It’s a time tested business model – buy wholesale, sell retail. From home based internet businesses to mature intermediary businesses who repackage commodities before bringing their product to the market place, the concept is viable and common.
However, if you are engaged in business in California as a retailer, who pays the sales tax? Are retailers on the hook for sales tax regarding business purchases made wholesale?
California retailers should obtain a Seller’s Permit. Some exceptions may apply, but businesses who intend to sell or lease tangible personal property that would normally be subject to sales tax if sold retail are required to obtain a Seller’s Permit.
As a Seller’s Permit holder, a California retailer is permitted to purchase tangible goods wholesale without paying sales tax. The business is then required to collect and report sales tax on goods sold retail.
To utilize the permit, retailers can simply provide a Seller’s Permit certificate to their wholesale suppliers. Wholesalers can validate a Seller’s Permit using a California Board of Equalization search engine.
If you operate a retail business we can assist you in determining your license and permit needs. For additional information regarding business licensing and permits, contact Corporation Service Company (CSC) at 800.927.9800 ext. 5077 or request a quote for a Business License Order.
Source(s):
California State Board of Equalization
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