Publication 107, Do You Need a California Seller's Permit?
Do You Need a California Seller's Permit?
When you sell or lease merchandise, vehicles, or other tangible personal property in California, even temporarily, you are generally required to register with our agency, the California Department of Tax and Fee Administration (CDTFA), and to pay sales tax on your taxable sales. When you register, we will issue you a seller's permit. Sometimes people incorrectly refer to a seller's permit as a resale number or resale permit. A seller's permit is a state license that allows you to sell items at the wholesale or retail level and to issue resale certificates to suppliers. Issuing a resale certificate allows you to buy items you will sell in your business operations without paying amounts for tax to your suppliers.
Generally, if you make three or more sales in a 12-month period, you are required to hold a seller's permit. This applies even if your sales are made through Internet auction houses or websites that offer online classified advertisements (online advertisers). For additional information, please see publication 109, Internet Sales, or call our Customer Service Center at 1-800-400-7115 (CRS:711).
When you have a garage sale and sell used items, you are generally not required to hold a seller's permit unless you have more than two garage sales in a 12-month period or are required to hold a seller's permit for being engaged in the business of selling merchandise, goods, or items (tangible personal property). Please see Regulation 1595, Occasional Sales – Sale of A Business – Business Reorganization.
Making sales of merchandise, goods, or other items in California without first getting a seller's permit violates the law and subjects you to fines and penalties. California law requires a seller's permit be held for warehouse locations when: the retailer has one or more sales offices in this state, the sale is negotiated out of state, and the order is filled from the retailer's in-state stock of goods at the warehouse. You are not required to hold a seller's permit if all your sales are made exclusively in interstate or foreign commerce, and you make no sales in this state. However, your business may be required to register for a use tax account as discussed in the Required Registration to Report Use Tax section.
Obligations of Seller's Permit Holders
When you hold a seller's permit, you must file sales and use tax returns and pay any sales or use tax due on your sales and purchases. You must report and pay sales tax on each taxable sale. At the time you make the sale, you may collect from your customer an amount equal to the tax you will owe. You also must keep adequate records that document your sales and purchases. As a registered seller, you will need to take the time to learn how to properly apply the sales and use tax law in your business operations. Our classes, publications, and online seminars can help you learn to meet your obligations and help ensure that you don't pay more or less tax than you owe.
Please note: You should not obtain a seller's permit just to take advantage of the opportunity to issue resale certificates to your suppliers. Issuing a resale certificate to avoid paying tax on items you will use rather than sell is against the law and may result in fines and penalties. It is a misdemeanor to issue a resale certificate if, at the time of purchase, you do not intend to resell the merchandise.
You must notify the CDTFA if you intend to sell or close your business. If you are not making sales, your permit may be canceled. For more information, please see Regulation 1699, Permits, and publication 74, Closing Out Your Account.
Please note: This publication summarizes the law and applicable regulations in effect when the publication was written, as noted above. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text in this publication and the law, decisions will be based on the law and not on this publication.
Required Registration to Report Use Tax
California law requires a "qualified purchaser" to register with the CDTFA and annually report and pay use tax directly to the CDTFA through our online services system. A "qualified purchaser" includes businesses with at least $100,000 in annual gross receipts from business operations. Gross receipts are the total of all receipts from both in-state and out-of-state business operations. For additional information, see publication 126, Mandatory Use Tax Registration for Service Enterprises.
A retailer with a computer server located in California on which a website resides may not be required to have a seller's permit unless the retailer has a proprietary interest in the server and the activities at that location otherwise qualify for a seller's permit. You may need to obtain other licenses, permits, or documents to operate your business (see Additional Requirements for Your Business) or you may be required to register for a use tax account with the CDTFA if you are a "qualified purchaser," as explained above.
If you are a retailer located outside of California, you are required to register with the CDTFA and collect California use tax on your taxable sales and report and pay the tax to the CDTFA if you are "engaged in business in this state." You are engaged in business in this state if you are a retailer that:
- Owns or leases real or tangible personal property, including a computer server, in California; or
- Maintains, occupies, or uses, directly or indirectly, or through a subsidiary or agent, a permanent or temporary office, place of distribution, sales or sample room, warehouse or storage place, or other physical place of business in California (whether or not it is related to your sales activities); or
- Has persons operating in California under your authority for the purpose of selling, delivering, installing, assembling, or the taking of orders for tangible personal property; or
- Derives rentals from a lease of tangible personal property (including vehicles, vessels and aircraft) situated in California; or
- Beginning April 1, 2019, has total combined sales of tangible personal property for delivery in California by you and all persons related to you that exceed $500,000 during the preceding or current calendar year.
Offering merchandise for sale over the phone, by mail order, or online will generally not, by itself, cause a retailer to be engaged in business in California. Also, using a website hosted on servers located in California will generally not, by itself, cause a retailer to be engaged in business in California.
For more information about California state, local, and district use tax collection requirements, please see our online guide, Use Tax Collection Requirements Based on Sales into California Due to the Wayfair Decision, publication 77, Out-of-State Sellers: Do You Need to Register with California?, and publication 44, District Taxes (Sales and Use Taxes)
Applying for a Seller's Permit
You can register by selecting Register, and then select Register a business activity with CDTFA. You can also register in person at any of our offices. Please contact our Customer Service Center for assistance at 1-800-400-7115 (CRS:711). You will need to provide information about your business, including bank account details and estimated income. You must also provide information about yourself including your driver license number and social security number (or substitute documents, as explained on the application). If you purchased your business, you'll need to provide the previous owner's name and seller's permit number. To make sure you won't have to pay any tax, interest, or penalties owed by the previous owner, you should request in writing, a tax clearance from us 60 days prior to your purchase. There is no charge for a seller's permit. However, depending on your type of business and expected taxable sales, we may ask you for a security deposit. The CDTFA may be able to issue your permit the same day.
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.
Additional Requirements for Your Business
In addition to registering for a seller's permit, you may need to register for one of the other taxes and fees we administer. For a listing of the special tax and fee programs the CDTFA administers, please see our Special Taxes and Fees page. You can register by selecting Register, and then select Register a business activity with CDTFA. You can also register in person at any of our offices. Please contact our Customer Service Center at 1-800-400-7115 (CRS:711) for additional information. The state and federal governments have additional requirements for businesses. You must file income tax returns with the California Franchise Tax Board and the U.S. Internal Revenue Service (IRS). 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.businessportal.ca.gov or www.calgold.ca.gov to obtain information about business licenses and other local, state, and federal business permit information. 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. For a complete list of other CDTFA-administered taxes and fees, please see publication 51, California Department of Tax and Fee Administration Resource Guide to Free Tax Products and Services. You may find these and all our publications under Forms & Pubs.