The California Department of Tax and Fee Administration (CDTFA) is the new name for the department that used to be called the State Board of Equalization. The CDFTA is the state agency responsible for collecting sales taxes for items sold in the state of California.
Doing Business in California
Anyone doing business in the state of California must have a California seller’s permit if they intend to lease or sell anything that is subject to sales tax. The requirement to have a seller’s permit applies to individuals and to companies that engage in both wholesale and retail sales. A seller’s permit is required for those that receive lease payments for personal property in California as well.
A California seller’s permit is only for sales taxes and is not the same as a business license. Having a business license is a separate matter that is handled by local authorities where the business is located.
California Seller’s Permit Needed for Each Location
For each place that is operated by a business in California, there needs to be a separate seller’s permit. For example, if a company has a showroom, an office, and a warehouse in different locations, each location needs to have its own seller’s permit. This requirement exists even if a location is temporary, such as a place for seasonal sales. Temporary seller’s permits are available for operations that last up to 90 days at one place.
A seller’s permit is also required for those that use a sales agent or canvasser to sell things in California. Examples of this are individuals or companies engaged in door-to-door sales, sales made from a vehicle, or sales made at a rummage sale or at a flea market.
Sales Tax Applies to all Tangible Personal Property Sold or Created
In California, sales tax must be charged for the retail sale of any tangible personal property and for services and labor if a tangible personal property is created. Examples of tangible personal property include antiques, clothing, giftware, furniture, toys etc.
When tangible personal property is created for a customer, sales tax is charged on the labor costs to make the item. For example, making jewelry for a customer requires sales tax on the total amount charged for the jewelry including the labor cost to make it. This applies even if the customer supplies the materials to make the jewelry.
Sales tax is not charged for the labor involved when a tangible personal property is not created. Examples of this would be making repairs or installing something. In these cases, the labor is not subject to sales tax.
Making an Application for a Seller’s Permit
Working with a company that helps make the application for a seller’s permit is an effective way to make sure the filing is done properly. To make an application, the basic information needed to get started is:
- Business name, type of business, address, and telephone number.
- An estimate of monthly sales.
- Owner’s identification and Social Security number.
Obtaining a Seller’s Permit