What Are Tangible Goods?

Anyone wanting to start a business selling tangible goods in the Golden State must obtain a California seller’s permit. But if you’re planning to start a company, you may be unsure which kinds of goods are considered to be tangible. We clarify the ins and outs of selling tangible goods in California.

Businesses in California need a seller’s permit to sell tangible goods because the sale of these goods is subject to sales tax. If you attempt to sell tangible goods without this permit, you are in violation of the law, and could incur expensive penalties and fines. Not only that, but attempting to sell tangible goods without a permit can also deter others from doing business with you in the future.

Tangible goods are any item that can be physically touched, moved, seen, weighed, measured, or picked up. A car, printed book, clothing, tools, flowers, furniture, or DVDs are just a few of many examples of tangible goods. In contrast, downloadable software, spa treatments, and other services are examples of intangible goods which do not require a seller’s permit.

When you have a seller’s permit, you have been granted the authority to collect sales tax on the tangible goods you sell. But as well, holding this permit allows the distributors and manufacturers to sell to someone else in the distribution chain without collecting tax. However, they can only do this if the individual they’re selling to holds a permit and can provide them with a statement that the goods in question are being purchased for the purpose of resale.

The sale of any tangible goods, also referred to as tangible personal property, that would be taxable if sold at retail in the state of California requires a permit. This permit is required regardless of type of business. In other words, you need to apply for a seller’s permit whether you classify your business as a partnership, corporation, limited liability, or sole proprietorship.