the City has a maximum amount it can charge for business licenses. This cap is presently $150,886. Removing this cap without making any changes to the current rate structure would result in the City generating an additional $51,765 in revenue. Removing this cap and pursuing lost revenue from unlicensed businesses is estimated to result in a total revenue increase of $421,872.
The alternatives modeled below are established without a cap on business license tax in place.
2.2 Alternatives Modeled.
The following table summarizes the options projected for each tax basis.
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Base Description
Per Employee Rates
1 $100.00 Per employee rate ranges from $25 to $100 as follows:
0-4: $25
5-9: $30
10-19: $45
20-49: $50
50-99: $60
100-249: $75
250-499: $80
500-999: $90
1,000+: $100
2 $150.00 Per employee rate ranges from $30 to $150 as follows:
0-4: $30
5-9: $35
10-19: $50
20-49: $60
50-99: $75
100-249: $80
250-499: $90
500-999: $100
1,000+: $150
3 $113.50 $45 per employee.
Contractor Rates
1 N/A Flat fee of $1,000 for all contractors and subcontractors doing business in the City
2 N/A Contractors/Subcontractors are charged a fee equivalent to 1.8% of every $1,000 of permit valuation.
Per Associate Rates
1 $275 Base plus $275 per associate.
Additional Tax Bases
1 N/A Convert all license subtypes receiving a flat rate to be charged on a per employee basis. The only exclusion is public utilities which will remain on a flat rate.
2 N/A Convert all license subtypes receiving a per unit rate (excluding short-term rentals) to be charged on a per employee basis.
3 N/A Adjust per vehicle + per employee to align with chosen per employee rate under each scenario.
The revenue impacts of each of these options have been summarized in the table below.
For each option, the current revenue (within that tax basis), projected revenue, average tax rate, and median tax rate, are shown.
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A final suggestion not modeled by the project team is to ensure that classifications using the “per employee” tax basis in addition to another (such as transportation of persons, per vehicle + per employee) should also be updated so that the employee rate matches what is being charged to businesses exclusively using the per employee rate.
2.3 Summary of Revenue Generation Under Various Options.
Option Category Current Projected Change Average Median Current Per Employee Businesses
Option #1 - Progressive tax
starting at base of $100 plus
$25 - 100 per employee.
$754,917 $1,743,780 $988,864 $1,126 $199
Option #2 – Progressive tax
starting at base of $150 plus
$30 - $150 per employee.
$754,917 $2,444,921 $1,690,005 $1,494 $260
Option #3 – Base of $113.50
plus $45 per employee. $754,917 $1,201,586 $446,670 $849 $254 Contractors
Option #1 – Flat fee of
$1,000. $281,537 $ 1,305,200 $1,023,663 N/A N/A
Option #2 – Fee as a % of
permit valuation. $281,537 $1,551,778 $1,270,241 N/A N/A Per Associate
Option #1 – Increase the per
associate fee to $275 base
plus $275 per associate.
$1,342,996 $2,155,263 $812,268 $4,518 $554
Flat Fees (Excl. Public Utilities)
Option #1 - Progressive tax
starting at base of $100 plus
$25 per employee.
$1,515 $868 ($647) $174 $174
Option #2 – Progressive tax
starting at base of $150 plus
$30 per employee.
$1,515 $1,148 ($367) $230 $230
Option #3 – Base of $113.50
plus $45 per employee. $1,515 $1,038 ($477) $208 $208
Transition Per Unit Fees to Per Employee Rates (Excl. Short Term Rentals) Option #1 - Progressive tax
starting at base of $100 plus
$25 per employee.
$25,047 $90,492 $65,446 $3,016 $518
Option #2 – Progressive tax
starting at base of $150 plus
$30 per employee.
$25,047 $104,334 $79,287 $3,478 $627
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Option Category Current Projected Change Average Median Option #3 – Base of $113.50
plus $45 per employee. $25,047 $70,352 $45,305 $2,345 $690 All of the options modeled above result in revenue increases within each general business license tax category. The only section that saw a reduction in revenue was the category of flat fees. While revenue may decrease in this area, there are efficiencies to be gained via the consolidation and simplification of the City’s overall business license program.
2.4 Impacts on Representative Businesses - Per Employee and Per Associate Basis.
The tables below show the impact on representative businesses of different employee sizes would be impacted by the options outlined above under each of the projection alternatives.
(1) Per Employee Businesses
Employee
Count
Current
Fees
Proposed Fee -
Option 1
Proposed Fee -
Option 2
Proposed Fee -
Option 3
1 $143 $174 $230 $208
5 $262 $281 $357 $391
10 $379 $449 $551 $621
20 $614 $913 $1,071 $1,080
50 $1,318 $2,453 $2,922 $2,457
100 $2,491 $5,529 $6,753 $4,752
250 $7,746 $17,009 $19,003 $11,637
500 $14,221 $37,419 $41,963 $23,112
1,000 $23,113 $83,329 $93,014 $46,062
10,000 $153,933 $1,001,329 $1,470,014 $459,162
(2) Per Associate Businesses
Employee
Count Current Fees Proposed Fee –Option 1
1 $260 $352
10 $2,311 $3,089
50 $12,029 $15,329
100 $23,152 $30,629
250 $56,025 $76,529
500 $112,275 $153,029
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2.5 Recommendation.
