The state of California is the proud home of many new businesses each year. Owning a business means ensuring you obtain all of the necessary licenses and permits, which can sometimes be a frustrating experience. However, by not obtaining a wholesale license in California as soon as possible, you are operating a business illegally, and this blog will reveal the consequences of not having the proper licensing. But, first, let’s take a look at the definition of a wholesale license.
What Is a Wholesale License?
A wholesale license and a resale permit are two completely different things. A resale permit allows a business to purchase items needed for its operations without having to pay a supplier tax. The wholesale license is what will allow a business to provide suppliers with resale certificates, as well as allow the business to sell merchandise. A wholesale license is also sometimes referred to as a seller’s permit.
Does Your Business Really Need One?
The first thing to understand is that a wholesale license is required for any business that sells or leases vehicles, merchandise, or any other property considered to be tangible at a retail or wholesale level. If you make three or more online or offline sales over 12 months, you will need to obtain a wholesale license.
Consequences of Operating Without a License
Because it isn’t mandatory to obtain a business license in order to apply for a wholesale license, it may seem easy to continue in this manner. However, as tempting as it may be, there are many consequences of not having a wholesale license.
Your business faces closure if you’ve been caught operating it illegally. Depending on your circumstances, your business may need to wait for a specific amount of time before you can reopen. In the worst-case scenario, the Board of Equalization can decide to refuse to issue you a wholesale license altogether. If you have established your business, and it is found that you’ve been operating it illegally, your reputation will most certainly suffer. Your customers will lose trust in you and become angry, and they may decide to sue you for fraud.
Not having a seller permit can cost you a lot more money and time than it would have cost you to obtain it in the first place. Depending on the nature and size of your business, you and other involved staff, such as accounting, could be liable for thousands of dollars in addition to the money you would need to pay for legal representation.
Don’t Place Your Business and Reputation at Risk
It’s easy to see that operating your business illegally is just not worth it—but how do you avoid waiting in those long lines and enduring this tedious process? By getting your license online. Based in San Francisco, FastFilings understands California’s requirements for licenses and permits and, because of this, has filed more wholesale licenses than any other company in the state. Find out how you can get your wholesale license fast.