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Obtaining a
Seller's Permit
- Who must obtain a
seller's permit?
- What does
engaged in business mean?
- What is meant
by ordinarily subject to sales
tax?
- How do I apply
for a permit?
- If I apply for a
permit, what information is needed
for an application?
- Is information
regarding my account subject to
disclosure?
- Do I need more
than one permit?
- Is there a fee
charged for a seller's permit?
- If I am no
longer in business, can I keep my
seller's permit?
- Should I tell the
Board if I change my business
address?
- If the
ownership of my business changes, do
I need to let you know?
- If I am a
spousal partner and divorce or
withdraw from the partnership, do I
need to notify the Board?
- Is my
seller's permit the same as a
Business Licence?
- Should I be
registered to pay other taxes?
- Are my
business records subject to audit?
- What are my
obligations as a permit holder?
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1. Who must obtain a
seller's permit?
You must obtain a
seller's permit when it has been
placed on the web if you:
- Are engaged in business in
California and
- Intend to sell or lease tangible
personal property that would
ordinarily be subject to sales tax
if sold at retail.
- Will make sales for a temporary
period, normally lasting no longer
than 30 days at one or more
locations (e.g. fireworks booth,
Christmas tree lots, garage sale)
The requirement to obtain a seller's
permit applies to individuals as well as
corporations, firms, partnerships, and
so forth. Both wholesalers and retailers
must apply for a permit.
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2. What does engaged
in business mean?
You are engaged in business in
California if you:
- Have an office, sales room,
warehouse, or other place of
business in this state (even if the
location is only temporary).
- Have a sales representative,
agent, or canvasser operating in
this state.
- Receive rental payments from the
lease of tangible personal property
in this state.
There are other activities that may
qualify a selling operation as being
engaged in business in California.
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3. What is meant by
ordinarily subject to sales tax?
In general, retail sales of tangible
personal property in California are
subject to sales tax. Examples of
tangible personal property include such
items as furniture, giftware, toys,
antiques, clothing, and so forth.
In addition, some service and labor
costs are taxable if they result in the
creation of tangible personal property.
For example, if you make a ring for a
specific customer, you are creating
tangible personal property. Therefore,
the total amount you charge for the ring
(including the charge for labor) would
be taxable. This would also be the case
if the customer provided the materials
for making the ring.
However, labor costs for making
repairs (resetting a diamond, for
example) are not taxable since they do
not result in the creation of tangible
personal property. You are only
repairing or reconditioning existing
property.
Likewise, labor charges to install or
apply property which has been sold is
not ordinarily subject to sales tax (note:
the labor charge should be stated
separately on the bill).
There are many rules governing what
is taxable.
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4. How do I apply for
a permit?
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5. If I apply for a
permit, what information is needed to
complete an application?
You will be asked to furnish:
- Your social security number
(corporate officers excluded).
- A photocopy of your driver
license to ensure the accuracy of
the information provided and to
protect against fraudulent use of
your identification numbers.
- The name and location of a bank
where you have an account.
- Names of suppliers.
- Name of person maintaining your
account.
- Names and address of a personal
reference.
- Anticipated average monthly
sales and the amount of those sales
which are not taxable.
Additional information may be
required.
If you have a business partner, or if
the business is managed by corporate
officers or limited liability company
managers, members or officers, those
persons will also be asked to furnish
some of the information listed above.
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6. Is information
regarding my account subject to
disclosure?
Yes. While most of the information
you provide to the Board is
confidential, some is subject to public
disclosure, such as the information on
your seller's permit and the closeout
date of your business, if applicable.
Under certain conditions, your account
information, including underreporting
and outstanding liabilities, may be
shared with the other government
agencies.
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7. Do I need more
than one permit?
If you have more than one place of
business (located on different
premises), you may need a separate
permit for each location. In some
instances it is possible to obtain a
consolidated permit for multiple
business outlets. At the time you apply
for a permit, be sure to provide
information for all business locations
so that the Board will issue the correct
type of permit.
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8. Is there a fee
charged for a seller's permit?
No. However, the Board may require a
security deposit to cover any unpaid
taxes that may be owed if, at a later
date, the business closes. The amount of
the security will be determined at the
time you apply.
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9. If I am no longer
in business, can I keep my seller's
permit?
Your permit is valid only as long as
you are actively engaged in business as
a seller. If you are no longer
conducting business, you should return
your permit to the Board for
cancellation. For more information
please see Buying, Selling, or
Discontinuing a Business. Likewise, the
Board may cancel your permit if it finds
that you are no longer engaged in
business as a seller.
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10. Should I tell the
Board if I change my business address or
mailing address?
Yes. We will need to update our
records to ensure that your tax returns
are mailed to the correct location.
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11. If the ownership
of my business changes, do I need to let
you know?
Yes. You must notify the Board
directly of any changes in ownership of
your business. If ownership records are
not kept current, previous owners are
generally liable for taxes, interest,
and penalties incurred by the business
after the transfer.
Incorporating a business or forming a
partnership or limited liability company
is considered a change of ownership and
must be reported. You must notify us
directly of any ownership changes.
Publishing this information in a
newspaper or reporting it to another
state agency is not sufficient notice to
the Board.
In addition, if you add or drop a
partner, you should notify the Board
immediately. Timely notification to the
Board could help limit the personal
liability of the departing partner for
tax, penalty, and interest charges
incurred by the business after the
partner's departure.
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12. If I am a
spousal partner and divorce or withdraw
from the partnership, do I need to
notify the Board?
Yes. This is considered the same as a
change of ownership and must be
reported. You must let us know in
writing that you are no longer involved
in the operation of the business. A
legal separation or divorce decree
awarding the business to one spouse,
without notification to the Board of the
change, is not sufficient notice.
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13. Is my seller's
permit the same as a Business Licence?
No. You should contact your city
and/or county Business Licence
department to obtain a separate Business Licence. To locate the department, check
the government pages of your telephone
directory (for example, look for the
terms license or Business Licence under
City Government Offices and County
Government Offices).
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14. Should I be
registered to pay other taxes?
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15. Are my business
records subject to audit?
Yes. Your records may be audited to
determine whether you have paid the
correct amount of tax. The audit may
determine that you owe tax, that you are
entitled to a refund, or that you have
paid the correct amount. In general, you
may be audited in three-year intervals,
at the time you close out your permit,
or in connection with an audit on
another permit you hold. Audits may also
be initiated as a result of information
received from outside sources.
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16. What are my
obligations a permit holder?
As a permit holder, you are required
to
- Report and pay sales and use
taxes
- Keep adequate records
You are also required to notify the
Board if you:
- Change your business address
- Change the ownership of your
business
- Add or drop a partner
- Sell your business
- Buy another business
- Discontinue your business
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