When you’re a business owner in the state of California, one of the most important things to keep track of is your resale certificate. This document allows you to purchase items tax-free for your business if you register with the Department of Revenue. It’s important to note that this certificate is only for tax exemption on the purchase or rental of property or services – not on the sale of products.
If you’re making taxable sales in California, you must report and pay use tax on those items. Use tax is similar to sales tax, but it’s paid by consumers rather than businesses.
Sales tax rate – 7.250%
Information required to register for a sales tax permit in the state of California
1) Social Security Number
2) Driver License Number
3) Email Address
4) Federal Employer Identification Number (FEIN)
5) State Employer Identification Number (SEIN)
6) For Corporations: corporate name, corporate number, State and date incorporated
7) Name, address and phone number of partner(s), corporate officer(s), member(s) or manager(s)
8) Name(s) and phone number(s) of personal references
9) Name(s) and address(es) of supplier(s)
10) North American Industry Classification System (NAICS) code
11) Standard Industrial Classification (SIC)
12) Bank Information (name and address)
13) Name and account number of the merchant credit card processor
14) Name, address, and phone number of the person(s) who maintains the books and records
15) If you purchased the business, name and contact information for previous business owner
Certain purchases and rentals can be made without the need to pay sales tax. You can use nails, fabric and wood to make a chair, or items that you will rent out as tangible personal property, real property, or services.
In order to make a purchase or rental that falls under this category, you must have a resale sales tax exemption certificate. It is necessary to have this document in order to rent or purchase such a property.
If you resell an item that you’ve purchased, you may need to report use taxes on the item. Similar to sales taxes, use taxes apply when merchandise is brought into your state and used there.
When it comes to getting a California resale sales tax exemption certificate, there are a few things that vendors need to know. First, vendors don’t need to request one from purchasers. The invoice should clearly identify exempt items. Secondly, the annual resale certificate is meant to be used on items that are tax exempt based on their usage. This means that you can use the certificate to purchase items for personal use and later sell them as part of your business.
An Annual Resale Certificate can be accepted by a selling dealer if it has only one owner and no d/b/a. This type of certificate is valid for any type of transaction (store, e-commerce). In addition, the selling dealer can continue to sell tax-exempt products (for example, on a charge account or cash on delivery basis) to this customer.
This certificate is also known as a tax-exempt certificate and it must be obtained by the business, that intends to buy products with an intention to re-sell. example – If you are a business called A, based in the state of Florida, then in order to re-sell goods within the state of Florida then you must obtain a reseller’s certificate. Normally reseller’s certificate is valid within the state however there is no clear-cut answer, as a few friendly states do accept certificates from other states, to do business in their own state.
If a reseller certificate is submitted by the business, supplier, or the provider of the service or goods, is authorized not the charge any sales tax, and the liability of sales tax, then lies with the re-seller, based on the value of the final sales. Ex. $100 worth of products are sold by business A. The reseller certificate (2A) was submitted by reseller b (2A). No sales tax is charged on this transaction. However, if the reseller sells the product for $200 or more, the $200 sales tax will be added to the final sales.
California is a state in the Western United States. California borders Oregon to the north, Nevada and Arizona to the east, the Mexican state of Baja California to the south; and has a coastline along the Pacific Ocean to the west. With over 39.5 million residents across a total area of approximately 163,696 square miles (423,970 km), it is the most populous and the third-largest U.S. state by area. It is also the most populated subnational entity in North America and the 34th most populous in the world. The Greater Los Angeles area and the San Francisco Bay Area are the nation’s second and fifth most populous urban regions respectively, with the former having more than 18.7 million residents and the latter having over 9.6 million. Sacramento is the state’s capital, while Los Angeles is the most populous city in the state and the second most populous city in the country (after New York City). Los Angeles County is the country’s most populous, while San Bernardino County is the largest county by area in the country (Alaska has some larger subdivisions, but they are not called counties). San Francisco, which is both a city and a county, is the second most densely populated major city in the country (after New York City) and the fifth most densely populated county in the country, behind four of New York City’s five boroughs.
The economy of California, with a gross state product of $3.2 trillion as of 2019, is the largest sub-national economy in the world. If it were a country, it would be the fifth largest economy as of 2020 as well as the 37th most populous. The Greater Los Angeles area and the San Francisco Bay Area are the nation’s second- and third-largest urban economies ($1.0 trillion and $0.5 trillion respectively as of 2020), after the New York metropolitan area ($1.8 trillion). The San Francisco Bay Area Combined Statistical Area had the nation’s highest gross domestic product per capita ($106,757) among large primary statistical areas in 2018, and is home to five of the world’s ten largest companies by market capitalization and four of the world’s ten richest people.Source