In California, many businesses selling certain items must obtain a seller’s permit in order to operate legally in the state. However, some business owners are uncertain whether or not this permit is required for the sale of tax-exempt items. We attempt to answer these and other questions you may have about the California sellers permit.
What Is a Seller’s Permit, and What Can Businesses Do with It?
Businesses that hold a CA seller’s permit are authorized by the state to sell goods to the public. It also allows them to collect sales tax on the items they sell. As such, business owners are responsible for reporting any and all such taxes they collect to the state.
Businesses that hold this permit also communicate to customers, suppliers, and potential partners that they are committed to conducting business in a legal manner. This commitment can benefit businesses in many ways, including the ability to attract more customers and quality relationships with suppliers and others in the business’s industry.
What Kinds of Items Are Considered to Be Taxable?
There are many items that are subject to sales tax. Tangible personal property such as toys, furniture, antiques, and clothing are all examples of taxable items. In addition, any costs for services or labor that ultimately result in tangible personal property being created can also be subject to sales tax. An example is a jeweler who creates a ring for a customer to buy. This is tangible personal property and, therefore, taxable.
On the other hand, a repair to that ring wouldn’t cause the creation of tangible personal property because the ring already exists. Therefore, this service would not be taxable.
What Kinds of Items Are Considered to Be California Sales Tax Exemptions?
Just as there are several taxable items, there are others that are considered to be tax-exempt.
Many food products not sold in a heated condition are considered to be exempt. The same is true of snack foods, bottled water, and foods sold in vending machines. The sale of items for the purpose of sustaining animal life, such as medicines, seeds, fertilizers, and feed are tax-exempt.
Some health-related products and services are also exempt. These include prescription medicines, blood storage units, and equipment like wheelchairs, walkers, and canes. Products offering a general public benefit like alternative energy are non-taxable, as are those offering industry benefits like vehicle and air carrier fuel. Some manufactured housing and building products are also exempt.
Of course, this is only a fraction of the items that are exempt from sales tax; the California Department of Tax and Fee Administration’s downloadable Exemptions and Exclusions document contains the exhaustive list of tax-exempt items.
Do You Need a Seller’s Permit in California?
If you’ve recently discovered that the items you’ll be selling are taxable and, therefore, require a seller’s permit, FastFilings can help you get one—fast. We specialize in preparing all of your needed documents and items for the submission of your seller’s permit application. Learn more about our services by visiting us online.