Based upon the analysis of the current business license tax database, comparison to peer municipalities, and to achieve the goals of the business license modernization effort, the City should adopt a business license tax structure based on the following parameters:
• Removing the business license cap.
• Increasing efforts to license unregistered businesses. • Reducing the number of categories and rates by converting, as outlined in Section
1.5, many of the existing categories (specifically flat fee and per unit rates) to “per employee” calculations.
• No change to current rates for businesses charged on a gross receipts basis. • Changing the per employee rate to a base rate of $150 plus a progressively increasing per employee charge based on the following employee size categories:
0-4: $30; 5-9: $35; 10-19: $50; 20-49: $60; 50-99: $75; 100-249: $80; 250-499: $90; 500-999: $100; and 1,000+: $150.
• Adjusting the per associate rate to a $275 base fee plus $275 per employee. • Transition contractor and subcontractor rates to $1.80/$1,000 of permit value.
If all of these efforts were implemented it would result in increasing the current BLT revenue of $2,510,159 to $6,361,593 in the following amounts:
Change:
Revenue Impact –
increase/(decrease)
Per Employee Rate Change (no cap) $1,690,005
Per Associate Rate Change $812,268
Contractor Rate Change $1,270,241
Flat Fee Converted to Per Employee ($367)
Per Unit Converted to Per Employee $79,287
Subtotal $3,851,434
Unlicensed Businesses $370,107
TOTAL $4,221,541
The unlicensed business amount can be achieved through greater enforcement and does not require modifications to the business license tax program.
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3. Comparative Survey
To gain insight into the prevailing practices for administering business license tax programs, the project team conducted a comparative survey of other Bay Area communities. The survey was designed to develop an understanding of common practices and provisions, as well as revenue metrics, from peer agencies doing similar work in other cities. The agencies asked to participate were determined by the team with the input of the City.
1. Comparable Communities and Basic Demographics
The following table presents the list of cities surveyed, as well as their population and the number of licensed businesses they reported in response to the survey.
City Population
San Jose 1,013,240
San Francisco 873,965
Oakland 440,646
Sunnyvale 155,805
Santa Clara 127,647
Berkeley 124,321
San Mateo 105,661
Daly City 104,901
Vacaville 102,386
San Leandro 91,008
Redwood City 84,292
San Bruno 43,908
Menlo Park 33,780
Burlingame 31,386
Millbrae 23,216
South San Francisco 66,105
South San Francisco sits in the lower half of surveyed cities by population. Four cities have smaller populations, and eleven have larger populations. The following table shows the estimated number of licensed businesses reported for each surveyed city.
City
Licensed
Businesses
Businesses per
1,000 Population
San Francisco 104,333 118
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City
Licensed
Businesses
Businesses per
1,000 Population
Oakland 70,000 162
San Jose 58,000 57
Berkeley 13,029 107
Santa Clara 12,751 100
San Leandro 10,938 121
Redwood City 8,610 100
Daly City 7,900 74
Burlingame 7,800 255
Sunnyvale 7,500 49
San Mateo 7,300 70
Menlo Park 5,480 158
Vacaville 5,093 51
Millbrae 3,300 146
South San Francisco 3,503 53
San Bruno 2,862 66
Average 21,660 109
2. BLT Ordinance and Major Program Elements
The first section of the survey addresses the business license tax ordinance in each City and compares their characteristics. Initial information about the ordinance and use of funding is shown in the following table.
Like most cities, South San Francisco’s ordinance has been recently revised but principally only to address the rates applied for the coming year, not for major program modifications. The only City to make major modifications to its program was Santa Clara, which transitioned to a general fee of $45 per employee for most businesses as of 2023.
All comparable cities surveyed are using the business license taxes for general fund support. Of the 14 cities surveyed, five use CPI to annually adjust business license tax rates and another (Vacaville) provides that option when CPI has increased by 10% since the last update but does not automatically trigger it.
The basis for assessing taxes is different from city to city. Eight of those surveyed use gross receipts as a primary basis for calculating fees, while others use a combination of per employee and/or per unit fees. Some municipalities also offer flat fees for specific types of businesses.
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City Summary of Ordinance Provisions
Berkeley Minimums:
$26 for home-based and nonprofits, $77 for rental property, $51 for all others
Gross Receipts:
• Retail and Automotive, Wholesale, Administrative Headquarters: $1.20 per $1,000 gross receipts
• Business, Personal Repair, Contractors, Private Franchised Haulers/Recycling: $1.80 per $1,000 gross receipts
• Groceries: $0.6 per $1,000 gross receipts
• Misc. Business: $2.40 per $1,000 gross receipts
• Professional/Semi-professional: $3.60 per $1,000 gross receipts • Recreation and Entertainment: $4.50 per $1,000 gross receipts • Property Rental:
- $10.81 per $1,000 gross receipts under 5 units
- $28.80 per $1,000 gross receipts 5 or more units
• Cannabis (will be transitioning to whatever business type best matches with the vendor, such as retail, manufacturing, or wholesale, following July 1, 2025.
