Business license fees a patchwork

The amount of money a business pays to be licensed varies wildly city by city from San Francisco down the Peninsula, from a low, flat $25 in Colma to tens of thousands of dollars for Daly City’s biggest businesses.

An Examiner look at fees for licenses in San Francisco and 13 San Mateo County cities show a patchwork of prices and methods for determining prices, from charging a fraction of a percentage on gross receipts, to requiring companies to pay by employee head, to imposing a flat tax on every business. Rules range from the straightforward, such as Foster City’s .075 percent tax on gross receipts for most businesses, to the arcane, such as Brisbane’s $100-a-day license fee for psychic mediums.

The difference, government finance managers say, lies in whether or not the city’s trying to make money on business licenses. Colma, which has the lowest license fees surveyed, collects a significant amount of money from gambling revenues at the Lucky Chances card room and sales tax, and has a budget-to-population ratio other cities envy. Daly City, with the highest potential taxes of the cities surveyed, passed its business license charges of one-tenth of a percent on gross receipts at the ballot box in 2004, specifically to raise money. It was called Measure N, and it earned 53 percent of the vote.

Daly City collects about $1.6 million in license fees annually.

“The City Council approved it [going to the voters] in order to make up for the shortfalls of the state takeaways,” Daly City Finance Director Don McVey said. “Business license is one of the few taxes that is left to local control, and even then you have to go to the voters to change it. We went out and explained to the Chamber of Commerce and they were supportive of the need for local services.”

Pacifica also has a high-end fee structure, made more complicated by a series of business classifications with different taxes. There’s a cap on contractor license fees of $1,000, but “for everybody else, the sky’s the limit,” Pacifica finance administrative assistant Gillian Cadgene said. The largest business license fee collected this year was $18,762, while the lowest was the minimum $75, she said. The fees are intended to make up for the city’s small tax base, she added.

While she said she receives some complaints about the minimum fees from tiny home-based businesses, apparently many local business owners in these cities don’t mind.

“It’s not any problem at all. Death and taxes are inevitable,” said Rex Golobic, the owner of Serra Bowl. “But we have no complaints about the service we’ve been getting from Daly City.”

Robert Beck of San Carlos ad agency Beck Interactive said he also finds his city’s fees “pretty painless.” San Carlos charges professional businesses $59 plus $30 per employee, with a $126 minimum. Beck said his agency’s fees have ranged from $500 to $255.

Mario Panoringan, CEO of the Daly City-Colma Chamber of Commerce, said he’s heard no criticism of the city fees. Nor has Linda Asbury, CEO of the San Mateo Area Chamber of Commerce. San Mateo also has comparatively high business license fees, from which it earns about $2.8 million annually.

Ironically, Burlingame city staff members said they do hear complaints about the license fee from time to time, even though at $100 with a one-time $35 startup fee it’s one of the cheapest in the county for many businesses.

In San Francisco, fees are capped at $500. The amount is tied to the business’s payroll figures, but is separate from the city payroll tax. The City collected $7,763,465 in license fees during the last fiscal year, according to David Augustine, the policy and legislative manager in the city treasurer’s office.

“The main purpose is to have one centralizeddatabase for all the businesses in San Francisco,” he said.

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