Congratulations on opening your new business in California!
Helping your business succeed is important to the Board of Equalization (BOE). We recognize that locating and reviewing all of the information you need can be overwhelming.
Our goal is to provide information that is easily accessible, which will not only assist you in understanding your sales and use tax obligations but help you avoid simple filing mistakes. This guide provides the information that we believe is important to you in managing your business.
Each section of this guide contains information important to your business.
The Filing and Payments section provides key resources related to filing returns and paying taxes or fees owed.
The Managing Your Sales section provides topics to help your business be successful and how to avoid problems with your taxes or fees. It also covers good recordkeeping practices, exemptions that may help you, where to find information specifically related to your type of business, assistance determining your tax and fee rates, and helpful guides and publications.
The Working with the BOE section helps you find the location of local BOE offices nearest to you for walk-in assistance, getting an educational consultation, obtaining tax and fee advice, and updating BOE with changes to your business.
Lastly, the Resources section provides links to a wealth of information, including forms and publications, current updates, web-based seminars, and access to live help from our customer service representatives.
Please note that the information included is general in nature and is not intended to replace any law or regulation.
If at any time you need assistance with topics included in this guide, or with topics we may have not included, feel free to contact us by telephone or email. Contact information and hours of operation are available in the Resources section
If you have suggestions for improving this guide, please contact us via email.
If you hold a permit or license, you have to file a return and pay any taxes or fees you may owe. Depending on your type of business, the BOE offers convenient online filing services. The online filing system offers helpful information to guide you through the process. It's secure, easy to use, and the calculations are done for you.
To learn more about filing online, please go to File a Return.
You may authorize your tax preparer to file your return electronically. Print form BOE-91-B, Tax and Fee Payer Authorization for Tax Preparer to Perform Electronic Services, select the appropriate allowed functions to authorize your tax preparer, and mail the form to us.
You can find specific filing instructions for your tax program:
When you have a permit or license with us, we will inform you when to file your return. Depending on the type of permit or license you have obtained, the return due dates will vary.
When you registered, you were assigned a reporting basis:
Make sure you file on time even if you can’t pay. Find your due dates at Filing Dates for Sales & Use Tax Returns.
For other tax and fee accounts, the filing dates will vary depending on each program. For filing dates for other tax and fee accounts please see Important Dates for Other Taxes & Fees for details.
You should gather all the information that you will need:
To learn more about filing online, please go to File A Return.
We offer a number of convenient payment methods for our tax and fee payers to apply toward current and past due liabilities.
Usually, when you file a return, you may also make a payment at the same time. You may pay directly from your bank account, or with a credit card, check, or money order. Depending on your business operations, you may be required to make payment through an Electronic Funds Transfer (EFT).
Board of Equalization
PO Box 942879
Sacramento, CA 94279-7072
We know that running a business can be challenging; therefore we want to help you succeed. The following tips can help you avoid problems with paying your taxes and fees.
|Put the Taxes and Fees Collected into a Separate Bank Account||The taxes and fees you collected from your customers are meant to be remitted to the BOE along with your tax or fee return. It should not be used to pay other business or personal financial obligations. Set aside the actual amount of taxes or fees collected in a separate account.|
|File and Pay Together On or Before the Due Date||You are required to file and pay your taxes or fees on or before the due date. Note your due dates on your calendar so you won’t forget. For many accounts, you can file your return and make payments together online.|
|Don’t Forget to Report and Pay Use Tax if You Owe It||Your online purchases may be subject to use tax. For more information go to California Use Tax Information.|
|Report Accurately||Make sure the amounts you report on your return are the total taxes or fees you collected from your customers plus any use tax you owe.|
|Keep Books and Records for a Minimum of Four Years||You are required to keep all your tax and fee records for at least four years.|
|Keep the BOE Notified of Changes||You are required to keep us notified of changes to your business, including changes in ownership, address, contact information, or when you close your business. You can submit changes on form BOE-345-WEB, Notice of Business Change.|
If you hold a California seller's permit or other BOE license or permit, you are required to maintain your business records to verify that you have properly paid the tax or fee.
