Legal Question in Business Law in California
I live in Southern California, specifically within San Bernardino County (and city). I recently started doing some freelance editorial work (small amount of work) and wanted to start up my own small business. After inquiring with the city, I realized that it was necessary for me to have a business license and permit (which makes sense). Although I do 60% of my work from home, I also perform it in other places (coffee shops, etc). At first, I was given different answers about what kind of permit I would need - home occ. or commercial. I was eventually told that while I would be operating the business from home (which would normally require a home occ. permit), I could have a separation (on the license and permit) by listing a UPS address instead of my home address (thus, I would receive a commercial permit instead of a home permit). This was very important to me as I did NOT feel comfortable having my home address listed on my business license or be available to the general public (SB city won't redact it from public view). However, when I called to verify this, I was informed that a UPS address was not sufficient and that I would have no other option but to list my home address. This is a non-negotiable for me for privacy reasons. With that said, I will not be getting a license and/or permit with SB city (which is not a huge concern, as I am moving in the near future to another state. I plan to get my license there). I am concerned, however, with following the law. I recently completed two (and only two) mini freelance projects within SB city. One was for about $90 and the other around the $200-$300 range (have not accepted payment for either yet). I was informed by SB city that it was not lawful to perform work in this way (within their city) without having a license. Since I no longer plan to pursue getting a license with them, my MAIN question is this, "is there any way I can legally get paid for the work I have already completed?" For instance, would it be legally acceptable for me to ask for donations for the work performed instead of charging/sending out an invoice? One of my friends, who is a sole proprietor like me, did this at one point with her small business (while she was on her way to getting licensed). Is this legal or acceptable in any way? If it isn't, unfortunately, I will not be able to receive any payment for my work. Just want to make sure I have exhausted all avenues here before moving forward. Thank you.
1 Answer from Attorneys
You have already broken the license law by performing work with an agreement for compensation within the city limits without a license. It does not make collecting your payments any more illegal. Bear in mind, though, that city business licenses are really just a tax system. Unless your customers go to the city and tell them they hired and paid you, the city really has no way of determining if you broke the law or not, and the penalties even if the city comes after you are just a) a cease and desist order until you have a license (which doesn't matter since you are moving) and b) possibly fines, but for less than $500 in billings it would cost the city more to collect than they'd get. So they are unlikely to give a damn. Bottom line: at this point you can't get in any more trouble by collecting what you are owed, and you really are in about as much trouble as a traffic ticket.
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