Getting Your California Seller’s Permit in Three Easy Steps
Operating a business in California comes with many regulations and headaches. For instance, if you want to sell anything with your business, you will most likely need a California seller’s permit. These permits are how the state track sales tax obligations, and selling without one can incur steep fines and jail time. You can avoid all of that by following the three remarkably simple steps to obtaining your permit.
1. Determine Necessity
Before jumping through the hoops to get a permit, you should probably make sure you need it. Anyone selling or leasing taxable, tangible goods in the state of California needs a seller’s permit. It doesn’t matter where the business is headquartered or incorporated. If sales are happening within the state’s borders, then a permit is a must. It’s worth noting that services typically do not require this particular bit of licensing, so if your business doesn’t need to charge sales tax, you’re done with this process.
Sometimes the necessity of sales tax can be a little tricky. If you provide a service that produces a tangible good (like making furniture for instance), then you may be subject to taxation and require a seller’s permit. If you are unsure of your taxation status, you can contact your nearest BOE (Board of Equalization) office for clarification.
2. Fill out an Application
Now that you know you need the permit, you must fill an application. This process can get very technical and may require advanced knowledge of business practices and regulation in California, so it’s worth considering employing a filing service. Such professionals can streamline the process and help you prevent costly mistakes.
Regardless, you will need basic information for you application. This includes your social security number, driver’s license, corporation number, bank account, supplier information, personal references, anticipated sales and projected taxable sales. You can see how quickly this information can get complicated. The application itself has no processing fee, but the BOE may require a deposit. This deposit can vary wildly in amount and is intended to cover potentially unpaid taxes.
The processing time for you permit can really drag, but once you get approved you can start selling. You will be subject to sales tax, but you can freely and legally sell within the limitations of your permit. These restrictions are mostly related to location of premises and major changes to your business. If you add or remove partners or otherwise make major changes to business operations, you will need to update your permit filing.
If you want to expand your business to new locations, you will need an additional permit for each location. It is possible to get a consolidated permit to make your life easier, but you will have to file for it separately.