Records must be kept for at least four years. If you are being audited, retain all records that cover the audit period until the audit is complete, even if it is longer than four years.
Your records should be adequate so BOE representatives may:
Records you should keep include but are not limited to:
Other taxes and fees have their own recordkeeping requirements. For specific information on recordkeeping for other taxes and fees, please see Special Taxes and Fees Programs.
Tax rates vary by location and may change during the course of the year. When there is a tax rate change, we will post a special notice on our website.
The sales and use tax rate in a specific California location is comprised of four parts: state tax rate, local tax rate, county rate, and any district tax rate that may be in effect.
As a retailer in California, you have a duty to report and pay the state’s sales tax, which applies to all retail sales of goods except those sales that are exempted by law. The current statewide sales and use tax rate is 7.25 percent. In addition, you are also responsible for any voter or local government approved district taxes that exist in cities and counties in which you are engaged in business.
To view notices of tax rate changes, please go to Special Notices on our website under News and Events.
For more information on how to determine your sales and use tax rates, please see Know Your Sales and Use Tax Rate.
Other taxes and fees have different rates based on the tax or fee program. To find rates for other taxes and fees, please see the rate tables at Tax-Rates Special Taxes and Fees.
Beginning January 1, 2016, sellers of prepaid wireless phone cards and services are required to collect a prepaid mobile telephony services (MTS) surcharge from customers and pay it to the BOE.
The surcharge is imposed as a percentage of the sales price of prepaid wireless cards/services sold in a retail transaction occurring in this state. If you sell prepaid wireless products and services to consumers, you must register with the BOE as a prepaid MTS seller. The prepaid MTS account is a separate account from your seller's permit.
Beginning January 1, 2017, sellers (other than telecommunication service suppliers) with less than $15,000 of sales of prepaid MTS in the previous calendar year are no longer required to register and collect the surcharge.
For more information about this program, please read our guide Prepaid Mobile Telephony Services (MTS) Surcharge.
If you purchased property without tax and used it in your business, you may owe use tax.
California’s sales tax generally applies to the sale of merchandise, including vehicles, in the state. California’s use tax applies to the use, storage, or other consumption of those same kinds of items in the state.
Generally, if sales tax applies when you buy physical merchandise in California, use tax applies when you make a similar purchase without tax from a business located outside the state.
If you hold a California seller’s permit, you must report and pay the use tax due on business related purchases on your sales and use tax return in the period in which your business first used, stored, or consumed the merchandise in California.
For more information, please see California Use Tax Information.
As a registered seller’s permit holder, you are entitled to purchase property that you plan to resell without payment of tax. However, if you remove items from resale inventory and make a use of the property rather than reselling the property, you owe use tax on your purchase price of the property. If you hold a California seller’s permit, you must report and pay the use tax due on property withdrawn from resale inventory on your sales and use tax return.
For example, if you give away merchandise as a gift or use the property yourself, you owe use tax on the purchase price of the property. Also, if you use resale inventory for marketing purposes or research and development, that is considered a use of the property and you owe use tax on the purchase price of the property.
In addition to use tax, if you purchase property without paying certain taxes and fees, you are required to report taxes on those purchases to the BOE. Some examples include:
Cigarette Internet Tax Program – If you purchased untaxed cigarettes and/or tobacco products from out-of-state internet retailers, and/or by the way of mail or telephone, for self-consumption in California, you are responsible for the excise tax and the use tax. Please see Cigarette and Tobacco Products Internet Program Frequently Asked Questions (FAQ) for more information.
Covered Electronic Waste (eWaste)Recycling Fee – If you purchased a covered electronic device (CED), such as televisions or computer monitors, for personal or business use, and did not pay the eWaste fee at the time of purchase, you must register and pay the fee to the BOE. Please see Electronic Waste Recycling (eWaste) Fee Frequently Asked Questions (FAQ) for more information.
