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(A) General. In the case of an individual, partnership, association, corporation, fiduciary or other entity engaged in the conduct, operation or prosecution of any business, profession or other enterprise, there is imposed an annual license fee being the greater of $100 or 2% of the net profits of such business, profession or other enterprise, if and to the extent conducted in or derived from activity in the city, whichever is greater. In determining the proportion or amount of the subject net profits of a business entity doing business within and without the city, such business entity shall use and apply a business allocation percentage formula computed on the basis of business receipts within and outside the city and payrolls within and outside the city. “Business receipts” means the sum total of gross receipts from sales plus gross credit or charges for work done and performed or services rendered. “Payrolls” means the total wages, salaries and other personal service compensation.
(1) Determination of fee. After determining such business allocation percentage, the license fee shall be determined by applying that percentage to the entire net profits of the license payer wherever derived, thus arriving at the subject net profit, and computing 2% of the resultant subject net profit.
(2) Fee adjustment. Should it appear to the Occupational License/Net Profit Division and/or the Director of Finance that any agreement, understanding or arrangement exists between the license payer and any other person whereby the activity, business, income or capital of the license payer is improperly or inaccurately reflected, the Finance Director may adjust items of income, deductions and capital in computing any allocation percentage, provided any income directly traceable thereto is also excluded from entire net income, so as equitably to determine the license fee.
(3) Explanation of business receipts factor. The percentage of the license payer's business receipts within the city is determined by ascertaining the taxpayer's business receipts within the city during the period covered by the report and dividing the sum of such business receipts by the license payer's total business receipts within and without the city during such period. Receipts from the following are allocable to the city:
(a) Sales of the licensee's tangible personal property delivered to the buyer within the corporate limits of the city.
(b) Work done and performed or services rendered in the city.
(c) Rentals from property situated in the city where the rental of such property is a business activity.
(d) All other business receipts earned in the city. All receipts of the period covered by the report (computed on the cash or accrual basis, in accordance with the method of accounting used in the computation of the license payer's entire net income) must be taken into account.
(e) Business Allocation Factor equals “receipts inside city” divided by “total receipts.”
FACTOR = RECEIPTS INSIDE CITY
(4) Compensation for work done and performed or services rendered:
(a) The term “compensation” may include not only payment in cash or property but also the gross credits to or charges by the licensee, under its normal and usual accounting practices, for the performance of work or services. For example, a plant, factory or other establishment in the city which processes material or manufactures parts for other plants or factories owned by the licensee, and which may receive credit for the performance of such services only by bookkeeping entries, may be chargeable under this chapter with the gross amount of such entries in applying the formula discussed hereunder. Furthermore, such bookkeeping entries may be considered in lieu of cash or property payment in determining the net profits of any license payer under this chapter, even though the business allocation percentage formula may not be used by or be applicable to the licensee. However, whenever such gross credits or charges are included in computing the net profits of any licensee who pays a license fee thereon under this chapter, the same licensee shall not be twice subject in the same fee period by the separate imposition of a fee upon such gross credits or charges.
(b) Compensation and other receipts from work done or services performed within the city are allocable to the city and subject under this chapter. All amounts so received credited or charged by a licensee in payment for such work or services are so allocable, irrespective of whether done or performed by employees or agents of the licensee, by subcontractors or by any other persons. It is immaterial where such amounts were payable or where they were received. Commissions or fees received by the licensee are allocated to the city if the services for which the commissions were paid were performed in the city. If the license payer's services for which commissions or fees were paid were performed for the license payer by sales persons or other agents or employees attached to or working out of the city place of business of the licensee, the licensee's services will be deemed to have been performed in the city. Where a lump sum is received by the licensee in payment for services within and outside the city, the amount attributable to services within the city is to be determined on the basis of the relative values of, or amounts of time spent in the performance of, such services within and outside the city, or by some other reasonable method approved by the Finance Director. Full details must be submitted with the licensee’s report.
(c) All business receipts earned by the city licensee within the city are allocable to the city. Business receipts are not considered to have been earned by the licensee in the city solely by reason of the fact that they were payable in or actually received in the city. Receipts from the sale of real property held by the licensee as a dealer for sale to customers in the regular course of business are business receipts and are allocable to the city if the real property was situated in the city. Receipts from sales of intangibles included in business capital, held by the licensee as a dealer for sale to customers in the regular course of business, are business receipts and are allocable to the city if the sales were made in the city or through a regular place of business of the licensee in the city.
(5) Payroll factor.
(a) The percentage of the license payer's payroll allocable to the city is determined by dividing the wages, salaries and other personal service compensation of the licensee' employees within the city during the period covered by the report by the total amount of compensation of all the licensee’s employees during such period. Wages, salaries and other compensation are computed on the cash or accrual basis in accordance with the method of accounting used in the computation of the entire net income of the licensee.
