When do California sellers need a seller's permit?
Interested in doing business in California? You might be wondering about which permits and licenses are required.
While the answers can vary, most Californians looking to sell merchandise will require a seller's permit, also commonly referred to as a reseller permit. Note that this applies not to those who offer services such as consulting or accounting, but instead to individuals or companies that intend to buy and sell goods.
Not sure where to start? Here’s a primer on what you need to know about seller's permits in California.
What is a seller's permit?
A seller's permit allows California sellers to purchase merchandise tax-free and then legally resell to customers within the state, thus granting the opportunity to do business there.
Typically, these certificates apply to the sale of tangible goods, such as toys, equipment, tools, and supplies, the majority of which sellers purchase wholesale. When a customer purchases an item, you collect sales tax on it.
When do you need a seller's permit?
Not everyone doing business in California will require a seller's permit. Those who intend to sell property that should be taxed at retail must obtain a resale license. This applies to both wholesalers and retailers. Those who plan on doing business for 30 days or fewer will need a temporary permit. Seasonal businesses like Christmas tree sales usually only require a temporary permit.
Individuals, partnerships, corporations, organizations, and LLCs can acquire a seller's permit. Note that seller's permits differ from resale certificates, which sellers may issue to their suppliers. Permit holders must report and pay sales and use tax and keep adequate records, as well as notify the State Board of Equalization of any major changes that occur within the business, such as selling or discontinuing operation.
How do you get a seller's permit?
The quickest way to obtain a seller's permit in California is to register online. The California Department of Tax and Fee Administration provides more details.
Information about sales tax permits in all states can be found at Sales tax permits: A state-by-state guide.
It's important to get any necessary sales tax permits before making sales in any state with a sales tax. Avalara State Sales Tax Registration can help with that process.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
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