Do I Really Need a Local Business License for this?!?

[Josef Roberge]

Someone is paying me a referral fee for just connecting them to a deal. I have no involvement in the deal at all, or transaction, contract, not a consultant.

I set-up a quick LLC for them to pay me under, and opened a bank account for it. Thought I was good to go. Very simple.

Then I heard I may need to apply for a local business license through the city I live in, just because I'm receiving money ? I have no store or office space, it's just someone writing me a check.

Does a city even have a way to discover I received this referral fee from someone?

I would think it's just the IRS and state tax board I need to worry about. I'm willing to go ahead and apply for it, it just seems so inapplicable and absurd. Anyone else with an LLC for similiar reasons and applied for a local business license?

Thanks

[Paul Allen]

Originally posted by @Josef Roberge:

Does a city even have a way to discover I received this referral fee from someone?

The IRS will share information with state and local taxing authorities. Here in Virginia it takes the Commonwealth about 30 days to contact a taxpayer with a Virginia adjustment after the IRS adjusts someone's tax return. Some of the local municipalities here will contact a taxpayer with a letter essentially stating you filed a Schedule C, but you don't have a business license - explain this to us.

I don't know that California does the same, but the opportunity is there for them.

Best of Luck with Your Real Estate Investments!