(b) Employees within the city include all employees regularly connected with a place of business maintained by the licensee in the city. Wherever it appears that the licensee's payroll was paid to employees attached to places of business outside the city who performed services within the city, the payroll factor is to be computed by deriving the percentage which the licensee's payroll paid in the city bears to his total payroll. In any such case, where an employee performed services both within and without the city, the amount treated as compensation for services performed within the city shall be deemed to be:
1. In the case of an employee whose compensation depends directly on the volume of business secured by that employee, such as a salesperson on a commission basis, the amount received by that employee for the business attributable to the employee's efforts within the city;
2. In the case of an employee whose compensation depends on other results achieved, the proportion of the total compensation which the value of the employee's services within the city bears to the value of all the employee's services; and
3. In the case of an employee compensated on a time basis, the proportion of the total amount received by the employee which the working time employed in the city bears to the total working time.
4. The accounting method used to compute net profits subject to the license fee shall be the same as the method used to compute net income for federal income tax purposes, excluding all taxes based on net income, license fees imposed under this ordinance and the net operating loss carry-forward or carry-back used to reduce net income for the current year.
(B) Application process. An application for business privilege can be obtained from the Occupational License/Net Profit Division. Every person desiring to conduct business in the City of Ashland shall fully comply with the following:
(1) A completed application shall be submitted to the Occupational License/Net Profit Division with the required fee.
(2) The application shall be forwarded to the Fire Inspector, Code Official, and Zoning Office. Each vendor with a physical location in the City of Ashland must meet all requirements of the City Zoning Ordinance and Building Code and are subject to inspection from the City of Ashland Code Enforcement Division and the City Fire Inspector. Business locations that fail to meet the zoning requirements and fire regulations could be subject to fines and possible closure until such zoning and safety issues are resolved.
(3) There shall be a fee of $10 for each additional business location. All information regarding the new location shall be supplied to the Occupational License/Net Profit Division and any required inspections shall be performed prior to the opening of the additional location.
(4) There shall be an additional fee of $50 for businesses that open and conduct business prior to obtaining a business license. The business shall still be subject to inspections by the Fire Inspector, Code Official and License Administrator. Pursuant to guidelines contained in Ordinance No. 122, 2006 as may be amended citations may be issued to appear before the Code Enforcement Board, which could result in fines, closure, or any combination thereof.
(C) Business license fees. Every person conducting a business as defined in this chapter shall obtain a license from the license fee division before commencement of such business, the fee for which shall be $100 per year. The license fee shall be pro-rated as follows for the first year of business:
(1) This fee will be credited in full to the account of the license payer and applied against the annual net business profit fee.
(2) A late fee of $25 shall be applied to those businesses failing to renew their license within 30 days of the expiration date.
(3) Every entity conducting business within the city must file with the Occupational License/Net Profit Division a statement of estimated net profits to be earned during the accounting year prior to issuance of the license. Upon the filing, the entity shall pay one-fourth of any license fees estimated to be due. Thereafter, at the end of each month succeeding each calendar quarter each licensee shall pay to the city one-fourth of said estimated license fees due.
(D) Temporary licenses. Every person conducting business on a temporary basis will be subject to a license fee in the amount of $10 per day for a period not to exceed five days per event. Temporary license applications may be obtained from the Occupational License/Net Profit Division.
(1) Temporary licenses shall be issued to businesses participating in special city events, festivals and other activities as approved by the Board of Commissioners. Vendors who propose to operate beyond the five day limit shall be subject to the minimum annual fee as required in division (C) of this section.
(2) Persons/businesses soliciting door to door on a temporary basis shall be required to purchase a regular city license and shall be required to notify the Ashland Police Department and the Occupational License/Net Profit Division of the type of solicitation along with the name of each individual participating in the door to door solicitation. Vendors desiring to acquire a temporary license to sell or solicit business from temporary structures, carts, tables, sheds, or vehicles on private property or city right-of-way or streets are required to obtain approval prior to the commencement of business from the Board of City Commissioners.
(3) Vendors participating in special events at the mall or other business locations may be approved by the Occupational License/Net Profit Division if obtained prior to the event.
(4) Food and lunch vendors, ice cream trucks, approved vehicles that regularly sell food goods from their vehicles which have been duly licensed to operate within the city and have State Health Department approval shall not be considered temporary vendors and shall comply with the provisions in division (C) of this chapter. Lemonade and refreshment stands operated by neighborhood children are exempted from this section.
(Ord. 51, 2021, passed 4-23-21)