The privilege license tax is a tax levied on the privilege of conducting a particular trade or business. If you are a professional that is licensed by a board, you most likely should be paying state privilege license tax every year (for example, accounts, attorneys, general contractors, realtors). There are some exceptions to this requirement, like professionals working for the government or non-practicing physicians, to name a couple.
However, there are some surprising professions on this list; most notably, photographers.
The license is issued to the individual and not the business. While the individual can go ahead and form his/her business, the license should be applied for before beginning business. It is unlawful to engage in business without obtaining a required privilege license. The penalty for failure to obtain a license is the greater of five dollars ($5) or five percent (5%) of the amount prescribed for the license per month or fraction thereof from the time the amount is due until the amount is paid, up to a maximum not to exceed twenty-five percent (25%).
The privilege license tax is annual and is due by July 1 of each year. The penalty for failure to pay any tax when due is ten percent (10%) of the tax due.
Because the license is issued to the individual and not the business, if an individual is engaged in more than one business, he/she will have to obtain a privilege license for each business. If you are a licensed psychologist who has a photography business on the side, you must obtain two privilege licenses and pay two taxes, for example. The license must be displayed conspicuously at the location of the licensed business, trade, or profession.
If you have questions about the privilege tax, please give us a call!
