If you're a freelancer earning untaxed income providing services (things like consulting, design or creative services, etc) or selling things you make (artist, craftsperson, etc), or some combo of the above, then you're operating a business. You don't have to be a corporation, have an LLC, or even have an EIN to count as a business. The term the government uses for a freelancer without a formalized business structure is a "sole proprietor," which is a fancy way of saying you own and operate your own business.

In many major cities around the US (places like Los Angeles, New York City, and Philadelphia) and some states (like New Mexico), sole proprietors are subject to business taxes, just like any other small business. While we know it's not always the best news to learn you have to pay a tax, it's important to be aware of these rules and stay in compliance, because it can be expensive to get into compliance after the fact due to late fees and interest.

Below you'll find information about some of the city and state business taxes our clients deal with most frequently. If you don't see your state or city listed here, ask your advisor if they're aware of any local business taxes or licenses you may be subject to, or get in touch with your local chamber of commerce.

Los Angeles (and many other California cities and counties)

  • If you're doing business within LA's city limits for more than 7 days in a year, you need to be registered as a business with LA and may be subject to business taxes:
  • Many other cities and counties in California have similar local business taxes. Please check with your local governments to make sure you're in compliance.
  • Unfortunately, we're not able to handle these local California business taxes on your behalf. So mark your calendars so you don't miss the deadline for these.

New York City

  • Metropolitan Commuter Transportation Mobility Tax (MCTMT): If you are a freelancer in NYC and your annual profit exceeds $50,000 in a given year, you'll have to pay this tax. It's 0.34% (i.e. about 1/3 of one percent) and applies only to your freelance profits.
  • Unincorporated Business Tax (UBT): For freelancers whose annual profit exceeds $100,000, you'll be subject to UBT. The tax comes to 4% of your freelance profits.
    • If you're paying estimated quarterly payments, you should consider adding a separate estimated payment for UBT. Just remember you have to pay this separately from your state & city taxes. You can ask us for help in figuring out the right amount to pay for estimated UBT payments in a consultation, just write to info@brasstaxes.com.
  • We can take care of filing these taxes for your during your tax appointment.

Portland, Oregon and Multnomah County

  • For those freelancing in Portland/Multnomah County, you'll need to file and pay local business taxes.
    • The tax rates for the City of Portland and Multnomah County are 2.2% and 1.45% respectively. 
    • Freelancers with gross receipts (i.e. all the freelance money you bring in before expenses) less than $50,000 will be exempted from this tax, but we must file the form to get the exemption.
    • Within 60 days of starting as a freelancer in Portland or Multnomah County, you must obtain a BZT number. 
      • Call the Revenue Division to get this number (503-823-5157, Monday - Friday, 9:00am - 4:00pm.
  • We can file this for you in your tax appointment, as long as you have your BZT number.

Philadelphia

  • Freelancers in Philadelphia, you'll need to file and pay Net Profit Taxes. 
    • The tax rate is 3.79% of net freelance profits.
    • You must register with Philadelphia to get an account ID.
    • We can file this for you during your tax appointment, as long as your provide us with your 7-digit account ID.
  • If you're not in Philadelphia, reach out to your local government or chamber of commerce to make sure you're in compliance with any local business licenses/taxes, as some other Pennsylvania cities and counties have similar taxes.

New Mexico

  • All freelancers in New Mexico are subject to the Gross Receipts Tax. 
    • The tax rate varies by county, ranging from about 5% to about 9%.
    • You'll need to apply for a New Mexico Business Tax ID, which you can do here.
    • And then you'll need to stay on top of filing and paying this tax on your own, as we won't be able to file it on your behalf, though we will need to include your Business Tax ID number on your state tax return.

Cities and States Not Listed Above

  • Your local city or county government, or the local Chamber of Commerce, should be able to help you figure out if there's something you need to be doing.

Have questions, or need help with any of the above? Reach out to info@brasstaxes.com to set up a consultation.