- $1.20 per $1,000 gross receipts
• Professional Sports: $100 per $1,000 gross receipts
• Firearms Dealers, Private Rubbish Haulers: $150 per $1,000 gross receipts
• Manufacturing: $1.20 per $1,000 value added
• Taxis: $215 per vehicle
• Handbills & Peddlers:
- $309 and $258 respectively
- $206 or $168 for hand-made peddler wares
Burlingame • Based on gross receipts.
• $0-$249,000 – annual fee of $200
• $250,000 - $999,999 – annual fee of $300
• $1 million or more – annual fee of $750
Daly City • Assessment for all business types is 1.1% of total gross receipts, with a minimum fee of $110.
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City Summary of Ordinance Provisions
Menlo Park Greatest of gross receipts or, if applicable, another methodology. • Gross receipts schedule:
- $0-$25k = $50
- $25-50k = $75
- $50-$75 = $100
- $100-$200 = $160
- ...etc up to:
- $1-$2mil = $750
- $250 per $1mil thereafter
- Capped at $8,000
• Admin offices or warehouses:
- 1-5 employees = $50
- 6-15 employees = $200
- 16-25 employees = $350
- ...etc up to
- 201+ employees = $1,250
• Peddlers/Solicitors:
$300/year or $20/day
• Home Occupation < $7,500 in gross receipts:
$93 one-time fee plus $25 annually
Millbrae • Retail and Services: $64, plus $4.25 per employee, plus application of gross receipts schedule (above $750,000 annual revenue). • Rental Property - Residential: $64, plus $5.30 per unit. • R&D: $64, plus $0.32 per $1000 cost of operations.
• Gross Receipts are applied in addition to the base fee and the per employee charge as follows:
- Over $750,000 and under $5,000,000 = .03% of gross receipts. - Over $5,000,000 and under $10,000,000 = .025% of gross receipts. - Over $10,000,000 = .02% of gross receipts.
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City Summary of Ordinance Provisions
Oakland • Most industries: gross receipts – based on ranges. Below minimum tax (varies)/ Min. tax - $1 million/$1 – $2.5 million/$2.5 - $20 million/$20 - $50 million/Over $50 million.
- Business and personal, contractors, hotels, real estate development or rehabbers: $60 + .18% of gross receipts above $33,335
- Cannabis: .12% of gross receipts above defined amount which varies depending on business classification
- Groceries: $60 + .06% of gross receipts above $100,000 - Professional: $60 + .36% of gross receipts above $16,600 - Residential rentals: 1.395% of gross receipts
- Commercial/industrial rentals: 1.395% of gross receipts, some exemptions
- Recreation / entertainment: $60 + .45% of gross receipts above $13,335
- Public Utilities: $60 + .1% of gross receipts above $60,000 - Administrative headquarters, retail, manufacturers, wholesalers, and all others: $60 + .12% of gross receipts above $50,000
• Transportation: per employee
- First person: $150
- Next 9 people: $25/employee
- Next 90 people: $30/employee
- All others: $40/employee
• Taxi/Limo/Ambulance
- $149 per Ambulance
- $180 per limousine/taxi
Redwood City • Most industries (default): $80 plus $53 per full-time employee • Real Estate Broker: $80 plus $48 per salesperson or employee • Residential property rental: $80 plus $29 per unit
• Non-residential property rental: $80 plus $29 per 1,000 square feet • Contractors with less than $50,000 gross receipts: $53 flat • Dance halls, vehicle wreckers, junk collection, pawnbrokers, commercial advertising, fortune tellers, Christmas tree lots: $795 flat • Maximum tax for any business is $5,798
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City Summary of Ordinance Provisions
San Bruno • General tax rate based on gross receipts for most business types:
- Less than $75,000 = $75
- $75,000 - $100,000 = $100
- Up to $500,000 = $110 + $5.25 per $5,000
- Up to $1,000,000 = $530 + $4.00 per $5,000
- Up to $5,000,000 = $930 + $2.75 per $5,000
- Over $5,000,000 = $3,130 + $1.65 per $5,000
• Manufacturing and central administrative offices: based on employee count and square footage.
Employee Count
- 1-10 = $7.50 per employee
- 11-25 = $75 + $5 per employee over 10
- 26-50 = $195 + $4 per employee over 25
- 51+ = $350 + $3 per employee over 50
Square Footage
- Under 1,000 square feet = $150
- 1,000 to 2,499 square feet = $250
- 2,500 to 4,999 square feet = $350
- 5,000 to 9,999 square feet = $550
- 10,000 or more square feet = $850
• Apartments: $50 + $1 per room
• Commercial property: $50 + $10/1,000 sq. ft.
