Whether you're selling goods from a store or online, you need a seller's permit to keep the doors open. If you plan on selling products or services through your business, most states require you to have a seller's permit. The process for acquiring a seller's permit varies, but generally you obtain one from the government agency that regulates businesses in your state. The main reason governments require seller's permits is to enable them to collect sales tax on transactions. Failure to secure a seller's permit could result in penalties and fines as well as back taxes on previous sales.
Although state and local laws vary, what follows is some general information regarding seller's permits. A seller's permit gives a business the authorization to sell products and services within the jurisdiction granting the license.
Many states require seller's permits, as do some local authorities, including counties and cities. Whether you need a seller's permit depends on the laws that govern your business. Look to local as well as state regulations to determine whether your business needs one.
If you sell tangible goods to the public, whether wholesale or retail, you likely need a seller's permit to do so. Some states also require service providers e. If your selling activities are temporary — for seasonal or holiday businesses, for example — you may be required to have a temporary seller's permit. If you only deal in resales, you may or may not need a seller's permit, depending on applicable laws.
Some states, however, require a resale certificate to cover these types of sales. If a security request is made, the department will send a notice of the requirement and additional information about the calculation of the security amount. Included will be information about the types of security that can be deposited.
Any security deposit will be returned to you if for 24 consecutive months you complied with the sales and use tax law. Refer to sec. Tax Code , "Sales and Use tax security deposits". After receiving the Application for Business Tax Registration and the security deposit if requested , a seller's permit will be issued to you by the department.
You will receive it within business days via U. You must display the seller's permit in a prominent location at your place of business. If that is not a fixed location, it should be displayed or carried at the various events. A personal wallet copy will be sent with your seller's permit to provide you with easy access to your permit number. If you sell goods or provide a service that is subject to state sales tax, you are required to have a seller's permit, and you'll need to get one in each state where you operate.
Businesses that provide goods and services subject to sales tax are actually acting as intermediaries for the government. Customers pay the sales tax, but businesses must collect the money and send it to the state.
Seller's permits give business owners the right to collect sales tax, and they give the taxing agency a way to track payments and ensure they are made in a timely fashion. A seller's permit, also called a sales tax license, vendor's license, retail license, certificate of authority, or business tax account, is usually issued by the state Department of Revenue.
Rules on the goods and services that are taxable vary by state. States tax the sale of most retail goods such as clothing, appliances, electronics, and liquor. Many states also charge sales tax on some services such as restaurants, equipment repair and installation, personal services like hair salons, and the leasing of some products and services. Check with the taxing agency in the state where you operate to find out if your business is required to collect sales tax.
If it is, you can usually apply to that same agency for a seller's permit. Only five states Delaware, New Hampshire, Oregon, Alaska and Montana don't impose sales taxes and don't require seller's permits. But Alaska and Montana allow local governments to levy their own sales tax.
If your business operates in one of those localities, you will need to check with the city or county to learn their requirements and procedures. Many states require online sellers to collect sales tax on purchases made in the buyers' states or delivered to those states, regardless of where the business is based. If your online business routinely sells to buyers in other states, you should check with the taxing agency in those states to learn their requirements.
Some states use the same application and permit for retailers with a physical presence and for online sellers. Other states use different types of permits for online sellers, and they might be called by a different name.
However, depending on your type of business and expected taxable sales, we may ask you for a security deposit. If you make sales of a temporary nature such as Christmas tree sales or sales of fireworks, you may apply for a temporary seller's permit. Temporary permits are issued to those whose sales activity will last no longer than 90 days. In addition to registering for a seller's permit, you may need to register for one of the other taxes and fees we administer.
The state and federal governments have additional requirements for businesses. Certain businesses are required to obtain permits from the California Department of Consumer Affairs and state and local environmental agencies.
If you have employees, you are required to register as an employer with the California Employment Development Department and the IRS and to pay payroll withholding taxes. We recommend visiting www.
Chambers of commerce, economic development organizations, and other business organizations are other good sources of information. Often the business licensing department of a city or county can assist you, too. Some counties and cities publish special guides for small businesses, available free or at a low cost. For more information regarding seller's permits, please see publication 73 , Your California Seller's Permit. April
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