Business License Tax
About the City of Cloverdale Business License Tax
In 1965, the City of Cloverdale business license tax ordinance 220-65 was established to license “the transaction and carrying on of certain businesses, trades, professions, callings and occupations in the City of Cloverdale, for the purpose of raising municipal revenue.” The last increase in tax was adopted in 1983 with the passing of Ordinance 354-83.
The tax imposed is a flat-rate tax based on the type of business being conducted in the City of Cloverdale. The City is a non-regulatory entity and therefore is only required to collect the tax, not enforce other conditions of business ownership or reporting that may be required by state, federal or local law.
A City of Cloverdale business license is not a regulatory license— it is a tax to help pay for the public safety needs of the community; and to provide ongoing maintenance of our streets and parks for the citizens of the City of Cloverdale. Conducting business in the City of Cloverdale without a license can result in penalties, Notices of Violation and Administrative Citations. It is a misdemeanor to violate the City Business License ordinances.
Frequently Asked Questions (FAQs)
What is a Business License Tax Certificate? A Business License Tax and Certificate is an annual tax you pay each fiscal year for doing business within the incorporated area of the City of Cloverdale. Cloverdale's municipal code requires that you obtain a license prior to conducting any business activity within the City. Even if your business is located outside the city limits or you have a business license from another city you are required to pay tax in Cloverdale. The Business License Tax Certificate is evidence only that your tax has been paid. Other permits may be required to open your business. A separate tax certificate is required for each type of business at the same location or for each branch location. Receipt of a Business License Certificate does not constitute an endorsement of the business nor does it grant permission to conduct business at any place prohibited by the City’s Zoning Ordinances or any other federal, state, or local regulation.
If the City's Business License Tax doesn't regulate professionals, trades people and business owners, what does the license do? The City of Cloverdale business license is a tax on the privilege of conducting business in the City of Cloverdale and is solely for the purpose of raising revenue for municipal purposes. The payment of your tax for a business "license" simply reflects a tax payment in much the same was "license" plate on a car represents a tax payment.
Who needs to pay the business license tax? Essentially anyone who sells a product, produces a product or provides a service is required to pay an annual tax which is initially collected with the application. To be clear, if you do not receive a payroll check for the type of product you sell or service you provide, you are probably subject to a business license tax.
I receive a 1099 earnings certificate that I file with my tax return because my employer does not pay me like their other employees. Do I need to pay the Business License Tax? Yes you do. You are considered an independent contractor or are self-employed, therefore, act as a business owner even if you provide these services to one business or individual.
Why do I need to pay this tax? The City of Cloverdale is required to collect the business license tax equitably and accurately from all individuals and entities conducting business in the City of Cloverdale. This tax is used for the benefit of the community by using the revenue to provide 9-1-1 emergency services to the community; maintain city streets and public parks; furnish animal control services; and provide local law enforcement and community services as a few examples. Without this revenue, services are subject to a reduction in staff or maintenance.
Do I need planning, zoning and/or building permits before I submit my business license tax application? Individuals and businesses can submit and pay a tax anytime they expect to do business in Cloverdale. However, planning, zoning and/or building permit requirements may also need to be in place before you start providing business services. Please contact the Cloverdale Community Development and Planning Department at 707.894.1701 for more information. They are open Monday—Thursday 8:00am—5:00pm and closed for lunch.
Do I need to have a Fictitious Business Name or dba? County regulations require persons doing business for profit under a fictitious name (does not included your surname in the company name) file a fictitious business name statement. For 24/7 pre-recorded information, please call the Sonoma County Clerk's Office at (707) 565.3700.
Are there any restrictions on where I do business? Every business must meet planning and/or zoning requirements to ensure that its business category and site are compatible. Before signing any leases, please contact the City of Cloverdale Community Development Department at (707) 894.1701.
I conduct business in several towns. Can I just get one license to do business in all of them? Unfortunately, no. Each city and town has its own business license requirements and probably need to obtain a license for each. Cloverdale will not honor any business license certificate obtained from another city or town.
My business is just starting and I haven't made any money. Do I still have to pay a tax? Yes. The tax is imposed is you intend to or have started doing business in Cloverdale, whether you have or have not generated income from your business. This includes a part-time or hobby-related business.
I own more than one business. Do I need to pay a separate tax for each? Yes, if you own more than one business, a separate Business License Tax Certificate is required for each.
How much does it cost? The business license is based on a flat tax plus additional amounts depending on the type of business and number of employees. A typical annual business license tax starts at $56.25 up to $337.50 annually. All taxes rates are listed in the municipal code which can be found on the city website at www.cloverdale.net, and are included with the Business License Tax Application.
How often do I pay this tax? The tax is an annual amount. Each December, the City will mail a renewal notice and bill to the address on record and payment is due prior to January 31st of each year to prevent penalties. It is the responsibility of the business or individual to notify the City in writing when they do not intend to do business in Cloverdale for the next calendar year. Once an account is inactivated, a new application is required to resume business.
