Online affiliate marketing: local business license needed?

by plugsnpixels

Posted: 13 years ago 16 replies

INTERNET MARKETING

I work full time and run an affiliate marketing website on the side. I'm a good boy and report all affiliate earnings on my tax returns.

My city (in California) seems to have gotten very efficient lately because for the first time ever they sent me a letter saying they understand via my filing a Schedule C that I am doing business in the town (based on my home address). I am encouraged to come pay them a visit to license up.

I can see where this would apply to local contractors and such, but online marketing? None of the developers for whom I market software are in this area, FWIW.

Your thoughts?

PS:

http://www.businessnameusa.com/busin...fornia_dba.htm says,

"All Business, (Home, online, websites, stores, consultants, offices, contractors, ebay, or any other business), are required to register a Business License", so maybe it does apply, though this is coming from a third party "service" that helps you get set up, so...

However, my particular town's website (under "Business Licenses") doesn't refer to online businesses, just local ones.

At the very least I will need to call them:

"Contact the City Business License Division at... to discuss the details of your particular business operation."

#affiliate #business #license #local #marketing #needed #online

mikeroosa 13 years ago

I would say just go down and get the license. Here is Florida they are very cheap.
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Rob Whisonant 13 years ago

It sounds like you do need a business lic. Most areas will fall into one of the 3 categories.

1. All businesses including home businesses are required to have a local business license.

2. All businesses that have vehicle traffic to it need a license.

3. Some counties don't issue business licenses at all.

You also need to check with the state to see if you need a retail (sales tax) license. Some require you to have it even if you don't sell anything that is taxable. In most states you would still be required to file an annual business property tax return and pay tax on the property you use in your business.
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plugsnpixels

13 years ago

Rob, what qualifies an activity to be a "home business"? Literally, the sort of thing I do can be done with a laptop using wifi in a coffee shop or anywhere else. I don't claim home office deductions beyond minimal odd office supplies (and I don't own; I rent).

I'm not handling physical products; no cars drive over to see me; I do not handle the transactions. I just connect the customers to the sellers and get a commission for each sale I encourage.

Again, I wil call my town next week but I'm still interested in input from various Warriors.

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Rob Whisonant

13 years ago

Originally Posted by plugsnpixels

If you make money from an activity and don't have a business location, it's a home business regardless of where you actually do your work.

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Brad Campbell 13 years ago

I just went through this myself -- my city (in Arizona) hit me with the same crap and when I called to talk to someone, I received a bunch of "ummm... I think you might possibly potentially maybe need to pay us..."

No one really understood WTH affiliate marketing was... in the end, I went ahead and paid the fee, got my license, etc...

But now, they're claiming I need to pay them a "sales privilege tax" on all my earnings. This really doesn't make sense to me -- I can understand paying the license fee, but a sales tax to my city for selling other ppls' digital products via a 3rd party payment processor to customers that aren't even in my state, let alone my city...

Does anyone know if this is correct? My accountant says no, but my city says YES...

I'm a good lil affiliate as well and report all of my earnings for income tax... but this seems flat out wrong to me...

-B
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plugsnpixels 13 years ago

I'm thinking the same way, Brad. Only conclusion I can reach is that cities are getting more desperate for revenue. In my case, this is CA after all!
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- Brad Campbell 13 years ago
  
  Originally Posted by plugsnpixels
  
  I'm thinking the same way, Brad. Only conclusion I can reach is that cities are getting more desperate for revenue. In my case, this is CA after all!
  
  I couldn't agree more -- this HAS TO be the case. Now my only dilemma is do I mark the little box that says "no activity" or suck it up and pay them? Guess I need to quit being stingy and shuck out $400 for my attorney to answer this, LOL...
  
  (but if anyone else happens to know a definite answer, would love to hear it)
  
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plugsnpixels 13 years ago

Nah, they'll hunt you down! ;-) Especially if W2s are involved...
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plugsnpixels 13 years ago

Well, I called the city and they said I am a "home based business" offering a "service". So not only do I need a business license, I need a Home Occupation Permit (!). Altogether, it'll cost about $160 (the latter form is the more expensive of the two, but is only needed once). And my landlord needs to sign the thing-!

I did find out from the voice mail message from the city that a lot of people were calling about this particular form, so I guess I wasn't the only one receiving it...

So I guess I will step it up and play the home office deduction game.
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Istvan Horvath 13 years ago

Your city is not the only one... Last year this made headlines all over the web:
Pay Up :: News :: Article :: Philadelphia City Paper
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AlexR 13 years ago

I'm not in the US, but seems to me that you are operating a business from SOMEWHERE and that somewhere's authority wants you to get a license. If it's a home based business (you actually work from home) then it applies to your home as being the business address.

If you do all, or the majority of your business from a coffee shop, then the coffee shop is your business address. The coffee shop may then ask you to pay rent, lol.
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- plugsnpixels 13 years ago
  
  Thanks for the link to the blogger article. In reading the comments, I wonder if I might gain some advantage from using a PO box (perhaps even in a different town?) for my business address? Maybe it's too late for this round; maybe next year.
  
  I feel a visit to an accountant coming on...
  
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Rob Whisonant 13 years ago

I would get all the licenses and permits and not try to play games with them. Hint... You may want to check and see what can happen to you if you are cited as operating a business without a license.

I would hate to have the police come a calling for not putting out a few hundred dollars to be legal.
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Rich Struck 13 years ago

This is why you need to keep your mouth shut and keep a low profile. Before you say anything to any government entity, talk to a lawyer. People in government are bureaucrats who are not paid to think. You cannot reason with them.

Fortunately where I live nobody cares what you do and that is one reason why we moved here.
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plugsnpixels 13 years ago

Yeah, even these costs are cheaper than getting professional advice so off I go...

Rich, I checked a map and I think they leave you alone because your town is so small and they haven't found you yet! What type of place did you move there from?
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plugsnpixels 13 years ago

Well, this week I licensed up. Let's discuss the advantages to me now.
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Online affiliate marketing: local business license needed?

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