If you’re starting a business and want to understand how to get a California resale license and planning to resell goods, you’ll need a resale license (also known as a seller’s permit). This license allows you to purchase products wholesale and sell them to customers without paying sales tax upfront. Here’s a straightforward guide to help you understand how to get your resale license quickly and easily.
What is a California Resale License?
A California resale license is required for any business that plans to resell products in the state. It’s issued by the California Department of Tax and Fee Administration (CDTFA) and allows you to buy goods from suppliers without paying sales tax. When you resell the goods, you collect sales tax from your customers. The resale license ensures that sales tax is only paid once—when the final consumer purchases the item.
Step 1: Determine If You Need a Resale License
You need a California resale license if you:
- Plan to resell tangible personal property in the state.
- Will buy goods wholesale for resale.
- Operate as a sole proprietor, partnership, corporation, or LLC.
If you’re not reselling tangible goods (for example, if you’re providing services or digital products), you likely don’t need a resale license.
Step 2: Gather Required Information
Before applying, make sure you have the following details ready:
- Business Information: Name, business address, phone number, and email.
- Employer Identification Number (EIN): If your business is a corporation, LLC, or partnership, you’ll need an EIN. Sole proprietors can use their Social Security number instead.
- Nature of Your Business: Be prepared to describe what products you plan to sell and the nature of your business.
- Bank Account Information: You might be asked to provide your business bank account details.
Step 3: Apply for the Resale License
You can apply for a resale license in California online through the CDTFA website. Here’s how:
- Visit the CDTFA Website: Go to the California Department of Tax and Fee Administration website and select the option for obtaining a seller’s permit. 2. Create an Account: If you don’t already have an account, you’ll need to create one. You’ll be asked for basic business information to register.
- Fill Out the Application: Complete the online application form, which will ask for details about your business, such as the products you plan to sell and how your business will operate.
- Submit the Application: Once your application is complete, submit it for review. You’ll typically receive your resale license in a few business days.
Step 4: Receive Your Resale License
After submitting your application, you’ll receive your resale license, usually within a few days. You may get a physical copy by mail, or some businesses may receive their license number electronically.
You’ll need to keep your resale license in a safe place and have it available to show suppliers when you make purchases. Some suppliers will require a copy of your resale certificate to process your wholesale purchases.
Step 5: Start Using Your Resale License
Once you have your resale license, you can start purchasing goods for resale. Just keep in mind that you’re responsible for collecting sales tax from customers when you sell these goods. You’ll need to file regular sales tax returns with the CDTFA, detailing your sales and the tax you’ve collected.
Important Considerations
- Sales Tax Collection: As a reseller, you are responsible for collecting the correct amount of sales tax from your customers, based on the location where the sale occurs.
- Renewal: In California, the resale license does not have an expiration date, but it’s important to keep your business information up to date with the CDTFA. Notify them if your business changes.
- Use Tax: Be aware that if you buy items for personal use or for a purpose other than resale, you may need to pay use tax.
Final Thoughts
Getting a resale license in California is a simple and necessary step for any business looking to resell goods. By following the steps outlined above, you’ll be on your way to legally purchasing wholesale goods and reselling them to customers. Just remember to stay on top of sales tax collection and reporting to keep your business compliant and running smoothly.
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