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.
Why Is a Seller’s Permit Needed to Sell Tangible Goods?
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.
What Is the Difference Between Tangible and Intangible Goods?
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.
What Does the Permit Allow Your Business to Do?
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.
Which Kinds of Businesses Need to Have a Permit?
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.
Do You Need to Have a Permit If Selling Tangible Goods Online?
If your business operates online and the tangible goods you’re selling are stored at your home, you are required by law to hold a California seller’s permit. Any business that sells their tangible goods from a website needs to have this document, but one is also required if you sell your items via online auction or classified sites.
Getting Your Permit
There are many ways to go about getting a CA seller’s permit, but by far, the fastest option is to request one online from an experienced company that communicates directly with the permit issuing office. FastFilings has processed more seller’s permits than any other company in the state, and you can get yours in 3 easy steps when you visit us online.