Tire Recycling Fee – If you purchased new tires for personal or business use, and did not pay the tire fee at the time of purchase, you must register and pay the fee to the BOE. Please see our California Tire Fee for more information.
Depending upon your type of business, some of your sales transactions may qualify for a full or partial sales tax exemption.
Exempt sales are transactions not subject to tax and a deduction for those transactions can be taken on your sales and use tax return. You must obtain all documentation to support the deduction. For a list of all exemptions, please see publication 61, Sales and Use Taxes: Exemptions and Inclusions. Some common exempt sales transactions include:
|Sales for Resale||
You may have customers who purchase goods from you with the intent of reselling those goods in their own regular course of business. If your customer provides you with a valid resale certificate and you accept it in good faith and in a timely manner, your sale to them is not taxable. To be valid, resale certificates must contain specific information.
A record of resale certificates must be retained to substantiate claims that a sale was for resale.
For more information, please see publication 103, Sales for Resale.
The sale of food for human consumption is generally exempt from tax unless sold in a heated condition (except hot bakery items or hot beverages, such as coffee, sold for a separate price), served as meals, consumed at the seller’s facilities, or sold for consumption at a location where admission is charged.
Sales of nontaxable food must be separately accounted for and supported by documents, such as guest checks or cash register tapes.
Generally, tax does not apply to your itemized charges for repair or installation labor. However, in California some types of labor charges are subject to tax. For instance, charges for fabrication labor are generally taxable, whether you itemize your labor charges or include them in the price of the product.
You must keep records of all sales invoices showing segregated charges for labor not subject to tax.
For additional information, please see publication 108, Labor Charges.
|Sales to the United States Government||Your sales and leases made to the United States government and its instrumentalities are generally exempt from California sales and use tax.
The following documentation must be retained to support the tax exempt sale:
Keep in mind that this sales and use tax exemption only applies to sales to the United States government and its instrumentalities. Sales to state, county, and city government agencies are still generally subject to tax.
For more information, please see publication 102, Sales to the United States Government.
Unlike sales and use taxes, other taxes and fees in connection with sales to the U.S. Government may not be exempt. For questions concerning the application of other taxes and fees, please contact our Customer Service Center at 1-800-400-7115.
|Sales in Interstate or Foreign Commerce||
Sales that involve shipments or deliveries from California to locations outside the state are generally exempt from sales or use tax if certain conditions are met.
You must retain all documents that will support any tax exemptions you claim. For a list of documents you should keep, please see the Documenting Your Sale and Delivery section in publication 101, Sales Delivered Outside California.
The manufacturing exemption allows manufacturers to receive a partial sale and use tax exemption on specific manufacturing and research and development equipment purchases if the purchaser and the transaction meet certain conditions.
You must obtain a timely exemption certificate from your customer to support the partially exempt sale.
Partial exemptions are transactions exempt from the state portion of the sales and use tax rate. To claim a partial exemption on your return, you must obtain a valid, timely partial exemption certificate from your customer. Below is a list of the most common partial exemptions:
If you purchase property for resale, the transaction is not subject to sales or use tax if the sale is properly documented.
Your supplier will ask you to provide a resale certificate as proof that the property was purchased for resale. You should not provide a copy of your sellers permit in-lieu of a resale certificate. The certificate must be taken in good faith and in a timely manner, which is any time within your normal billing and payment cycle and must include specific information. If you make several purchases from one vendor, you may file one resale certificate with that vendor to keep on file.
You may use a resale certificate to buy property that you will:
You should not use a resale certificate when buying a product that you will:
If you knowingly use a resale certificate to purchase items that you will not resell, you will owe the tax due on the transaction, plus interest. For each purchase made for personal gain or to evade the payment of taxes you may also be required to pay a 10 percent penalty of the tax due or a $500 fine, whichever is greater, for each purchase.
