Before you start a business in California, you need to know what a California seller’s permit is and if your business needs one.
Let’s say it does.
Now, you need to learn how to get a California seller’s permit and other helpful tips like the easiest way to apply, how often to remit your sales tax, what to do if you sell part-time, have multiple businesses, or from another state!
And you`ll find all these answers and more here in our How to Get a California Seller’s Permit as a small business guide.
California is a hub of innovation and investment, known for its skilled workforce and entrepreneurship. However, starting a business in the Golden State comes with high costs, including an 8.84% corporate tax rate.
Despite this, California is often the first choice for entrepreneurs because of abundant government incentives, business-friendly regulations, and zero state income tax.
Sounds great, right?
And besides the high rent, wages, and corporation tax costs, it is. Hey, it`s not called the land of sunshine and opportunity for nothing!
But to start a business in California (or anywhere else), you must take specific steps, like choosing an engaging brand name, forming an appropriate business structure, registering for sales, and using tax.
Sales tax (also known as a retailer’s use tax, vendor’s use tax, or sales and use tax) is an additional charge the state requires you to add to taxable products or services. California`s state sales tax rate is 7.25% and can rise to 10.25% when adding local sales tax, depending on your jurisdiction.
The system is simple, for example:
You sell a $100 product, add the State sales tax rate of 7.25% plus your local sales tax (say it`s 2.75%), charge customers $110, and pass the $10 tax onto the California Department of Tax and Fee Administration (CDTFA).
Some US states don’t charge sales tax; those include Oregon, Montana, Alaska, Delaware, and New Hampshire.
A seller’s permit, also known by various names, including a sales tax permit, allows you to charge, collect, and remit state and local (if applicable) sales tax on your products and services.
Once you secure your California seller’s permit, you must charge your customers the relevant state and local sales tax on taxable items and services and remit it to the California Department of Tax and Fee Administration before set deadlines.
California’s sales tax deadlines:
Any business operating in California, regardless of its structure (individuals, LLCs, corporations, partnerships, or out-of-state businesses), intending to sell or lease tangible goods or personal property must get a California seller’s permit.
So, if your business sells taxable products or property to people living in California, you`ll need a seller`s license.
Taxable products and services include furniture, giftware, toys, antiques, and clothing. Meanwhile, nontaxable products include groceries, medications, utilities, and fuel.
For a comprehensive list of taxable and exempt products and services, refer to the California Tax Service Center.
What about seasonal sales, I hear you ask?
Great question.
Entrepreneurs who sell for less than 90 days per year (for example, Christmas tree stands or craft fairs) can apply for a temporary seller’s permit.
California`s requirements for obtaining a seller’s permit are pretty extensive; let’s look at what you need next:
Federal statistical agencies rely on the North American Industry Classification System (NAICS) to categorize businesses and gather and assess data vital to the US economy.
Your business’s NAICS code is on the US Census Bureau’s website.
To register for your Seller’s Permit, use the California Department of Tax and Fee Administration online registration tool or apply at one of the CDTFA field offices.
With your California seller’s permit in hand, you must:
You must also notify the California Department of Tax and Fee Administration (CDTFA) if you:
The California Department of Tax and Fee Administration (CDTFA) provides several options for paying your sales tax, including:
But the easiest way to pay your sales tax in California is by card through the California Tax and Fee Administration website.
Each US state has its own sales tax permit regulations; in California, those include:
Yes, if you sell to customers within the state, including remote sellers on Amazon, Etsy, and eBay vendors or businesses outside California.
Occasional sellers and online businesses selling to customers in other states are exceptions to the Golden States` sales and use tax permit requirement.
Any individual or business that sells less than 3 taxable items in a calendar year within the Golden State doesn`t require a California seller`s permit.
California also provides an exemption for occasional or isolated property sales not associated with an activity requiring a seller’s permit (in other words, if you sell your home or flip the odd Condo). Real estate agents, however, need a California seller`s permit.
Anyone who forms a business, like an LLC, corporation, partnership, or sole proprietorship, to sell certain tangible goods and personal property must pay sales tax, including wholesalers and retailers.
Even part-time sellers, like Christmas tree growers, pumpkin farmers, or rummage sale entrepreneurs, must apply for a temporary seller’s permit.
You must provide, at minimum, the following to receive a seller’s permit:
If you make three or more sales in 12 months, you need a California seller’s permit, including sales made through internet auction houses or websites that offer online classified advertisements.
Yes, California requires you to register and have a seller’s permit to sell on Etsy before you make the first sale.
The Golden State doesn`t charge for a seller’s permit, but depending on your business, you might need to pay a security deposit.
The quickest way to get a California seller’s permit is to apply online, where you often receive your permit immediately after submitting your application.
No, but your permit is only valid for as long as you`re in business, and if you stop selling, you must contact the CDOR to cancel your permit.
Unless you sell cigarette and tobacco products, in this case, you’ll need to renew that permit yearly.
No, if you have more than one place of business, you`ll need a California seller`s permit for each location.
However, you can apply for a consolidated permit for multiple business outlets, which provides sub-permits (from the original) for numerous locations.
As permits aren’t transferable, if you sell your business, you must cancel your California seller`s permit.
No, a California seller`s permit allows a business to collect and remit sales tax on taxable products and services. A resale certificate will enable businesses to make tax-free purchases (like when you buy stock from a wholesale seller) on taxable goods they plan to resell.
That’s everything you need to know about How to get a California seller’s permit as a small business owner.
And when you start your business, it always pays to be prepared; as the saying goes, “By failing to prepare, you are preparing to fail.”
Ensure your success and get your seller`s permit before you need it, collect the correct percentage of sales tax, and pay the California Tax and Fee Administration office on time, every time.
Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.
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