• Vehicle vendors: $75/year
• Nonresident contractors: $75/year
San Francisco • Gross receipts tax based on business type. - Brackets range from gross receipts of $0 - $100,000 (in which Schedule A pays $56, Schedule B pays $46), up to a bracket of $200 million or greater (in which Schedule A pays $44,006, Schedule B pays $37,720).
- Schedule A: default schedule, includes every business function not listed in Schedule B.
- Schedule B: businesses consisting solely of the business activities of Certain Services (e.g. Repair/Maintenance, Personal/Laundry, Civic Orgs), Retail Trade, and/or Wholesale Trade).
- Administrative Offices pay flat fees based off payroll expenses, starting from up to $2.5 million ($19,184) to $25 million or more ($44,765).
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City Summary of Ordinance Provisions
San Jose • Default rate is based on employee count, unless stated otherwise. - Base tax (1 - 2) employees = $213.15.
- Higher staffing numbers increases the per-employee cost based on brackets; 3 - 35, 36 - 100, 101 - 500, 501+.
- Highest cost per employee is $70.52.
• Fees specific to businesses:
- Residential Rental: Same base tax, similar fee structure, but uses property units instead. Caps at 501+ rental units (29.36 per), same maximum tax.
- Commercial Rental: Same base tax. Flat incremental tax of $0.03 per square foot. Same maximum tax.
- Mobile Home Parks: Same base tax for 1 - 2 lots. Incremental tax of $11.74 per unit for 3 or more lots. Same maximum tax.
- Water Meter Connections: Same base tax, flat tax of $1.16 per connection.
• Tax cannot exceed $179,439.71
San Leandro • Base tax either $815.60 (for automobile wrecking, commercial advertising, tree lots and pumpkin patches, dance halls, pawn shops, secondhand shops, and fortune tellers) or $162.80 (all others). • Additional tax charged depending on type of business. - Manufacturing, retail, peddlers, utilities, local wholesale/distribution, and miscellaneous: $48.60 per employee
- Contractors: $97.87 per employee
- Recreation, and “services”: $97.20 per employee
- Professional: $121.60 per employee
- Warehouses and general wholesale/distribution: $126.20 per 1,000 square feet
- Nonresidential property rental: $24.20 per 1,000 square feet - Residential property rental: $14.60 per unit
- Towing and coin-operated devices: $1.40 per $1,000 of gross receipts - Firearms dealer: $4.80 per $100 of gross receipts from concealable weapons sold to private individuals or entities.
- Parking lot: $108.60 per $1,000 of gross receipts
- Waste disposal: $2.20 per ton.
- Carnival: $291.30 per day
- Merchant: $50.20 per week
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City Summary of Ordinance Provisions
San Mateo • Most professions and retailers taxed by gross receipts according to established schedule:
- Under $30,000 = $25
- $30,000 to $40,000 = $30
- $40,000 to $45,000 = $38
- $45,000 to $50,000 = $46
- $50,000 to $55,000 = $54
- $55,000 to $65,000 = $62
- $65,000 to $70,000 = $70
- $70,000 to $75,000 = $78
- $75,000 to $80,000 = $86
- $80,000 to $85,000 = $94
- $85,000 to $90,000 = $102
- $90,000 to $95,000 = $110
- $95,000 to $100,000 = $115
- Over $100,000 = $115 + $2.85 per additional $5,000
• Real estate brokers: $50 + $5 per associate
• Automotive: various flat taxes depending on type of business • Contractors: $100 general, $40 other/subcontractors
• Hotels: $30 + $2.50 per room
Santa Clara • All businesses pay $45 per employee, with a cap of $350,000 per year. • Businesses outside the city (unless specifically taxed by other provisions) pay the same per-employee amount but prorated based on the number of days business was conducted in the City, ranging from 6-64 days (25%) to 130 days (100%).
• Rental units (3 or more) are charged $15 per unit per year. Rental units are also subject to surcharges.
Sunnyvale • Business license tax based on number of employees or rental units; whichever count is higher. Vendors pay a total fee based on brackets of five employees, ranging from 1 employee to a cap of 946 employees. • Employee count
- First employee = $94.44
- Maximum employees (946+): 29,391.30
• Rental units start at the same as employees (94.44 for one unit) but caps at 421+ ($13,150.95).
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City Summary of Ordinance Provisions
Vacaville • Fees are prorated based on application month. Cycle begins March. • Service/Contractor/Retail/Wholesale Business:
- Fees are based on number of employees, ranging from 1 ($65) to 51- 100 ($575).
- Vending companies pay a base fee of $15 and $1.15 per every $1,000 in gross sales.
• Professional Services:
- Fees based on number of employees, starting at 1 ($90) to 51-100 ($625).
• All business located downtown are assessed BID fees:
- Zone A: $250 for retail/restaurants, $30 for personal services, $10 for hotels (per room), $1 per 3 seats for theaters, $200 for “service”, $150 for “Professional” and $500 for banks. All businesses are also charged $3 per full time employee in addition to the fees above. - Zone B: $200 for retail/restaurants, $25 for personal services, $135 for “service”, $85 for “professional”, and $400 for banks. All businesses are charged an additional $2 per full time employee.