If you maintain no permanent place of business and your business activities consist of you or your sales representatives travelling and soliciting sales door to door or at fairs, shows or special events, you are considered an itinerant seller. You must calculate the tax based upon the tax rate at the location where your sales are made.
For more information, please see Regulation 1802, Place of Sale and Use for Purposes of Bradley- Burns Uniform Local Sales and Use Taxes.
To combat against the use of sales suppression devices or sales-hiding software, California law makes it a crime for anyone in California to purchase, install, or use any automated sales suppression device or software to misrepresent records. The use of this technology is estimated to cost California more than $200 million in sales tax revenue each year. Violators may face jail time as well as fines.
For more information, please see our Special Notice – New Law Makes Sales Suppression or Sales‑Hiding Software Programs and Devices a Crime.
Our website offers many resources to help you understand BOE’s tax and fee programs.
We have a number of helpful industry guides, online seminars, and frequently asked questions. If you are unable to locate the information you need or require immediate assistance, you may call our Customer Service Center Monday through Friday (except state holidays) from 8:00 a.m. to 5:00 p.m. (Pacific Time).
You can email us with any general or non-confidential tax or fee questions.
We offer many online services, but also have local offices located throughout California and across the nation. You can make an appointment over the phone to meet with a representative at the office of your choice.
Below are some of the services available:
We also have a number of computer kiosks located in our offices that enable you to file and make payments. Feel free to visit the local offices nearest you.
As a California taxpayer, you have a right to be treated courteously and professionally by our employees.
We are committed to upholding all your taxpayer rights. When you are unable to resolve a matter through normal channels, you may contact The Taxpayers’ Rights Advocate Office (TRA). TRA can explain your rights and help facilitate resolutions between you and the BOE.
To learn more, please see publication 70, Understanding Your Rights as a California Taxpayer.
Now that you have your new business up and running, you are now faced with the challenge of interpreting and complying with the complex and changing Sales and Use Tax laws.
As part of our commitment to helping you understand your sales and use tax obligations, we have established The Taxpayer Educational Consultation Program. This free program provides eligible businesses with education and assistance, and helps them prepare for their sales and use tax reporting requirements.
If you have specific sales and use tax questions regarding your business, we recommend that you get answers from us in writing. This will enable us to give you the best advice and will protect you from penalties and interest in case we give you erroneous information.
For details, please see publication 8, Get It In Writing!
To ensure we can provide you with the most helpful information about your account, please inform us of any changes made to your business.
Some significant changes include, but are not limited to, adding and closing sub-locations, updating mailing address and changing account ownership. You can contact our Customer Service Center at 1-800-400-7115 (TTY:711) or the nearest local office to make changes to your account information.
You can also submit changes on form BOE-345-WEB, Notice of Business Change and mail it to the provided address.
We offer many forms and publications in multiple languages. If you require interpreter assistance, please call us to schedule an appointment. We will make every attempt to provide access to a BOE employee who speaks your language.
BOE has five publicly elected Board Members. Their popular election ensures that the BOE’s tax program administration remains directly accountable to the people. Four members are elected by district. The fifth member, the State Controller, is elected statewide.
Now that you have registered with the BOE, we suggest you visit the Governor’s Office of Business and Economic Development to help you determine if other state, federal, and local agencies have any licensing or registration requirements that may affect you.
The Governor’s Office of Business and Economic Development (GO-Biz) offers extensive information on state, local, and federal permit requirements:
In an effort to ease the process for a taxpayer who is interested in starting a business in California, BOE partnered with the Employment Development Department, the Franchise Tax Board and Internal Revenue Service to establish the California Tax Service Center. The website acts as a one-stop source for the latest tax information.
In addition, we offer links to other state, federal, and other tax resources at www.boe.ca.gov/info/links.htm
Need to know more? Follow the links below for more information about the topics covered in this guide, as well as other information you might find helpful.