San Francisco Treasurer and Tax Collector office where businesses register for their annual business registration certificate

San Francisco Business License: Registration, Fees, and Prop M Tax Changes

What “Business Registration” Means in SF (vs. a Traditional License)

San Francisco doesn’t issue a “business license” in the way most cities do. Instead, every business operating in the city must complete an Annual Business Registration with the SF Treasurer & Tax Collector. The registration itself is mandatory — there’s no minimum revenue threshold, no exemption for home-based businesses, no pass for sole proprietors. If you’re doing business in San Francisco, you register.

The registration fee is separate from taxes. Think of it as the base entry cost for operating in the city — you pay it regardless of whether you owe any business taxes.

What makes SF’s system distinctive is the unified Annual Business Registration and Tax Form. One form covers everything: your Annual Business Registration, Gross Receipts Tax, Homelessness Gross Receipts Tax, Commercial Rents Tax, and Overpaid Executive Tax (if applicable). For most small businesses, only the registration portion and its fee will have non-zero amounts.

What you still need beyond registration: The Annual Business Registration does not replace industry-specific permits. If you’re opening a restaurant, you still need health permits. If you’re opening a retail store in certain neighborhoods, you may need conditional use authorization from the Planning Department. Entertainment venues need Entertainment Commission permits. The registration is your tax obligation to the city — regulatory permits are handled by the relevant department for your industry.

Where to register: sftreasurer.org — the SF Treasurer & Tax Collector handles all business registration and tax filing.

The New $5 Million Small Business Exemption

This is the headline change from Proposition M (passed November 2024), and it fundamentally restructures who owes what to the city.

Before Prop M:

  • Businesses needed to file Gross Receipts Tax returns if SF gross receipts exceeded $2.25 million
  • The $2.25M threshold meant many mid-size businesses — successful restaurants, professional services firms, growing tech companies — were caught in the tax net

After Prop M:

  • The exemption threshold more than doubled to $5 million in SF gross receipts
  • Businesses under $5M don’t need to file a Gross Receipts Tax return
  • Businesses under $5M don’t owe the Overpaid Executive Tax
  • Approximately 91% of restaurants and 87% of nightlife businesses now have their full annual license bills eliminated

What you still owe under $5M: The Annual Business Registration Fee. This fee varies based on your SF gross receipts or payroll expense but for most small businesses runs $150-$500. You must renew this registration annually.

What “SF gross receipts” means: This is revenue attributable to your San Francisco business activity — not your total worldwide receipts. If you’re a consulting firm based in SF but half your clients are in other cities, only the SF-attributed portion counts toward the $5M threshold. Apportionment rules (covered below) determine how to calculate this.

The practical impact: a restaurant doing $3 million in annual revenue, which previously would have owed Gross Receipts Tax, now pays only the registration fee. A tech startup with $4 million in SF revenue is in the same position. For the vast majority of San Francisco businesses, the Gross Receipts Tax no longer applies.

A worked example to illustrate the savings: Under the old system, a professional services firm with $3 million in SF gross receipts would have been subject to the Gross Receipts Tax at rates that could have meant several thousand dollars in annual city tax. Under Prop M, that same firm pays only the Business Registration Fee — likely $300-500 depending on the fee tier. That’s a potential savings of thousands of dollars per year. Over five years of operation, the cumulative difference is significant for a small business’s cash flow.

What counts toward the $5M threshold: Only receipts attributable to San Francisco activity count. If your business generates $8 million in total revenue but only $4 million is from SF sources (with the rest from out-of-city clients), you’re under the $5M threshold for SF purposes. Apportionment rules determine how to calculate your SF-specific receipts — see the apportionment section below.

The 7 New Business Activity Categories and Their Rates

If your SF gross receipts exceed $5M, you’ll need to determine your Business Activity Category to calculate your Gross Receipts Tax.

What changed: The old system sorted businesses into 14 categories, each with different rates and calculation methods. Prop M consolidated these into 7 broader categories. Fewer categories means simpler classification and fewer disputes about which category applies.

Rate structure:

  • Rates range from 0.1% to 3.716% depending on your category and the amount of receipts
  • The structure is progressive within each category: as your receipts increase, higher marginal rates apply to the additional receipts
  • Rates are adjusted annually for inflation

Determining your category: Categories are based on NAICS codes. You can look up your code at census.gov/naics. If your business falls into multiple categories, specific rules in Section 953.27 of the Business and Tax Regulations Code govern how to handle multi-category businesses.

For businesses under $5M, this entire section is informational only. You won’t need to select a category, calculate a rate, or file a Gross Receipts Tax return. Your only interaction with the city tax system is the registration fee.

Why understanding the categories still matters even if you’re under $5M: If your business is growing, you may cross the $5M threshold in future years. Understanding which category you’ll fall into — and what the marginal rates look like — helps you plan for that transition. The progressive rate structure means the tax doesn’t hit you all at once when you cross $5M; it applies gradually as your receipts increase within your category. But the rates at the upper end (up to 3.716%) are higher under Prop M than the old system, so high-growth businesses should model the impact before it arrives.

The Consolidated Filing Deadline and Extensions

Prop M consolidated the filing calendar, which is a genuine improvement over the old system’s multiple deadlines.

New unified deadline: Last day of February each year. For 2026, that’s March 2, 2026 (because February 28 falls on a Saturday).

This single deadline covers both the Business Registration Fee renewal and the Gross Receipts Tax filing (for businesses over $5M). Previously, these had different due dates.

