If you are ANY of the following, please read on;
- I receive or will start to receive 1099-NEC forms (NON-EMPLOYEE COMPENSATION) and/or 1099-K forms. (1099-NEC forms were previously 1099-MISC forms with Box 7 filled out.)
- I am a Sole Prop, Self Employed, Independent Contractor, DBA
- I own an LLC (single member or multi-member partnership)
- I own an S CORP, or I own an LLC that is taxed liked an S Corp
- I own a C Corp
- I own a Partnership but am not an LLC
- I am paid in Cash! CASH BABY!
- I have a Schedule C on my tax returns
- I own a rental property in LA ( go to the end of this book and click on the link to get info on this situation)
Did you answer NO to ALL those questions? Then you do not need to read this any further. Thanks for playing!
Did you answer YES to at least one of those questions? Then keep on reading!
The next question is,
Are you ALSO any one of the following;?
- Earning my income in the City of Los Angeles
- Earning my income in the City of West Hollywood
- Earning my income in the City of Beverly Hills
- Earning my income in the City of Santa Monica
- Earning my income in the City of San Diego
- Earning my income in the City of San Francisco
- Earning my income in a major metropolitan area in the US?
- Did you answer NO to ALL those questions? Then you do not need to read this any further. Ciao Baby!
Did you answer YES to at least one of those questions? Then keep on reading!
You probably have an obligation to register and report your gross income to the local city taxing authority.
This is sometimes referred to as a Business License, sometimes it is referred to as City Tax.
I am only going to talk about the City of Los Angeles Office of Finance. The other cities all have their own rules and idiosyncrasies, too many for me to cover. You will need to do your own research or go on their websites to see what your obligations are. They are actually very easy to understand and execute, whereas the City of Los Angeles Office of Finance is…well…do you know what PIA stands for?
If you work or earn money in the City of Los Angeles, AND get a 1099-NEC or a 1099-K
AND/OR
You are an entity such as an LLC, S Corp, C Corp, Partnership, etc., then the City of LA Office of Finance wants you to do 2 things.
- Register with them NOW if you haven’t already
- Report your gross income between Jan 1st and Feb 28th in the following year.
So, if you received your first 1099-NEC and/or 1099-K in 2021, or just opened a new entity (i.e. LLC, S Corp, C Corp, etc.,) in 2021, you need to register with them ASAP, then report your gross 2021 earnings to them in between Jan 1st and Feb 28th of 2022.
CLIENT: But I haven’t even done my personal taxes yet!
ROD: Yes, I know, they are very unreasonable.
They go by GROSS INCOME, NOT NET INCOME. AND BY GROSS INCOME, I AM ONLY REFERRING TO YOUR 1099-NEC INCOME (and/or your 1099-K) OR YOUR ENTITY’S INCOME (THE INCOME FROM YOUR LLC, S CORP, ETC).
YOU WILL NOT BE REPORTING YOUR W2 INCOME, OR ANY OTHER INCOME, to them.
CLIENT: Rod, what about if I receive a 1099-MISC with Box 1 or Box 2 filled out?
Or Box 3, or Box 6? Or any other box?
ROD: Nope, that does NOT count. Only 1099-NEC and/or 1099-K.
CLIENT: And you say it’s based on Net Income?
ROD: No, I said Gross income! NOT Net Income!
Once you are registered, you need to report your gross income annually, until your situation and/or location changes.
If your gross income is under $100k, they will not impose a tax.
If you are in the entertainment industry, and your gross income is under $300k, they will not impose a tax.
BUT If you miss the Feb 28 deadline, they will tax you anyway.
KEEP IN MIND THE FOLLOWING
- They will NOT tell you or inform you that you have a filing obligation or that you need to register.
- They will NOT remind you or inform you that a deadline is coming.
- They WILL wait 2-3 years, once you have amassed enough penalties and interest, and
- THEN suddenly send you a bill overstating your income and overstating how much you owe them.
- They want you to make a mistake. That’s where they make their money.
- You can register and report income to them in person, by phone, by mail or online
Go to: www.finance.lacity.org
Do not wait until the Feb 28th deadline or you will be screwed, because…
- The Phone Lines are clogged
- There is a long line around the office
- The website crashes
- The Mail is slow and they make believe they never got your letter in time
Do all this at the end of January, so you give yourself plenty of time to do it right.
Be aware that even if you do everything correctly, this office is run by people who don’t care. Therefore, you may still get a bill from them, stating you never registered, (even though you did), or that you never reported your income (even though you did), or that you have a filing obligation (even though you don’t). They do this ALL THE TIME. ON PURPOSE.
THEREFORE, please document everything and make sure you receive AND SAVE confirmations.
They do not care nor are interested in doing the right thing. The Office of Discovery does not cross reference with their other departments that have your updated information. They just send out notices that are not based on any facts. They DON’T CARE.
If you just opened a new entity (i.e. LLC, S Corp, C Corp, etc.,) in 2022, you need to register with them as soon as you are able.
BTW
If you do end up paying any taxes to them, IT IS A DEDUCTION ON YOUR TAX RETURN. YAY!!!
IF YOU HAVE ANY FURTHER QUESTIONS, PLEASE GO TO: www.finance.lacity.org
LASTLY
IF YOU OWN A RENTAL PROPERTY IN THE CITY OF LOS ANGELES, YOU MIGHT NEED TO REGISTER WITH THEM
HERE IS THE LONG ASS LINK THAT EXPLAINS YOUR OBLIGATIONS