How do I obtain a license and how long does it take to apply? You can obtain an application from City Hall, or download one from this website. Complete the application and return it with your payment to City Hall at 124 N. Cloverdale Blvd., Cloverdale, CA or mail it to PO Box 217, Cloverdale, CA. Once received and the payment has been processed, you will receive your business license certificate in 2-6 weeks.
Examples of companies and persons required to pay the Business License Tax
- Any business in a commercial or industrial location selling or providing a product
- Persons who have a home office or use their home as the headquarters for their business
- Businesses which are located outside the city limits but transact business in the city, such as contractors, house cleaners, repair people, gardeners, fumigators, telemarketers, distributors of goods to a retail location, et cetera
- Independent contractors such as doctors, real estate agents, hairdressers, janitorial contractors, and home party demonstrators and sales persons
- Apartment houses, hotels, motels, boardinghouses, and other housing facilities (except duplexes and single-family dwellings, which are exempt)
- Vendors who sell or deliver goods to a private residence or to a public place of business not owned by such a vendor, including by freight line
- A barbershop or beauty salon and each person renting space or providing a service
- Street vendors or peddlers; solicitors of all kinds
- All other lawful and authorized business, other than salaried employee or employees for wages
- Insurance offices are exempt as long as no other separate business is occurring in the same office
- Non-profits with a 501(c)(3) status are exempt from the business license tax
Still not certain if you need to pay the tax?
If you answer yes to one or more of the following sample questions, you are required to pay the Business License Tax:
- Do you own a business with a physical location within the city limits of Cloverdale?
- Do you rent space and sell goods from a business location not owned by you?
- Does your company deliver goods to a retail store in Cloverdale?
- Do you receive a 1099 federal tax form from a Cloverdale address?
- Do you file a Schedule C with your federal tax return for money paid to you from a Cloverdale location?
- Do you sell real estate in the Cloverdale?
- Does your company manage the sale or rental of a Cloverdale property?
- Do you sell a product like satellite television, housewares, personal goods, jewelry, et cetera?
- Do you rent space from a barbershop or beauty salon?
- Do you provide on-location repairs services?
- Do you have a vending machine located in Cloverdale?
- Do you collect money from someone after providing cleaning or gardening services?
- Did someone hire you to do construction in their business or home?
- Do you provide any kind of consulting service for which you receive payment?
- Do you sell products or services on consignment?
Where can I get a Business License Tax Packet and Application?
Print the application packet from this website: Business License Applications
Pick up a packet in the lobby at City Hall Monday - Friday 8:00am - 5:00pm. City Hall is located at 124 N. Cloverdale Blvd., Cloverdale, CA 95425
Want a packet mailed to you? Send a self-addressed stamped envelope to City of Cloverdale, Attn: Business License Dept., PO Box 217, Cloverdale, CA 95425
Change in Ownership or Closed Your Business?
If you are no longer conducting business please send written notification to the City of Cloverdale, Attn: Business License Dept., PO Box 217, Cloverdale, CA 95425. Provide the business name, address, certificate number, and the date you stop transacting business in Cloverdale. Please provide current contact information should we have any questions. Don't forget to sign your notice.
If you have sold your business please send written notification to the City of Cloverdale, Attn: Business License Dept., PO Box 217, Cloverdale, CA 95425. Provide the business name, address, certificate number, and the escrow closing date. Also include the new business owner's name, address and phone so we can contact them. Please provide your current contact information should we have any questions. Don't forget to sign your notice.
If you are moving away please consider whether you will retain clients within the Cloverdale city limits. If so, you will need to keep your business license account current by submitting a new application. Check the box on the top right corner "Change of Address" and complete Sections 1 and 4 of the application and return to the City of Cloverdale, Attn: Business License Dept., PO Box 217, Cloverdale, CA 95425.
Received a Notice or Letter from the City of Cloverdale?
Why did the City send a notice to me? The Finance Department is charged with enforcing the City's license ordinance. As part of this, City staff identifies businesses that may not be in compliance with this requirement, and send notices to inform them of the regulations. We use a variety of filings, such as Seller’s Permits, DBA’s, periodicals, professional licensing bureaus and tax filings with higher authorities to identify these individuals and businesses.
Does anyone verify the information before sending out the notices? Yes. Prior to sending out notices, information from various agencies that provide data to the City are compared against the City's business license database. If no match is identified, the City staff sends out notices to notify the business that a license is required. If it turns out the business already has a license, or it is determined none is required, the record is closed.
I already have a Business License Certificate with the City of Cloverdale, but I received a notice. What should I do? We suggest responding to the notice by US mail or by fax. Please list the account number that appears on your Business License tax certificate so we can be certain our records are accurate. If you are conducting a business under another name, different activity or additional locations, you will need to submit a separate Business License Tax Application for each. If you have any questions, you may contact us directly at (707) 894.2521. Important Note: If the notice was mailed to a separate legal entity from the one that already has a business tax certificate, it may need to pay its own business tax. A business tax certificate is unique to legal business entity.
How long do I have to respond to the notice? To avoid imposition of accrued penalties, you must submit your Business License Tax Application and payment on or before the due date specified on the notice. This date is always at least fourteen (14) days days after the the date of the notice. The delinquency date is the first date the penalty will be applied.