Making Sales in California - Español | 中文 | 한국어 | Tiếng Việt| Other Languages
An Introduction to the State Board of Equalization
The California State Board of Equalization (BOE) welcomes you and your new business. Our state has a rich history of entrepreneurs and prosperous ventures and we wish you equal success. This is a brief outline of some of the legal requirements that apply to everyone who makes sales in California. Please note, however, the state's business rules and tax laws are very complex and this is not a comprehensive guide. Our employees are prepared to answer any additional tax-related questions you may have. Many speak languages other than English and with advance notice, we will make every effort to ensure that someone who speaks your language is available to help you.
California Seller's Permit
A California seller's permit allows you to sell items at the wholesale or retail level and to issue resale certificates to suppliers (see "Seller's Permit vs. Resale Certificate"). You receive a seller's permit when you register with the BOE. Generally, you must be registered in order to legally conduct business where you sell or lease merchandise, vehicles, or other tangible personal property in California, even temporarily. (Temporary permits are issued to sellers whose sales activity will last no longer than 90 days, such as Christmas tree vendors or craft fair merchants.) Please note that a California seller's permit does not grant you any other rights, privileges, or status under local, state, or federal law.
Seller's Permit vs. Resale Certificate
Although many people use the terms seller's permit and resale certificate interchangeably, they refer to different things. A seller's permit is issued by our agency and allows you to make sales in California. Once you have a seller's permit, you may issue resale certificates to your suppliers to buy items you will sell in your business operations. Issuing a resale certificate allows you to buy these items without paying tax to the seller. A seller's permit is not a buying permit. You will still have to pay tax on all the items you use rather than sell in your business (such as office supplies).
Applying for a Seller's Permit
You can apply for a seller's permit online using electronic registration (eReg) or you may apply at a nearby BOE office.
In order to properly complete your application you will need to provide information about your business, including bank account details and estimated sales. If you purchased your business, you will need to provide the previous owner's name and seller's permit number. To make sure you won't have to pay any sales or use tax owed by the previous owner, you should request a tax clearance from us before you buy the business. There is no charge for a seller's permit. However, depending on your type of business and projected taxable sales, we may ask you for a security deposit.
Obligations of Seller's Permit Holders
When you have a seller's permit, you must:
- Take the time to learn how to properly apply the sales and use tax law in your business operations.
- Keep adequate records that document your sales and purchases (see "Keeping Records").
- File periodic sales and use tax returns with the BOE. The BOE will determine your payment cycle and instruct you to file on a monthly, quarterly, or yearly basis.
- Pay any sales or use tax due on your sales and purchases. (Note: At the time you make a sale, you may collect from your customer an amount equal to the tax you will owe. This is usually referred to as sales tax on your receipt or invoice.)
You must keep records that are necessary to determine the correct tax liability under the Sales and Use Tax Law, such as:
- Books of account that summarize your income and expenses (for example, your general ledger and journals). This information may be stored on computers.
- Documents of original entry (for example, bills, receipts, invoices, job orders, contracts, or other documents) that support the entries in your books of account.
- Documents and worksheets used to prepare your tax returns.
- Any resale certificates you accepted from your customers.
Your records must show:
- Gross receipts from all business income, including sales and leases of merchandise--including income you may consider to be exempt from tax.
- All deductions claimed on your tax returns.
- The total purchase price of all items purchased for sale or lease, or for your own use.
Generally, you must keep sales and use tax records for at least four years.
Additional Requirements For Your Business
In addition to registering for a seller's permit, you may need to register for other tax and fee programs we administer (for example, the California Tire Fee, Electronic Waste Recycling Fee or Cigarette and Tobacco License Program). Additional BOE-administered tax or fee programs you are required to register for will be identified when you register online using eReg. You may also need to obtain other licenses, permits, or documents to operate your business. Chambers of commerce, economic development organizations, and business organizations are good sources of information. Often the business licensing department of a city or county can assist you, or you can call us for help.
Taxpayers' Rights Advocate
As a California taxpayer, you have many rights, such as the right to confidentiality, the right to be treated fairly, and the right to appeal actions we have taken. If you are unable to resolve a disagreement with any BOE employee or if you would like to know more about your rights under any of the tax or fee programs administered by the BOE, you may call the Taxpayers' Rights Advocate's Office toll free at 888-324-2798.
For More Information
Should 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. If you prefer, you may, of course, bring your own interpreter. In all cases, we will make every attempt to communicate clearly with you. If you have suggestions on how we may improve our services, please let us know.
Note: This is a summary of the law and applicable regulations in effect when the site was written. However, changes in the law or in regulations may have occurred since that time. If there is a conflict between the text and the law, decisions will be based upon the law.