South San Francisco Varies depending on business type:
Auctioneer $150.50 per auction day
Business and Personal Services
Manufacturer
Warehousing
Wholesale/Retail Sales
Distributor and Other Services
Repair and Other Services
$113.50 per year + $23.00 per employee
(including owner), up to $150,886.50
total.
Coin Operated Machines 1% of gross receipts
Commercial Parking Facility 8% of gross receipts
Construction Contractor “A” or
“B”
$226.25 annually
Subcontractor or “C” Contractor $188.25 annually
Junk Collector or Recycler Higher of $302.25 or 4% gross receipts Medium $755 annually
Pawnbroker $302.25 annually
Peddler or Solicitor $113.50 + $23.00 per employee/owner + $332.25 per vehicle used
Peddler – Single Perishable
Product
$211.75 annually
Peddler – Catering Truck $423 per vehicle annually
Peddler – All Others $423 annually plus $15.25 per day in excess of 2 persons
Professional/Semi-professional $226.25 + $226.25 for each additional associate, partner or member of the
professional corporation
Public Utilities $7,544.75 annually
Bowling Alley $75.25 per alley annually
Circus or similar exhibition
Carnival or similar event
$755 for 1st day + $150.50 per
additional day
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City Summary of Ordinance Provisions
Other Recreation/Entertainment
Businesses
$150.50
Hotels, Motels, or Apartment
House
Trailer and Mobile Home Parks
$113.50 + $8.00 per unit/space annually
(occupied or vacant)
Temporary Vendors $75.25 per day
Transportation of Persons $377.25 per vehicle + $23.00 per employee annually
Most cities have a business license tax based on either gross receipts or employee count, with per-unit or square footage exceptions carved out for property rentals, along with specific rates for some particular business types. South San Francisco is unique in charging a flat rate to contractors while using a per-employee or gross receipts-based rate for other business types.
Every city surveyed which determines business license taxes on a per-employee basis defines “employees” as only those employees which are located or operating within the city limits.
3. BLT Exemptions and Provisions for Specific Business Types There are some cities which also offer exemptions to businesses in addition to those already exempt from business tax under California law. These exemptions, as well as any special provisions for contractors headquartered outside the city and transportation network companies (TNC’s) like Uber and Lyft, are shown in the following table. Cities not offering any exemptions beyond those required under State law are shown as “Standard”.
These standard exemptions include 501(c)3 nonprofit and religious organizations, federally chartered banks, insurers subject to the State gross premiums tax, low-income housing, and license-exempt daycares.
City Exemptions
Provisions for
Contractors Outside
the City TNC Provisions
Berkeley Nonprofits, warehouses if
they serve another related
business location in the city,
infirm individuals, charitable
organizations.
Gross receipts
apportioned for work
done in city,
subcontractor
payments deductible
Drivers not required
to get a business
license.
$0.50 per ride
originating in the city,
minus $0.25 for
shared rides
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City Exemptions
Provisions for
Contractors Outside
the City TNC Provisions
Burlingame Standard Pro-rated based on
when work in the City
is conducted
Drivers expected to
become licensed as
independent
contractors.
Daly City Standard No special
provisions
Drivers expected to
become licensed as
independent
contractors.
Menlo Park Owners of less than five hotel,
motel or apartment units;
Owners of industrial,
commercial, professional or
other real property held out to
others for lease; home day
cares; standard other
categories.
Gross receipts
apportioned for work
done in city,
subcontractor
payments deductible
Drivers expected to
become licensed as
independent
contractors.
Millbrae Standard No special
provisions
Drivers expected to
become licensed as
independent
contractors.
Oakland Businesses grossing < $2,500
in 2010 dollars. Also, certain
commercial and owneroccupied properties, parking
lot operators, and other
identified businesses subject
to other taxes.
No special
provisions
Drivers expected to
become licensed as
independent
contractors.
Redwood City Home occupations less than
$1,000, standard other
categories.
No special
provisions
Drivers expected to
become licensed as
independent
contractors.
San Bruno Auctioneers, people under 16,
moving companies.
Flat fee of $75/year Drivers expected to
become licensed as
independent
contractors.
San Francisco Businesses grossing < $2
million or with no more than 4
rental units.
No special
provisions
Drivers expected to
become licensed as
independent
contractors.
3.25% per ride
originating in city
Minus 1.5% for
shared rides
Minus 1.5% for zeroemission rides
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City Exemptions
Provisions for
Contractors Outside
the City TNC Provisions
San Jose Farmers market vendors, offduty police officers, handproduced wares, senior citizens, and at-home lessons,
along with standard
categories.
Pro-rated based on
when work in the City
is conducted
Drivers expected to
become licensed as
independent
contractors.
Must have ground
transportation permit
to offer airport
service.
