Ordinarily, you read WritersWeekly for tips about how to make money. This is a cautionary tale that may help you keep more of your earnings. Last year, I discovered that I need a business license to write at home.
Border issues complicated my dilemma. I used to live in San Diego, and my post office box is still there. I now live half a mile away in the city of La Mesa. When I went to the post office during Labor Day weekend, I found a letter from San Diego that congratulated me for starting a business and demanded $302 for doing so.
Apparently, the state of California gave the city my tax information, and San Diego billed me $34 per year plus hefty penalties for not filing for a license for those three years. There was also a processing charge.
It was ironic to receive this bill during Labor Day weekend. Some steady markets were drying up. Writing for one publication had become a gamble about when I’d get paid. I couldn’t do much because of the holiday, so I called two freelance colleagues and complained about what looked like a tax on First Amendment rights. Both friends used to live in San Diego; neither had heard about the license requirement.
“What if you stopped writing at home and took your laptop and wrote in the mountains?” one friend asked.
“Maybe, but the mountain jurisdiction might require a license,” I replied, “and then there’s the cost of commuting.”
The unexpected demand for money weighed heavily on me, so I turned to the Internet. Searching for “writers + business licenses” produced mixed messages.
I found the link to a 1965 New York Times article, “Alaskans Oppose On Creativity: State Requires License for Artists Grossing $500.” It cost $3.95 to read the story, so I went to the newspaper archives that are accessible through the San Diego city and county libraries. The archive only went back to 1980. Although it was intriguing to see that licensing writers was a decades-old issue, I had to rein in spending.
I returned to free Google results and found the warning “Don’t get busted: get a business license” at Microsoft’s Small Business Center.
That was a general article aimed at small-business owners. The search for writer-related information led to the National Writers Union. In 2000, the union adopted the position “that business licenses should not be applied to self-employed freelance writers and artists.” I was encouraged about that stand as it related to state and local laws.
Furthermore, the National Writers Union of the District of Columbia (NWUDC) in 2003 was among the key players in “killing a Master Business License for D.C. that would have required freelance writers and editors, consultants and baby sitters, among others, to obtain a license.” However, NWUDC warned in 2009 about a new license, but said writers might be spared.
That made me more optimistic as I read a New York Times article about the lengthy fight between the Writers Guild of America and Los Angeles.
The city in 1989 tried to impose a tax on writers who worked at home. In 2000, the writers and L.A. reached an agreement. The guild agreed not to fight state legislation that the city had requested. The California law allowed cities to examine state tax records, and cities could consider “artistic or literary integrity” when deciding whether to tax people.
The guild agreed to a 20-point test to determine whether a writer was exempted from the tax. I do great on tests. I was encouraged and didn’t feel so alone when I read that other writers were concerned about the free speech aspect of this issue.
I went offline, hoping that San Diego’s license requirement didn’t apply to writers. No such luck. I called my CPA Tuesday morning; he said I was the third client to call about that letter. I’m a former newspaper reporter who covered city government. Now I was a constituent experiencing it. I called San Diego and learned there was a special phone line for people with questions about the letters. The man who answered said that anyone paid with a 1099 needed a license. I asked why people, especially writers, didn’t know about this. He said this law had been in place since 1942.
I told him about my move. He removed the current year from the bill, reducing it to $240. Next, I called La Mesa and learned they required a license because I have a home-based business. Fortunately, La Mesa is a small town. I needed Planning Department approval for my business. The planner signed off after seeing that my apartment-based business didn’t violate zoning laws.
As I filled out the license application, I saw some humor in the questions. I declared that my business wouldn’t use “flammable or combustible liquids, compressed gases or other hazardous materials.” No, just a phone and a computer, items I declared in my business inventory.
That experience cost me $35 for the permit and $50 for the processing fee.
Consider my story an alert about a situation you may face as cash-strapped governmental bodies seek money. I was among approximately 41,000 businesses and individuals notified by San Diego, according to a January 2009 San Diego Union-Tribune article. The San Diego mailing netted about $4.3 million from people like me.
My advice is to avoid a large bill by checking with government agencies or the chamber of commerce to learn whether you need a business license.
It was painful to pay for licenses in two cities and the penalties aggravate me. Both cities cashed my checks; only La Mesa sent me a license. It’s a green form that fits inside a No. 10 envelope. The city instructed me to post it in a prominent place. That caused me to smile because usually only my cat Portia and I see it. She’s not impressed. However, the license is visible when I’m at my computer and it motivates me. After all, I’m a licensed writer.
In addition to WritersWeekly, Liz Swain’s credits include researching and writing encyclopedia entries for Cengage Learning projects including the Gale Encyclopedia of Medicine, Gale Encyclopedia of Diets and Gale Encyclopedia of Alternative Medicine. She is the San Diego correspondent for Adverse Event Reporting News and Validation Times, newsletters for people in healthcare industries. Her other writing credits include Reminisce and Catholic Digest. She is a member of the National Writers Union and supplements her freelancing by teaching adult-school classes such as the Whodunit Book Club, a mystery discussion group. This spring, she’s teaching a writing class. Naturally, she’ll refer students to WritersWeekly.