The seller’s license allows you to collect taxes payable to the state tax office for the sale of goods and services. In most states, sales tax must be levied when selling products and services. The amount must be paid to the tax office, regardless of whether the product is sold directly or online. Find out what a seller license is and how to get it.
What is a seller’s license?
A CA Sellers Permit license sometimes called a sales tax license or a sales and use tax license, is a business license that allows you to collect sales tax on taxable goods and services. Your business is then responsible for sending the tax you collect to your state’s tax authority. Seller’s licenses are state-specific, which means they allow you to collect and pay the required sales tax in the state where the license is issued for the transaction. Because seller licenses are state-specific, you may need multiple licenses if you do business in multiple states. Seller licenses usually include a state tax ID number. This does not replace the Employer Identification Number (EIN) obtained from the IRS for federal purposes.
Types of businesses that require seller permission
Whether you need a seller license depends on what you sell and where you sell it. Most states require retail and e-commerce businesses to collect and pay sales tax, but in some states, certain items, such as food or clothing, are exempt. Some states also impose a sales tax on certain types of services. In addition to state taxes, businesses may also be subject to local sales taxes.
Five states have no sales tax:
- New Hampshire
Since the rules regarding sales tax vary from state to state, it is best to contact the tax office or other agency responsible for sales tax to find out if your business requires a California Sellers Permit license. Additionally, the research licensing requirements of other states where you have a physical presence.
When to get a seller license
Before you can start selling goods or services to comply with state and local laws, you need a seller’s license. You may face fines and penalties for failing to collect and pay sales tax.
Where to get a seller license
The process for obtaining a seller’s license will vary slightly in each state. Most states require you to file an application with their tax office. Consult with business regulatory and tax authorities about the process in the state where your business is located.
Do business online
As a general rule, online businesses need to obtain a seller license for each state where their physical location is located. Companies typically have to collect and pay sales tax on sales to customers in the state, but if customers outside the state meet certain sales standards in the state, then from customers outside the state. You may also need to collect sales tax. However, it is important to investigate, as the rules vary from state to state.
Seller license and wholesale certificate
Wholesale certificates, also known as resale certificates, allow you to purchase inventory from another company without paying sales tax. Avoid double taxation on items purchased for resale. For example, let’s say your business sells printed t-shirts and you buy blank t-shirts from a wholesale distributor. If you have a wholesale certificate, the T-shirts you buy are not subject to sales tax. Instead, when you sell printed shirts to consumers, you will collect and pay the applicable sales tax. In many states, you’ll get a resale license along with your seller’s license but check with your state’s tax department to be sure.
Can I get a seller license online?
Some states have updated their systems to accept online applications for seller licenses. Check with your state’s tax office to find out what the process is and if you can do it online.
A business license and LLC difference?
LLC (Limited Liability Company) is an entity established for liability and tax reasons. A business license allows you to do business legally. There are many types of state, local, and federal business licenses, and your business may require multiple licenses. All types of entities can obtain a seller’s license or other business licenses.