San Leandro Businesses grossing < $5,000 No special
provisions
Drivers expected to
become licensed as
independent
contractors.
San Mateo Standard No special
provisions
Drivers expected to
become licensed as
independent
contractors.
Santa Clara Standard Reduced payments
based on days
worked in the City.
No licenses issued
for rideshare drivers.
Sunnyvale Standard No special
provisions
Drivers expected to
become licensed as
independent
contractors.
Vacaville Charities, nonprofits, at-home
teachers, minors under 16,
any gross receipts under $1k,
and peddlers who are blind or
veterans, standard others.
No special
provisions
Drivers expected to
become licensed as
independent
contractors.
South San Francisco Standard No
With the exception of San Francisco, exemptions are typically limited to small businesses such as those showing minimal gross receipts, small private landlords, and home occupations. Individual cities also exempt parking lot operators, business owners under 16 years of age, and veterans or disabled peddlers. Most cities which have separate provisions for businesses outside city limits use a flat fee or pro-rate the business license tax, lightening the tax burden on those businesses.
4. BLT Program Administration
The following section explores how the business license tax program is administered in the cities surveyed. The administration of the program (whether internal or contracted), the approximate number of assigned FTEs for those internally administered, and the Business License Tax Assessment Program Update South San Francisco, CA Matrix Consulting Group 32
extent of technology use for businesses to apply and renew their license, are shown in the following table.
City Administration Assigned FTE’s
Application
Approach
Berkeley Internal 3 Paper
Burlingame Contracted - Electronic
Daly City Contracted - Electronic
Menlo Park Internal 1 Electronic
Millbrae Contracted - Electronic
Oakland Internal 8 Electronic
Redwood City Internal 1 Electronic
San Bruno Contracted - Electronic
San Francisco Internal - Electronic
San Jose Internal 10 Electronic
San Leandro Contracted - Paper
San Mateo Contracted - Paper
Santa Clara Internal 1 Electronic
Sunnyvale Contracted - Electronic
Vacaville Internal 4 Electronic
South San Francisco Internal 1 PT Electronic
Most cities administer their business license tax program internally, using either a single staff member or partial contributions from more than one staff member. In many cities where all business license renewals are due at the same time each year, staffing needs for the function are defined by seasonal workload fluctuation. Several cities have partnered with third-party vendors to host an online business license processing portal.
The majority of cities offer online applications and renewal, requiring no in-person visits or manual paper processes. There are six cities without this ability; they are still using a paper-based process.
The following table shows the business license cycle for cities surveyed, the requirements of the renewal process, and the means (if any) by which audits are conducted to ensure accurate information and discourage unlicensed businesses from operating.
City Business License Cycle Renewal Process Auditing Resources Berkeley Annual ending 12/31 Reminders mailed in
November, delinquent
notices at 30, 60 days
Revenue Development
division of the Finance
Dept conducts audits
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City Business License Cycle Renewal Process Auditing Resources Burlingame Annual ending 6/30 Courtesy notices mailed
prior to renewal
Informal, using permit
and inspection records
Daly City Annual ending 9/30 Courtesy notices mailed
month prior to renewal
Require tax documents
of gross receipts at
renewal
Menlo Park Annual ending 12/31 Reminders sent 1 and 2
months ahead of time
Informal, using permit
and inspection records
Millbrae Annual ending 6/30 Courtesy notices mailed
month prior, delinquent
notices follow.
None
Oakland Annual ending 3/1 Multiple notices via mail
and email prior to
renewal
City’s audit team
conducts separately
Redwood City Annual ending 6/30 Bills mailed prior to
deadline
Outsourced to
contractor
San Bruno Annual ending 6/30 Courtesy notices mailed
month prior, delinquent
notices follow.
Outsourced to
contractor
San Francisco Biennial ending 5/31 Bills mailed prior to deadline
Internally search for
unlicensed businesses
and check tax filings
San Jose Annual ending on
anniversary month
Bills mailed prior to
deadline
Coordination with fire &
code inspectors, field
audits, and verification
of renewal information.
San Leandro Annual ending 12/31 Courtesy notices/forms
mailed and emailed prior
to deadline
Selected internal audits
of renewal information
and applications
San Mateo Annual Courtesy notices mailed
prior to renewal
Outsourced to
contractor
Santa Clara Annual ending on
anniversary
Courtesy notices mailed
month prior to renewal
Informal, using permit
and inspection records
Sunnyvale Biennial ending 12/31 Courtesy notices mailed and emailed prior to
renewal
Internally review permit
and inspection records
Vacaville Annual ending 4/30 Reminders sent 60 days
ahead of time
Informal, using permit
and inspection records
South San Francisco Annual ending 12/31 Courtesy notices mailed month prior
Informal, check
financial times notices
of new businesses
South San Francisco, like most cities, has an annual cycle and mails courtesy notices the month prior to the renewal deadline each year. Unlike some other cities, however, there is no program in place to audit business licenses; instead, this is conducted informally by reviewing notices of new businesses and checking to see if they are registered with the City.
