Short answer: Warehouse and logistics bookkeeping in Commerce tracks employees and enclosed square footage for each building, because the city figures its business license tax from those two numbers, not from revenue. Revenue is split by client and service for margin. Out of state purchases of racking, packaging and equipment are checked for California use tax at the Commerce rate.
A license based on people and floor space
The City of Los Angeles taxes most businesses on gross receipts. Commerce does it differently. Its municipal code sets the business license tax as an amount for each employee plus an amount for each square foot of enclosed premises the business occupies. The city also says it has no gross receipts tax.
For a 3PL, that turns two operating numbers into tax numbers. A new mezzanine, a second building or a peak season hiring push can change what you owe, even if revenue stays flat. An operator with two buildings in the city needs both figures for each one, ready before the renewal arrives.
Ask the City of Commerce Business License Division how it counts employees, including part time and agency workers, whether each building needs its own license, and what the current rates are.
What we keep by building
| Figure | Where it comes from | Why it matters in Commerce |
|---|---|---|
| Enclosed square footage | Each lease or property record | One half of the license tax, and the base for cost per pallet position |
| Employee count | Payroll reports split by work location | The other half of the license tax, and the base for labor cost per order |
| Agency labor hours | Staffing agency invoices tagged to the building | Lets you answer the city's headcount question either way it is asked |
| Rent, utilities and repairs | Bills coded to the building they belong to | Shows which building earns its space |
| Client revenue | Invoices tagged to client and building | Margin by client, since the city does not tax revenue itself |
Use tax on what you buy to run the floor
Warehouses buy a lot of things they consume: racking, stretch wrap, pallets, label printers and forklifts. When an out of state seller does not charge California tax, CDTFA says the buyer generally owes use tax, at the rate in effect where the goods are first used. For a building in Commerce, CDTFA moved that rate from 10.50 to 11.25 percent as of October 1, 2026.
We flag untaxed out of state invoices each month and keep them in one account, split by the rate in effect on the purchase date. If you hold a seller's permit, those purchases go on your sales and use tax return. Your CPA or tax preparer makes the filing; the books give them a list they can check line by line.
A typical cleanup: two buildings, one set of numbers
Picture a 3PL that leases one building in Commerce, then takes a second one a few blocks away when a new apparel client signs on. Rent for both lands in one account. Payroll runs from a single location code. Agency invoices for peak season are paid in a lump. At renewal, the owner reuses last year's headcount and square footage, as if the second building did not exist.
We set each building up as a class, pulled square footage from both leases and asked the payroll provider to add a second work location. Agency invoices were matched to the building and client they served. The owner had current figures to give the city, and for the first time could see that the new building's storage rates did not cover its rent.
What else a Commerce operator needs in the books
- Storage, receiving, pick and pack and accessorial charges booked as separate income lines for each client.
- Carrier costs passed through to clients kept apart from your own margin.
- Forklift and yard truck loans with each payment split into principal and interest.
- Overtime and shift premiums in their own accounts, so a heavy holiday season shows up clearly.
- Separate books for a property company that owns a building and the operating company that rents it.
Getting the books in order
- List the buildings We start with each address, its lease and its square footage, plus which clients use it.
- Split payroll and agency labor Work locations are set in payroll, and agency bills are coded to the building they served.
- Sort out purchases Equipment and supplies are reviewed for use tax, and fixed assets are listed with their loans.
- Close monthly You get profit and loss by building and by client, plus the headcount and floor space figures for the license.
Questions
Does Commerce tax my warehouse revenue?
The city says it has no gross receipts tax. Its license tax is figured from employees and enclosed square footage, so those are the figures to keep current.
We added a second building in Commerce. What changes in the books?
The new building gets its own class, its own square footage and its own work location in payroll. Ask the Business License Division how it wants the new space reported.
What is the sales tax rate in Commerce now?
CDTFA lists 11.25 percent from October 1, 2026, up from 10.50 percent. Use the CDTFA address lookup for a specific location.
Do you count our employees for the license form?
We give you employee counts by work location from your payroll records. You or your CPA decide what goes on the form, based on the city's instructions.