Have you renewed your Virginia business license for 2022?

Due Date for Business, Professional and Occupational License Tax is Approaching

The due date for filing the business license applications and paying the taxes due generally is March 1 for the City of Richmond and surrounding counties.[1] It is important to focus on your company’s Business, Professional and Occupational License (BPOL) obligation now to prevent paying either too much or not enough.

Overview of Business, Professional and Occupational License Tax

While there are uniform ordinance provisions that all localities must follow, be aware that localities do have some variances in their actual application and interpretation of BPOL. If your business operates in more than one location, you will need to stay up to date on requirements for each locality in which you operate.

BPOL is imposed by all cities and many counties and towns in Virginia for the privilege of doing business within the locality. The tax is generally imposed on individuals and businesses that are engaged in a business, trade profession, occupation or calling from a “definite place of business” in the particular locality. This “definite place of business” may be an office, a warehouse, store, or it may be the home of a self-employed person. Even a consultant who spends a lot of time traveling from client to client and who has no real office per se but who keeps all their records in their car is subject to BPOL – their home is considered their business location. Businesses that have various offices in various localities may be subject to BPOL in each of those localities, depending upon what they are doing and where they are doing it.

City of Richmond BPOL Fee Structure

BPOL may be a license fee or tax, or possibly both, depending upon the locality and the volume of receipts. The following illustrates the City of Richmond’s current BPOL fee structure:

• If the basis of the tax is less than $5,000 – no tax or fee is due
• If the basis of the tax is between $5,000 and $99,999.99, a flat fee of $30 is due
• If the basis is $100,000 or more, the tax due is the basis multiplied by the tax rate applicable to the business classification.

For more detailed information regarding the activity in which you will be engaged and a determination concerning its taxable status, contact the City of Richmond’s Assessment Office at 804-646-7000.

Henrico County BPOL Rates

Virtually all businesses in Henrico County must obtain a business license before commencing operation (the County has no Merchants’ Capital Tax).

If your business has gross receipts of less than $500,000, normally there is no business license tax but you must still file for a business license. For businesses with gross receipts of $500,000 or more the rate is usually $.20 per $100 of gross receipts (or $.15 per $100 for contractors). For more information, please call (804) 501-4310.

BPOL Tax Reduction and Refund Opportunities

Businesses that take the time to do careful analysis of their business activities and income may find a way to reduce BPOL taxes and/or identify refund opportunities for prior year BPOL tax.

BPOL Refund Example

if a business has been required to close or move from a locality during the year, it generally is entitled to a refund of BPOL (prorated) but must actively seek the refund by submitting the proper forms or contacting the locality directly

In addition, the City of Richmond provides a 2-year waiver of BPOL taxes (but requires the payment of the $30 fee each year) for businesses locating in the City for the first time.  Businesses must apply for the waiver and meet certain eligibility requirements.

Now is the Time to Fix a License Oversight

If you are in a locality that imposes BPOL and you have not registered/been paying the tax, now may be a good time to correct that oversight. Localities may impose interest and late filing penalties for businesses that have not complied with their specific requirements.  In addition, they may look back up to seven years for payment of back taxes and interest.

BPOL Tax Oversight Example

In Henrico County, there is a 10% penalty for late payment and interest is assessed at an annual rate of 10% beginning 30 days after payment was due.

Note, too, that many local business tangible personal property tax returns are due March 1.  There are potential planning opportunities that apply to some types of businesses.

Please contact your Keiter Opportunity Advisor for more information on BPOL tax or other state and local tax requirements or Email | Call: 804.747.0000.

[1] Surrounding counties as referenced herein include Chesterfield, Goochland, Hanover, and Henrico. But, note that Hanover imposes business license tax requirements only on certain businesses such as contractors, electric contractors, plumbers, and steam fitters (source:  Hanover County website).