Philadelphia license requirements

12 Replies

I live in California and my friend lives in the Philly area. We recently got together to buy a 3 unit new construction residential property in Philadelphia. The title will be held in 4 names (the two of us and our better halves) and so will be the mortgage. There is no LLC or any other business structure involved. I have been scratching my head trying to decipher the various Philadelphia requirements. Based on a certain understanding, my friend and I went ahead and created a Business Tax Account Number online listing my friend as an entity and the remaining 3 people as partners / officers. The process was simple and we got the ID by email. We are now second guessing if we should have created 2 IDs one per couple. The questions are,

1. Is one Business Tax Account ID covering all the 4 the right step?

2. Is one commercial activity license sufficient? I am reading on some forums that each owner should apply separately

Please help. Thanks.

Think about it from the other side when you will need to use the license. When you go to evict a tenant or sue  the tenant for non-payment who is going to sue and could there be disadvantages to not having a CAL? Who is the rent being made out to? Is it some entity that includes all the partners, or are all partners going to file separately? 

Thanks for the perspective. We have hired a prop mgmt company to manage the asset. They get the rent, deduct the expenses and transfer the proceeds to a common account my friend and I have set up. All the tenant screening, placement and eviction (if applicable) are going to be done by the mgmt company. Does this give you enough info on the setup to clarify my original question? Thanks for your help.

You're problem is that you are trying to not have a formal business relationship with your friend while operating a business with your friend. If there are any future issues and you need to go to court a judge is going to look at your case and say well you never filed for a business license, never paid any business taxes, why should I give you standing in my court. You're argument would be well me and my friend well we had this arrangement he paid the taxes and you will realize that maybe we should've formalized some of this before it got to this point.

Hi Tim,

My question is on the logistical part of applying for licenses. While framing the question quite possibly I set the context incorrectly. My friend and I (and our spouses) do have a General Partnership established. Since I posted the question I have found answers to my questions. This is what I have done to this point (posting for the potential benefit of others or feedback)

--Established a General Partnership

--Applied for federal EIN for the Partnership

--Used the EIN and General Partnership info to apply for Philadelphia Business Tax Account Number

--Used the Tax Number to apply for Commercial Activity License (just one license representing the Partnership). In fact the online form for CAL asks for EIN and Tax Account Number

--Applied for Rental License using the CAL and Business Tax Account Number

In effect, the business tax account number bearing all the four names of the partners along with EIN tie everything together for local, state and federal tax purposes. I think I have done it right. That said I am going to run it by a CPA for confirmation.

Originally posted by @Sudhir N. :

Hi Tim,

My question is on the logistical part of applying for licenses. While framing the question quite possibly I set the context incorrectly. My friend and I (and our spouses) do have a General Partnership established. Since I posted the question I have found answers to my questions. This is what I have done to this point (posting for the potential benefit of others or feedback)

--Established a General Partnership

--Applied for federal EIN for the Partnership

--Used the EIN and General Partnership info to apply for Philadelphia Business Tax Account Number

--Used the Tax Number to apply for Commercial Activity License (just one license representing the Partnership). In fact the online form for CAL asks for EIN and Tax Account Number

--Applied for Rental License using the CAL and Business Tax Account Number

In effect, the business tax account number bearing all the four names of the partners along with EIN tie everything together for local, state and federal tax purposes. I think I have done it right. That said I am going to run it by a CPA for confirmation.

You should also confirm whether the property management company is taking care of the following:

1. Lead Paint Disclosure (usually done at time of lease signing) 

2. Certificate of Rental Suitability (application sent to "Licenses & Inspections", can be done online, needs to be provided to tenant along with a “City of Philadelphia Partners for Good Housing” brochure)

3. Lead Paint Certification (if there will be children 6 years and under living on the unit).

Without these in place, you won't be able to evict those tenants and your entitlement for rent will only begin on the date on which those items are taken care of.

Thanks @Jibu V. . Great pointers.

1. The property is brand new construction. So didn't have to deal with lead paint disclosure

2. Yes, the property management company handled the rental license and suitability certificate work

3. All adult tenants at this time

Philadelphia also requires you to have an agent that resides within city limits that is responsible for the property - the point of contact on it. 

This person doesn't have to be a paid person like a real estate agent or a property manager. It can be a friend, cousin or neighbor (for examples); but that is another Philadelphia requirement many out of state property investors never hear about.