Virginia Business License Renewals Reminder

Overview of the Business, Professional and Occupational License (BPOL) and Due Dates

Did your business receive a notice from your local government regarding your business license tax renewal? 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 BPOL obligation now to prevent paying either too much or not enough.

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.

What is BUSINESS, PROFESSIONAL AND OCCUPATIONAL LICENSE TAX?

The Business, Professional and Occupational License Tax (“BPOL”), is imposed by all cities and many counties and towns in Virginia for the privilege of doing business within the locality.[2]  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.[3]  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.[4] 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.

If you have recently moved your business to the city you may be entitled to a BPOL incentive. Upon application and acceptance by the City, businesses relocating there may be eligible to pay only the minimum BPOL fee of 30 dollars per year for the first two years in the City. However, you must inquire about the incentive and complete the application to be eligible. A few other localities in the state offer BPOL incentives to new businesses or businesses relocating, thus they should inquire as this information may not be readily volunteered by the locality.

Benefits of Analyzing Business Activity and Income for BPOL

There could be some benefits for businesses that take the time to do careful analysis of their business activities and income, including:

• Reduction of BPOL taxes
• Refund opportunities may exist for prior years

Alternatively, 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

Learn about BPOL’s taxable basis and how the BPOL tax rate is classified:

[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). [2] Va. Code § 58.1-3703. [3] Va. Code § 58.1-3703.1. [4] Ruling of the Tax Commissioner, PD 01-210 (December 12, 2001)

Additional State and Local Tax Resources

• Top State and Local Tax Considerations for 2020/2021
• Overview of Virginia’s Popular Tax Credits