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Apply For Seller Permit California

Are you a wholesale or retail seller selling or leasing merchandise, vehicles, or any other tangible property in California, even temporarily, in California? If yes, you must apply for seller permit California to sell or lease any tangible property in the state of California.

California Department of Tax and Fee Administration (CDTFA) is the agency where you must register as a wholesale or retail seller, obtain your California seller’s permit, and file a sales tax return.

Undertaking sales of merchandise, vehicles, or any other tangible property in California without obtaining a seller’s permit results in a violation of the law and attracts fines and penalties.

As per California state law, you must acquire a seller’s permit if you make three or more sales in the state of California over 12 months. This rule applies even if you make sales via Internet auction houses or online advertisers.

Finally, once you are a registered seller with CDTFA, you are obligated to file sales and use tax returns, pay the desired sales and use tax on sales and purchases, and report each taxable sale.

Don’t know how to obtain a California seller’s permit? Don’t worry as in this article, we will cover everything you need to know about who must obtain a California seller’s permit and how to apply for seller permit California. So let’s get started.

Also Read: California Sales Tax 2023 For Business: A Complete Guide

How Do I Know If I Need A Seller’s Permit In California?

You are mandatorily required to obtain a seller’s permit in California if you meet both of the following conditions:

1. You Are Engaged in a Business in California

California state law considers you an entity engaged in a business in California if you engage in any of the following. This applies to you even if you are a seller located outside the state of California.

  • You maintain, occupy, or use directly or via an agent or a subsidiary, a permanent or temporary physical place of business in California. This could include an office, a place of distribution, a sample or sales room, etc.
  • Have a representative, independent contractor, agent, or canvasser operating in the state of California on your behalf for making sales, taking orders, making deliveries, training customers, etc, or setting up a market for your products.
  • You receive rental income via the lease of personal property such as machinery, furniture, equipment, etc located in California.
  • You own or take on lease a tangible personal property such as equipment, machinery, etc located in California
  • Starting 25th April 2019, you would be considered as an entity engaged in a business in California if, during the previous and the current calendar year, the combined sales of tangible personal property in California or for delivery in California by you and persons associated with you exceed $500,000. To know in what cases the person is treated as someone associated with you, check Internal Revenue Code section 267(b).

2. You Wish To Sell Or Lease Tangible Personal Property On Which Sales Tax Would be Charged Ordinarily if Sold At Retail

Tangible personal property being ordinarily subject to sales tax means that typically, the retail sale of tangible personal property in California is subject to sales tax. Tangible personal property could include furniture, clothing, household goods, etc.

Apart from the tangible goods being subject to sales tax, certain services and labor costs are also taxable if they form part of the sale of tangible personal property.

For instance, if you make customized furniture for a particular customer, you are creating a tangible personal property. In this case, sales tax would be levied on the total amount you charge for the furniture including the labor cost.

However, if you simply repaired existing furniture for the customer, the labor cost for repairing furniture would not be subject to sales tax because you are not creating tangible personal property here. You are simply repairing an existing property, furniture in this case. Likewise, labor charges to install or apply a property are also not subject to sales tax.

Alan Chen, CPA at Freecashflow.io, helping eCommerce businesses with their tax and accounting

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Requirements For Obtaining A Seller’s Permit In California?

Here’s a list of information you must keep handy while applying for a California seller’s permit. You may be required to provide:

  • Social Security Number
  • Email Address
  • Federal Employer Identification Number (FEIN)
  • State Employer Identification Number (SEIN)
  • Identification proofs like driver’s license, state identification number, U.S. passport, U.S. military ID, Visa (E2), or consular identification card
  • In the case of corporations – corporate name, corporate number, states, and dates incorporated
  • Name, address, and phone number of partners, corporate officers, managers, or members
  • Names and addresses of suppliers
  • Names and phone numbers of personal references
  • North American Industry Classification System code (NAICS code)
  • Bank details such as name and address
  • Standard Industrial Classification (SIC)
  • Name and the account number of the merchant credit card processor
  • Name, addresses, and phone numbers of people who maintain the books and records.

How To Apply For Seller Permit California?

The first step in how to apply for seller permit California is to establish a nexus with the state. You need to see if there is a connection between your business and the state of California and whether such a connection triggers the need for you to obtain a California seller’s permit, and collect and remit sales tax on the sales made in California.

If you have a nexus with California, you must obtain the seller’s permit and collect and remit sales tax on the sales made in California. As mentioned earlier, CDTFA is the agency responsible for issuing a seller’s permit in California. You can simply visit the CDTFA website and register online for free simply and safely. Keep following the instructions to register and obtain a California seller’s license.

Once you are on the CDTFA website, follow the steps mentioned below.

1. Choose ‘Register A New Business Activity’

  • Click on the ‘Register a New Business Activity’ link and fill in the requisite details that apply to you. This page will ask you about the kind of business you do in California. Once you check the necessary boxes, click ‘Next’.
  • The next page will ask you about the items or goods you sell in California. Check the boxes that apply to you. For instance, if you sell regulated items like Alcoholic beverages, check the ‘Yes’ provided in front of the ‘Alcoholic Beverages’ option. If they do not apply to you, simply select ‘No’ and click ‘Next’.

2. Select the Type of Business Activity You Are Registering For

The next step in how to apply for seller permit California is to choose from the dropdown the type of business activity for which you are obtaining a seller’s permit. Your business could be a sole proprietorship, partnership, corporation, LLC, married co-ownership, trust, LLP, Limited Partnership, estate, joint venture, Registered Domestic Partner, local government, state government, federal government, UBO, etc. Choose the option that applies to you.