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5. BLT Revenue Comparison
The following table shows the reported revenues from business license taxes for each city in FY21 to FY24 (Adopted):
City FY21 Actual FY22 Actual FY23 Actual FY24 Adopted
Berkeley $19,521,973 $21,654,766 $22,554,810 $20,400,000 Burlingame $566,662 $600,000 $1,300,000
Daly City $5,947,105 $5,710,744 $5,846,044 $5,817,692
Menlo Park $4,653,742 $5,986,988 $5,690,988 $5,128,500
Millbrae $841,000 $3,340,000 $2,794,000
Oakland $101,289,621 $111,880,000 $125,248,004 $128,138,817 Redwood City $3,637,470 $3,689,074 $3,312,374
San Bruno $1,974,584 $2,277,785 $1,929,258 $2,615,287
San Francisco $957,140,000 $1,065,350,000 $902,300,000
San Jose $85,375,289 $86,000,000 $87,500,000
San Leandro $5,898,566 $6,309,045 $5,830,000 $6,100,000 San Mateo $6,686,853 $6,179,303 $6,302,889
Santa Clara $4,738,855 $3,500,000 $8,594,000
Sunnyvale $1,922,860 $2,045,190 $1,993,149 $2,061,681
Vacaville $354,818 $407,457 $393,910 $400,000
South San Francisco $2,741,082 $2,661,252 $3,700,000
The following table shows, for comparison purposes, the total General Fund revenue of each city from FY21 to FY24 (Adopted):
City FY21 Actual FY22 Actual FY23 Actual FY24 Adopted
Berkeley $232,028,202 $284,528,005 $269,974,632 $261,726,315 Burlingame $64,906,266 $63,701,701 $72,132,955
Daly City $96,058,806 $117,557,113 $118,921,945 $115,376,535 Menlo Park $56,737,523 $67,234,139 $81,072,742 $75,144,952 Millbrae $33,459,000 $39,410,000 $39,694,000
Oakland $2,116,534,380 $2,266,940,952 $2,136,939,860 $2,146,660,364 Redwood City $181,462,010 $160,098,051 $176,713,011
San Bruno $52,443,667 $59,910,391 $57,137,821 $64,922,570 San Francisco $14,001,270,636 $14,613,035,863 $14,572,513,030 San Jose $2,343,105,975 $2,039,127,536 $1,501,520,585
San Leandro $131,848,874 $135,453,589 $133,526,710 $137,992,835 San Mateo $163,782,327 $157,494,504 $159,125,424
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City FY21 Actual FY22 Actual FY23 Actual FY24 Adopted
Santa Clara $242,183,546 $242,058,385 $274,263,600
Sunnyvale $184,728,116 $219,156,563 $208,501,511 $219,006,770 Vacaville $118,158,991 $131,928,134 $137,413,869 $139,227,959 South San Francisco $131,723,393 $137,232,796 $140,162,481 Based on these figures and the total count of businesses, the following table shows each city sorted by per-license revenue in FY2023, as well as each city’s business license tax as a percentage of all general fund revenues in that year.
City
Licensed
Businesses
(Est.)
FY 2023 Revenue
per Business
FY 2023 Revenue as
% of General Fund
Berkeley 13,302 $1,696 8.4%
Burlingame 8,003 $162 1.8%
Daly City 7,763 $753 4.9%
Menlo Park 5,337 $1,066 7.0%
Millbrae 3,390 $985 8.5%
Oakland 71,385 $1,755 5.9%
Redwood City 8,429 $393 1.9%
San Bruno 2,898 $666 3.4%
San Francisco 103,128 $10,330 7.3%
San Jose 57,755 $1,489 4.2%
San Leandro 11,012 $529 4.4%
San Mateo 7,396 $835 3.9%
Santa Clara 12,765 $274 1.4%
Sunnyvale 7,634 $261 1.0%
Vacaville 5,222 $75 0.3%
South San Francisco 3,503 $760 1.9%
Average (Minus Major Cities) 7,763 $624 3.9%
The per-license revenue, as well as the percentage of GF revenue accounted for by business license taxes, vary widely from city to city, reflecting differences in philosophy and approach. South San Francisco tends to fall near the middle of this range. At $760, the City’s per-license revenue sits just slightly below the median ($753) of the 15 California cities with available data, while the 1.9% of general fund revenue received from business license taxes in South San Francisco is lower than 10 of 15 California cities.
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Appendix – Fee Schedules
For cities with a published schedule of fees available online, those schedules have been collected and attached below for reference.
