Published on: 05/26/20 12:21 PM
Last modified on: 06/5/20 10:00 AM
In this blog post, we will discuss how to complete the registration for a sales tax permit in the state of California. Since the landmark court case of South Dakota V. Wayfair in 2018, states have been dramatically changing laws to reflect this expansion of the authority to require businesses to collect tax – and California is no exception. If you’re not already familiar with nexus, read our blog post, “Sales Tax Nexus” before continuing.
Who needs a permit?
Generally, if the company has physical presence in California and sell goods at retail, it is required to obtain a sales tax registration. Physical presence includes storing inventory in the state, a store front (brick & mortar), or independent salespeople – among others.
California has enacted “marketplace facilitator laws” effective 10/1/2019 which require platforms such as Amazon, to collect and remit sales tax on behalf of those using the platform to sell if the platform has more $500,000 in annual sales. However, if the seller uses a non-marketplace facilitator platform, the seller is responsible for collecting and remitting tax on these sales if they have otherwise established nexus through physical presence.
California has also enacted an “economic nexus” law effective 4/1/2019 which requires retailers with $500,000 in sales for delivery in California, in either the previous calendar year or current calendar year to register. This supersedes a previous law setting a lower sales threshold and transaction requirement.
Affiliate Nexus & Trade Shows
Affiliate nexus creates a requirement to register and is determined by that exact relationship of the business tie. Click-through nexus occurs when cumulative sales are more than $10,000 and the retailer’s cumulative sales are more than $1 million within the previous 12 months. Additionally, if you attend trade shows and are in the state more than 15 days and derive more than $100,000 in sales during the previous calendar year,
You can find out more about whether you need a permit by reading Publication 73, “Your California Seller’s Permit, or alternately you can use our Nexus Determination Service for $99 which examines all aspect of your business to determine whether there is a requirement to register, collect & remit sales tax from customers in California – as well as all other states.
What is the cost of the application?
Currently, there is no fee to apply for a seller’s permit in California.
What information do I need to register?
The state of California has an application process with numerous questions. If you’re familiar with every aspect of the business, you can continue – otherwise we recommend reading the blog post entitled “Things to Know When Registering”.
Here is a list of items you will need to complete the California sales tax registration:
- Business name and entity structure, to include date (or start date), state of incorporation, and ID number issued by the state.
- FEIN (Federal Employer Identification Number) for the Business
- Contact information for the Business to include physical and mailing address, telephone and fax number, and email address
- Bank information (Name/Address)
- Supplier (Name/Address)
- Credit Card Processor (Name/Account Number)
- NAICS Code
- Bookkeeper/Accountant Address and Phone Number and/or Contact information of the person(s) who maintains the books and records (name, address, and phone number)
- Projected monthly sales, projected monthly taxable sales
- Products sold
- Officer, Member, or Partner Information (date of birth, SSN, or driver license and address, email address)
- Personal References
How do I register for a sales tax permit?
The registration process begins online at CDTFA Online Services. You should bookmark this location in your browser as you will use it to file returns when they are due, make payments, and respond to letters or inquiries sent by the state.
Register a New Business Activity
To begin, locate the “Register a New Business Activity” link and click on it. During the process, you may come to a point where you are unsure of the answer. You can save the application by selecting “Save Draft” located in the bottom left corner of the page.
Begin the Questionnaire by selecting the business activity that your business operates. Usually, this is selling items or goods in California. Questions will be asked about whether the business sales different items. Answer yes or no. Next, enter what business type you are registering for the activity you entered in the previous step – Individual/Sole Proprietor, Limited Liability Company (LLC), Partnership, or Corporation, among others. Depending on your choice, you will provide a series of information about the business.
The next section is Taxpayer Information such as address, entity name, and responsible person – including SSN or Individual Tax Identification Number, and Driver’s License or Passport Number. In this section, you will also list representatives as the contact person for both Books and Records, and Business Activities.
The Business Information section will inquire about whether you accept credit cards, sell on the internet, or through third party websites. You will enter your NAICS code or codes, and whether you have a retail location, stock of goods, or warehouse in California. Add the location for both books and records and mailing here.
Account Information & Summary
The next section is the Account Information where you will enter start date, projected monthly sales, monthly taxable sales, products sold, and whether there are any independent sales representatives in California. Add at least one supplier name and address. You must also certify the Certificate of Registration for the required Use Tax Account. Add your personal information as the person preparing the registration. Check the box for the Declaration of Intent, and then submit the registration. At this point, documents – such as incorporation or driver’s license – may be requested to upload. The CDTFA may contact you via the email you provided as the person preparing the registration
Be sure to save a copy of the confirmation number. The California Sales Tax Registration is now complete.
How long does it take to receive the sales tax permit?
Generally, the permit number will be assigned as soon as you submit the application. However, sometimes documents will be needed, and the CDTFA will contact you via the email you provided as the person preparing the registration for that information.
You can click on “Get Registration Status” and provide your email address and confirmation number from above. Make a note of both the account number and the limited access code.
What happens next?
Create a Username to be able to access all the functions of the CDTFA Online Services. Click on the “Sign Up Now” button. Select either the owner of the business, or a third party – tax preparer, representative, or employee.
As the owner of the business you will be asked if you have received a letter in the mail containing a security code. Answer “no” to have one sent to you or “yes” if one has been received. If you have not received your letter, begin the process to receive one. Once you have received it, come back, and complete the username set-up. Once you have completed this process, you will have access to all the account functions. This includes the ability to file and pay tax returns.
As a third party, enter a username and password. Request access to the account through the owner of the business.