3. Provide Your Identification Details

In this section, you will be asked to provide your identity details. The information required to be filled in would vary from the type of business you won. For instance, if you run an LLC, you will be asked to provide the jurisdiction where you have registered, FEIN, SEIN, state of jurisdiction, etc. If you are from outside the USA, it would be a little challenging to get a seller’s permit as you would have to fulfill additional requirements like opening a bank account with a local bank, having an SSN or ITIN, etc.

Based on your responses, the CDTFA is going to provide you with a list of permits or licenses you need to undertake sales in California. In this case, let’s assume it suggests you obtain only a seller’s permit.

4. Other Tax Information

Once you fill in the identification details, the next step in how to apply for seller permit California is to provide your business details. For instance, if you own an LLC, you would have to put in the following details:

  • Name of the LLC
  • Start date
  • Jurisdiction where your LLC is registered
  • State where your LLC is registered
  • FEIN
  • Non-California-issued entity number
  • Contact details like your phone country, phone type, phone number, extension, and a valid email ID.
  • Your relationship with your LLC
  • Entity type

5. Provide Member/Manager Information

Upon defining your relationship with the LLC (member in this case) in the previous section, the next step in how to apply for seller permit California is to provide ‘member’ information. This would include details like:

  • Name and date of birth of the member
  • Primary identification numbers such as SSN, FEIN, and SEIN
  • Secondary identification number like driver’s license
  • State
  • Identification number
  • Home address of the member
  • Add additional managers/members if any

6. Attach Additional IDs

Once you’re done filling in the member/manager information, you’ll be asked to attach a copy of one or more of your IDs. The next step in how to apply for seller permit California is that you can attach the copy here or submit the same to your nearest CDTFA office.

7. Add Business Information

a. Details of Contact Person for Books, Records, and Business Activities

This section requires you to provide contact information of the contact persons for books and records and business activities. Fill in the details like the names, phone numbers, and email addresses of these persons.

b. Credit Card Processor Details

If your business accepts payments via credit cards, you would need to fill in credit card details such as the merchant card processor name and merchant card processor account.

c. Internet Sales Information

If you make internet sales, especially internet sales via third parties such as Etsy or Amazon, you will have to provide the names and the website addresses of these platforms.

d. Provide the NAICS Code

This is the industry classification code that you need to add here. You can simply search the NAICS code on Google and fill the NAICS code of your industry here.

e. Add Additional Details

Provide additional details related to retail location, warehouse, or stock of goods, equipment leased or installed in California

f. Add Account Information

In this section, you are required to provide details about your Certificate of Registration – Use Tax. Fill in the following details:

  • Start date of the Certificate of Registration – use tax
  • Projected monthly sales
  • If you anticipate zero dollars in the monthly sales
  • Projected monthly taxable sales
  • If you anticipate zero dollars in the monthly taxable sales
  • Products that you will sell during your business

If you have any independent representatives in the state of California

Additionally, you will have to select the books and records address and the mailing address for the sales and the use tax account. The former is the address where your accounting information will be stored whereas the latter address will be used for the official communication.

9. Add Supplier Information

When applying for a California seller’s permit, you need to add details of one or more suppliers. This would include details such as the name, country, phone number, CDTFA account number, product information, etc.

Upon filling the above details, you will see a summary of the certificate of registration details on your screen. This is to ensure that the details provided by you are correct. You’ll be asked to acknowledge that you have read and understood the account information so provided.

10. Provide Preparer Information

In this section, you need to provide the details of the person who is preparing this form for obtaining the California seller’s permit. If you are the preparer, fill in your details such as your name, phone number, email address, your role in the application, etc.

11. Confirm the Declaration of Intent

This page will ask you to declare your intent to obtain a California seller’s permit and acknowledge the correctness of the information provided. It will also ask if you are registered to vote and if not, whether you would want to apply to register to vote.

12. Check the Summary and Sumit the Application

Finally, the next step in how to apply for seller permit California is to go through the summary of information and hit ‘Submit’ if all the information is correct.

Is A CA Seller’s Permit Free?

Applying for a seller’s permit in California is free. However, CDTFA may ask you to submit a security deposit in certain cases. Typically, you will not be asked for a security deposit if applying for a California seller’s permit unless it is required by law. But, if you have a history of non-payment or if your permit has been revoked, you may be asked for a security deposit.

What Are Your Obligations As A California Seller’s Permit Holder?

As a California seller’s permit holder, you must:

  • Report and pay sales and use taxes
  • Maintain proper records
  • Notify CDTFA in case you:
  • Buy another business
  • Sell your existing business
  • Change your business or mailing address
  • Change the ownership of your business
  • Discontinue your current business

Are You A Temporary Seller?

As mentioned earlier, you will have to obtain a California seller’s permit if you make three or more sales of items in the state of California over 12 months.

However, if you are selling items at a location for less than 90 days, you will be treated as a temporary seller and will be required to obtain a temporary seller’s license.

The process of obtaining a temporary seller’s permit is the same as the regular seller’s permit mentioned above and will have to register each temporary location.

Also, if you already have a seller’s permit for a permanent business location, you will not have to register for a separate temporary seller’s permit but a sub permit for each temporary location.

Some of the common types of sellers who would need a seller’s permit are as follows:

  • Garage sales
  • Crafts
  • Online auction sales
  • Firework stands/holiday trees
  • Conventions/ trade shows
  • Swap meets/ flea markets or special events

Want Help With E-Commerce Taxes?

Alan Chen, CPA at Freecashflow.io, helping eCommerce businesses with their tax and accounting

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