The first joint filing under the new Prop M rules is due March 2, 2026. If you registered a business in SF before Prop M took effect, your 2026 filing will be the first under the new system.

Extensions:

  • You can extend your filing deadline to November 30, 2026
  • Extension must be requested by March 2, 2026
  • To qualify for the extension, you must pay 110% of your prior year’s tax obligations by the March 2 deadline
  • This is significantly more generous than the old extension timeline

Estimated quarterly payments (for businesses over $5M):

  • Due April 30, July 31, and October 31
  • Required if your prior-year tax exceeded certain thresholds
  • Underpayment of estimated taxes incurs interest charges

Penalties for late filing apply even if you qualify for the small business exemption. Owing no tax doesn’t excuse you from registering and filing on time. The registration itself is the obligation — missing the deadline triggers penalties regardless of your tax status.

Payment options: The SF Treasurer accepts electronic payment through the sftreasurer.org portal. You can pay by ACH, credit card, or electronic check. Payments are accepted up to 11:59 PM on the deadline date. Paper filings sent by mail must be postmarked by the deadline.

Record keeping: Maintain records of your SF gross receipts, payroll expenses, and apportionment calculations for at least 4 years. The Treasurer’s office can audit your filings, and having clean records makes any audit process faster and less painful. This applies even if you’re under the $5M threshold — the city may verify that you actually qualify for the exemption.

The $10 Million in Eliminated Fees

Beyond the tax threshold changes, Prop M eliminates approximately $10 million in permit, license, and other fees that previously added to the cost of operating in San Francisco.

What’s being waived (starting March 31, 2026):

  • 49 specific fees across various city departments
  • Entertainment Commission fees that affected nightlife and music venues
  • Health permit surcharges
  • Various other regulatory fees

Who benefits most:

  • Restaurants: 91% will see full license fee elimination
  • Nightlife businesses: 87% will see full license fee elimination
  • These sectors were disproportionately burdened by the old fee structure

The full list of eliminated fees is available on the Prop M page at sftreasurer.org. If you’re opening a restaurant, bar, or entertainment venue, review this list — the savings can be meaningful, especially in the first year when startup costs are highest.

Timeline context: The fee waivers take effect March 31, 2026. If you’re paying fees before that date, check whether they’ll be waived going forward. Fees paid before the effective date are not retroactively refunded — but going forward, those 49 fees are eliminated.

For non-restaurant businesses: The fee eliminations are heavily weighted toward food, beverage, and entertainment sectors. If you’re in tech, professional services, or retail, fewer of the eliminated fees applied to you in the first place. The $5M Gross Receipts Tax exemption is the more impactful Prop M change for non-food businesses.

How this affects new business planning: If you’re opening a restaurant or bar in SF in 2026, the combination of the $5M exemption (no Gross Receipts Tax for most small restaurants) and the fee eliminations (no license fees for 91% of restaurants) means your city tax burden is essentially just the Annual Business Registration Fee. That’s a fundamentally different cost picture than what existed even two years ago. Use those savings strategically — invest in better equipment, a stronger launch marketing push, or a deeper cash reserve to get through the first year.

Apportionment for Businesses Operating Inside and Outside SF

If your business generates revenue from both inside and outside San Francisco, you’ll need to apportion your gross receipts to determine how much is attributed to SF activity.

Why this matters: Only SF-attributed receipts count toward the $5M exemption threshold and toward any Gross Receipts Tax calculation. Proper apportionment can mean the difference between being above or below the exemption threshold.

Why apportionment matters: Proper apportionment can mean the difference between being above or below the $5M exemption threshold. A company with $6 million in total revenue but only $4.5 million attributable to SF activity is under the threshold — and owes no Gross Receipts Tax. Without apportionment, the same company would appear to exceed $5M and face a tax obligation.

General apportionment method: Total receipts x (SF payroll / total payroll) = SF gross receipts

Alternative methods: Some business categories use allocation instead of the payroll-based formula. Allocation looks at where the revenue-generating activity actually occurs rather than where employees are located.

Advance Written Determination (AWD) program: If you’re unsure how to apportion your receipts or which category applies to your business, the Treasurer & Tax Collector offers an AWD program. You submit your business details and receive a written determination of your classification and apportionment method. This provides certainty and protects you from reclassification disputes later.

For remote and distributed businesses: If your company is headquartered in SF but has employees working remotely in other cities or states, the payroll-based apportionment method may reduce your SF-attributed receipts. This is one of the structural benefits of the distributed work model for SF-based companies.

Practical tip for distributed businesses: If you’re running a fully remote or hybrid business from SF, track where your employees work and where your revenue-generating activities occur. Accurate records of work locations strengthen your apportionment position. Many SF tech companies that shifted to remote work post-2020 found that their SF-attributed receipts decreased as their workforce distributed across other cities and states — resulting in lower SF tax obligations.

The AWD process: The Advance Written Determination takes several weeks to months to process, so don’t wait until filing deadline to request one. If you anticipate apportionment questions, submit your AWD request well in advance. The written determination provides certainty: the Treasurer’s office won’t reclassify you or dispute your apportionment method as long as you follow the AWD.

The bottom line under Prop M: San Francisco’s business registration system is now significantly simpler for businesses under $5M. Register at sftreasurer.org, pay the annual registration fee, file by March 2 each year, and you’re compliant. The layered tax complexity that defined SF’s reputation now only applies to businesses well above the small business threshold.