You are required to register with the California Department of Tax and Fee Administration (CDTFA) when you sell or lease tangible personal property like vehicles and merchandise in the state of California. On any taxable sales you make, you will also be required to pay a sales tax. All qualified merchants who register with the CDTFA will receive a seller’s permit. In some cases, people mistake the seller’s permit for a resale number or California reseller permit.
A seller’s permit refers to a state license that permits you to sell items at a retail level or a wholesale level. This license also allows you to issue resale certificates to any suppliers with which you do business. When you issue a resale certificate to a supplier, you will be able to purchase items and later sell them without paying a tax on the items to the supplier.
In general, if you’re making three (or more) sales in a period of a year, you need to have a seller’s permit to do business. This is true even if you are making your sales on an online auctions house like uBid or eBay. You also need to have a seller’s permit if you are selling the products on Craigslist or another classified advertisement website.
If you are selling used items at a garage sale, you generally do not have to hold a seller’s permit. The only exception to this rule is if you hold more than two garage sales in the period of a year.
It is a violation of the law to sell merchandise, goods, or other tangible items in the state of California if you do not have a seller’s permit. If you are caught selling merchandise, goods, and other tangible items without a seller’s permit, you will be subject to various fines and penalties.
If you have at least one sales office in the state of California, you will be required to hold a seller’s permit. Law also mandates that you have a seller’s permit if you make a sale out of state, but the order is filled from your in-state inventory of goods at the warehouse. On the other hand, you do not need a seller’s permit if all of your sales are foreign commerce or interstate and none of your sales are made in the state of California. However, be sure to confirm whether your business fulfills the requirements for being a qualified purchaser. You may be required by law to sign up for a use tax account.