faqstatetaxstatepermit

FAQ

Here are a few of the common ones that we get, along with answers to the questions. We will add to this list when we get more FAQs. Contact us if any of your questions are not answered here.

Do I need more than one Seller's Permit?

Each seller must have a tax permit for each active place of business. A place of business is an established outlet, office, or location that the seller, or the seller’s agent, or employee operates for the purpose of receipt of orders for taxable items. If you have multiple places of business you will receive separate permits for each business location displaying the same taxpayer identification number, but with separate outlet or sequence numbers. Once a sales tax account has been established with the state, additional permits will be added to the same account unless there has been a change in ownership structure.

Can I use the sales tax permit number from my old business or from an existing business that I purchased?

No. A permit is valid only for the person to whom it was issued and only for the business at the address shown on the permit. It can be transferred from one owner to another but the new owner must be registered and approved by the governing agency before the permit is valid.

If the ownership of my business changes, is a new permit needed?

Yes. The new owner must obtain a permit if there are any changes in ownership of your business. Incorporating a business or forming a partnership or limited liability company is considered a change of ownership and must be reported. For example, if you operate a business as a sole proprietor, but decide to incorporate, the corporation will have to obtain a new permit for the business, even though you may operate the business as an officer of the corporation.

Is a seller's permit the same as a business license?

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).

What is a Resale Certificate?

Generally, a Resale Certificate is a form a business uses when it purchases goods it intends to resell. This Resale Certificate, also referred to as an Exemption Certificate in some states, serves as a written statement that the business owners and operators won’t use the goods purchased for personal use instead of selling them. It is also intended to show that the business will not use the goods before reselling them. It may also be used when purchasing certain services for resale. With your sellers permit, if you purchase tangible personal property for resale, the transaction is not subject to sales or use tax provided the sale is properly documented. As a result, your supplier will ask you to provide a Resale Certificate as proof that the property was purchased for resale.

Why is a seller's permit needed?

If you are in the business of selling, leasing personal tangible property ( for example, selling from home ebay merchandise online) or sell taxable services at a retail or wholesale level, you are required to obtain a Seller’s Permit. In addition, if you are a seller at more than one location, a separate license is required for each location. We will prepare and review and file your seller’s license application

When should I apply for a seller's permit?

Apply for a seller’s permit at least three weeks before you open your business. You must allow for processing times in some states. Plan ahead and make sure your permits are in order before your operation commences.

What is the difference between sales tax and use tax?

A sales tax is imposed on retailers. It applies to all retail sales of tangible personal property in the state of operation. Retailers making sales in the State are required to remit the sales tax to the governing tax agency. Retailers are required to pay and report sales taxes to the governing tax agency and they have the option of collecting sales tax reimbursement from their customers. Almost all retailers utilize this option. Whether or not a retailer collects the sales tax, the retailer is liable to remit the tax due. The California use tax is imposed on consumers of tangible personal property that is used, consumed, or stored in this state. Use tax applies to purchases from out-of-state vendors that are not required to collect tax on their sales. Use tax also applies to most leases of tangible personal property. Many construction contractors will apply for use tax as their purchases are for their use or consumption, not resale. The state sales tax and use tax are “mutually exclusive,” which means either sales tax or use tax applies to a single transaction, but not both.