Berkeley
Industry Classification Category Tax Basis Base Rate Factor Per Year Tax Rate for $1,000
Administration headquarters Gross payroll 1 1.2
Business, personal repair services Gross receipts 1.5 1.8 Medical Cannabis Business Gross receipts 20.83 25
Non-Medical Cannabis Business Gross receipts 41.66 50
Construction contractor Gross receipts 1.5 1.8
Firearms and firearm ammunition Gross receipts 125 150
Grocer (retail or wholesale) Gross receipts 0.5 0.6
Manufacturing Value added 1 1.2
Miscellaneous business Gross receipts 2 2.4
Motor vehicle sales Gross receipts 1 1.2
Nonprofit organizations Per square foot Not applicable; see section 9.04.305
Not applicable; see
section 9.04.305
Private rubbish haulers Gross receipts 125 150
Private franchised/recycling rubbish
haulers Gross receipts 1.5 1.8
Professional-Semiprofessional Gross receipts 3 3.6
Professional sports events Gross receipts 83.33 100
Recreation and entertainment Gross receipts 3.75 4.5
Rental of real property (except five or
more dwelling units) Gross receipts 9 10.81
Rental of five or more dwelling units Gross receipts 24 28.8 Retail trade Gross receipts 1 1.2
Wholesale trade Gross receipts 1 1.2
Burlingame
Gross Receipts Fee
$0 - $249,000 $200
$250,000 - $999,999 $300
$1,000,000+ $750
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Menlo Park
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Oakland
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Redwood City
Type Base Tax
Residential Property Rental $80 $29 per unit of dwelling space in excess of 3 units
Non-residential Property Rental $80 $29 per 1000 sq. ft. or fraction Real Estate Brokerage $80 $53 per salesperson or employee Dance Hall Operator $80 $795 flat annual
Vehicle Wrecking Facility $80 $795 flat annual
Christmas Tree Lot Sales Operation $80 $795 flat annual Commercial Advertising $80 $795 flat annual
Fortunetelling $80 $795 flat annual
Junk Collector $80 $795 flat annual
Pawnbroker $80 $795 flat annual
Itinerant Vendor $80 $53 per week
Solicitors/Hawkers $80 $53 per day
Peddlers $80 $53 per person
Curb Painters $80 $29 per day per person
Carnival Operator $80 $660 per day
Coin-Operated Device Activity $80 $16 per device
Commercial Advertising Vehicle Operation $0 $80 Per Vehicle (Base Tax Not Applicable) Business License Tax Assessment Program Update South San Francisco, CA Matrix Consulting Group 40
Type Base Tax
Contracting (excluding any contracting
business with gross receipts over
$50,000.00) Business In Redwood City
$80 $53 flat annual
San Bruno
Gross Receipts Annual Tax
Less than $75,000 $75.00
$75,000 or more, but less than
$100,000
$100.00
Over $100,000 $110.00, plus $5.25 for each additional $5,000 or fraction thereof up to $500,000
Over $500,000 $530.00, plus $4.00 for each additional $5,000 or fraction thereof up to $1,000,000
Over $1,000,000 $930.00, plus $2.75 for each additional $5,000 or fraction thereof up to $5,000,000
Over $5,000,000 $3,130.00, plus $1.65 for each additional $5,000 or fraction thereof
Area of Place of Business Occupied Annual Tax
999 square feet or less $150.00
1,000—2,499 square feet $250.00
2,500—4,999 square feet $350.00
5,000—9,999 square feet $550.00
10,000 square feet or more $850.00
Number of Employees Additional Annual Tax
1—10 $7.50 per employee
11—25 $75.00, plus $5.00 for each employee in excess of 10 26—50 $195.00, plus $4.00 for each employee in excess of 25 51 or more $350.00, plus $3.00 for each employee in excess of 50 Business License Tax Assessment Program Update South San Francisco, CA Matrix Consulting Group 41
San Francisco
San Francisco Gross Receipts Schedule A Schedule B
$0 to $100,000 $56 $46
$100,000.01 to $250,000 $93 $78
$250,000.01 to $500,000 $157 $124
$500,000.01 to $750,000 $314 $250
$750,000.01 to $1,000,000 $439 $376
$1,000,000.01 to $1,500,000 $628 $518
$1,500,000.01 to $2,000,000 $879 $725
$2,000,000.01 to $2,500,000 $376 $250
$2,500,000.01 to $7,500,000 $628 $502
$7,500,000.01 to $15,000,000 $1,885 $1,414
$15,000,000.01 to $25,000,000 $6,285 $4,714
$25,000,000.01 to $50,000,000 $15,716 $9,429
$50,000,000.01 to $100,000,000 $28,290 $18,859
$100,000,000.01 to $200,000,000 $37,720 $25,146
$200,000,000.01 and over $44,006 $37,720
San Jose
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San Leandro
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San Mateo
Gross Receipts Tax
Under $30,000 $25.00
$30,001—$40,000 $30.00
$40,001—$45,000 $38.00
$45,001—$50,000 $46.00
$50,001—$55,000 $54.00
$55,001—$65,000 $62.00
$65,001—$70,000 $70.00
$70,001—$75,000 $78.00
$75,001—$80,000 $86.00
$80,001—$85,000 $94.00
$85,001—$90,000 $102.00
$90,001—$95,000 $110.00
$95,001-$100,000 $115.00
Over $100,000, $115.00 plus $2.85 for each $5,000
or fraction thereof, thereafter.
Vacaville