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 license?
- Should I be registered to pay other taxes?
- Are my business records subject to audit?
- What are my obligations as a permit holder?
You must obtain a seller's permit 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.
The requirement to obtain a seller's permit applies to individuals as well as corporations, partnerships, and limited liability companies. Both wholesalers and retailers must apply for a permit.
If you do not hold a seller's permit and will make sales during temporary periods, such as Christmas tree sales and rummage sales, you must apply for a temporary seller's permit. Such permits are normally issued to selling operations lasting no longer than 30 days at one location.
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. Due to the various rules that apply, you should contact the Board's Information Center 800-400-7115 or contact your nearest Board office to determine if you must obtain a permit.
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. You are encouraged to call the Board's Information Center 800-400-7115 or contact your nearest Board office for information on what is taxable for your business.
You can visit or call a nearby Board office to obtain an application. Or, you can arrange to have an application mailed or faxed to you by calling 800-400-7115. Applications can also be downloaded from our Forms and Publications Section of our website.
(Note: You will need to mail or bring in the completed application since we must have your original signature. You should make a copy for your records.)
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.
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.
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.
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.
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 Discontuining a Business. Likewise, the Board may cancel your permit if it finds that you are no longer engaged in business as a seller.
Yes. We will need to update our records to ensure that your tax returns are mailed to the correct location.
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.
- 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.
No. You should contact your city and/or county business license department to obtain a separate business license. To locate the department, check the government pages of your telephone directory (for example, look for the terms license or business license under City Government Offices and County Government Offices).
Check with the other tax programs administered by the Board. You should also check with other state, federal, and local taxing and licensing authorities about any registration requirements they may have (for example, do you need to be registered with the State Franchise Tax Board or the Employment Development Department).
The California Protection Agency offers extensive information on state, local, and federal permit requirements. For a listing of their assistance centers, visit their website at http://www.calgold.ca.gov/;. See also California's Tax Information Center, http://www.taxes.ca.gov.
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.
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