Business Taxes & Fees
Business License: Gross Receipts Tax
Unlike state and federal income taxes, the business, professional and occupational license (BPOL) tax in Virginia is based on your business gross receipts (revenue before deductions). Different classes of occupations pay different rates, reflecting their relative operating margins. Your occupational category is based on your description of your business and possible follow-up questions, in accordance with Code of Virginia guidelines .
Each calendar year’s BPOL tax is based on the prior year’s gross receipts, except for the first year, which is based on itself. When you apply for a license, you will be asked to provide a good faith estimate of your first year’s gross receipts, and pay an estimated tax. This estimate will be corrected to actual in your second year. The first year is the only year you will be asked for an estimate.
IMPORTANT: Your first-year estimate must be reasonable. Under Virginia Tax Department guidelines, taxes paid by first-year taxpayers based upon estimates will be subject to correction with interest and penalties if an estimate proves to be unreasonable. Estimates of the tax due will be deemed unreasonable if they are less than 80% of the actual taxes ultimately due.
All business license applications are subject to minimum, nonrefundable $30 or $50 fee.
Special flat fees are offered to small businesses whose entire gross receipts are below $100,000:
| Gross Receipts | Flat Fee |
|---|---|
| $0 to $3,999.99 |
No charge (except first year - minimum $30) |
| $4,000 to $49,999.99 |
$30 |
| $50,000 to $99,999.99 |
$50 |
Otherwise, your entire gross receipts will be taxed according to the schedule below:
| Category | Rate Per Hundred Dollars |
|---|---|
| Wholesale | $0.05 |
| Contractor | $0.16 |
| Retail Sales |
$0.20 |
| Business, Personal, Repair and Other Services |
$0.36 |
| Utility | $0.50 |
| Professional Services |
$0.58 |
Other Taxes and Fees
In addition to the BPOL tax or fee, other fees may apply. For example, sellers or servers of alcoholic beverages pay annual fees depending on the type of beverages served or sold. A permit from the Virginia Department of Alcoholic Beverage Control is also required for those businesses.
Most businesses will be liable for annual business personal property (BPP) or machinery and tool (M&T) taxes.
Some businesses, depending on the nature of the business activity, will be responsible for collecting and remitting monthly taxes (county prepared food and beverage tax, county lodging taxes, and/or state retail sales and use tax).
When you apply for a business license, you will be registered for these other tax types as needed. Our business license inspector will be able to provide a more detailed estimate of your taxes and fees, depending on your business model. Please call 757-253-6698 for more information.