Those holding a current business license in Santa Clara are subject to the Business License Tax. In the first year of implementation, and annually thereafter, all new and existing businesses in the City of Santa Clara will be required to submit an application for a business license that includes information on their business locations and number of employees. 

Approximately 30-45 days prior to their renewal due date, existing business owners will receive instructions by email or mail on how to renew their business license online. Businesses can contact the Business Tax Unit by phone at 408-615-2310 during business hours Monday – Friday, 8 a.m. – 5 p.m. Renewal notifications will continue to be sent out on a rolling basis as licenses come up for renewal. Businesses have a 30-day period following the renewal date to pay their Business License Tax.

Yes. Businesses with earnings of less than $5,000 per year, charitable and non-profit organizations as well as businesses owned by disabled veterans are exempt. While exempt from the tax, these businesses are still required to submit an annual application with proof of earnings and/or appropriate documentation to support their stated exemption qualifications.

Under the new tax structure, all businesses with greater than $5,000 in earnings will pay a flat rate of $45 per employee or $15 per rental unit for landlords, with a maximum cap on the tax of $350,000 on the City’s largest businesses. These rates will be subject to an annual adjustment based on the consumer price index (CPI) but capped at 5%.

The number of employees is determined by the number of persons engaged in the business, including the owner, over the four quarters immediately preceding the application and should be calculated as follows:

1. Business owners should use employment data reported to the State of California Employment Development Department if the applicant files such information with the State (DE3 and other forms, “DE3 Contribution Return and Report of Wages Under the Unemployment Insurance Code).
2. For businesses with multiple locations located in and outside of the City, the applicant may self-report the total number of employees. The report shall include all employees that perform services in the City which include any of the following: 1) an employee where all or most of the employee’s services are performed in the City; or, 2) where an employee’s base operation is located in the City; or 3) the place from which the business exercises basic and general direction and control over all the employee’s services in the City.

An “employee” is any or all persons engaged in the operation or activity of any business, whether as owner, a corporate officer, a partner, agent, manager, solicitor or any and all persons employed or working in such business either full-time, part-time, permanent or temporary”

The “number of employees” is the number of persons employed in the business as anticipated or the number of employees including owner(s) at the time of application or renewal.

The business applicant will be required to submit a signed affidavit listing the total number of employees and locations during the annual application/renewal process.

Yes, for purposes of calculating the business license fee, the number of employees should include the business owner(s) in the count.

On the business license tax application form, out-of-City businesses will be required to estimate the number of employees and the number of days their employees will be conducting business within the City of Santa Clara. “Operating a business in the City” shall include every person entering into a contract with the City including without limitation, contracts for public works, consultant services and franchise agreements.

Businesses whose employees come into the City for six (6) or more days during a calendar year to work or render services will be subject to the following rate schedule:

Out-of-City Business License and Tax Schedule

Number Of Days	Percentage Of Tax
6-64	25%
65-129	50%
130+	100%

 

For example, a business with 4 employees who are projected to work in Santa Clara 10 days a year would pay a business license tax fee of $45: (4 employees x $45 per employee) x 25%.

One of the benefits of the Business License Tax program update is that the process for businesses with multiple locations has been streamlined. In the old system, each location had its own business license. For business owners with multiple locations, this meant duplicate applications and multiple tax bills.

With the new update, businesses will now be able to submit one renewal form for all of their locations at the same time. During the first year of implementation, the number of locations and employees will be validated during the renewal process and fees due at the time their first location is up for renewal.

Since your multiple locations will be reported under a single business license, there may also be a pro-rated charge for locations that would have otherwise renewed later in the year.

To help small businesses transition to the new structure, the City has approved a program that will grant a one-time subsidy to qualifying businesses located in Santa Clara with 49 employees or less (including business owners) as they renew their business license to help offset the cost in 2023/2024. While the tax for the City’s largest companies will increase under the new structure, a cap of $350,000 has been adopted in an effort to maintain the City’s business-friendly environment.

Employee Range	Subsidy Per Business
0-4	$30
5-9	$75
10-19	$100
20-49	$200

The new program will go into effect on July 1, 2023. Businesses seeking to obtain a new license should plan to pay their fee when their application has been submitted and verified. Existing businesses will be responsible for complying with the new application process at the time of their scheduled renewal date. For businesses with multiple locations, a new application that consolidates all locations and number of employees into one application document will be due at the time their first business location is up for renewal.

For the most current information on the implementation of the Business License Tax Update, check this webpage for updates.

For questions about the Business License Tax Update, please email: BusinessLicense@santaclaraca.gov.