California: Sales Tax Registration Guide

Mar 3, 2023 | Blog Posts

Do You Have Nexus in California?

Sales tax nexus describes the connection a business has with a state that obligates them to gather and submit sales tax. There are two main types of sales tax nexus to consider: physical nexus and economic nexus. Physical nexus arises from having a physical presence within a state while economic nexus results from conducting a certain level of economic activity in a state, such as reaching a specific sales threshold or number of transactions.

In California, physical sales tax nexus is established when a business has a physical presence within the state. This presence could take the form of an office, warehouse, retail store, employees or any other physical presence that allows the business to engage in sales activities. Once a business has established physical sales tax nexus in California, they must register with CDTFA, collect and submit the appropriate sales taxes on all taxable sales to California customers, and file regular sales tax returns. The sales tax rate in California varies based on the location of the sale, so it is essential for businesses with physical sales tax nexus to be knowledgeable about the state’s sales tax regulations.

In California, the economic nexus threshold is $500,000. If a business surpasses this amount through sales to California customers in the previous or current calendar year, it is obligated to register with the CDTFA, collect and remit sales tax on all taxable sales made to California customers, and file routine sales tax returns. It is essential to be mindful that the economic nexus rules differ across states, and it is your responsibility to familiarize yourself with the specific regulations and mandates in each state in which they have a taxable presence. If you would like to speak to someone about your specific sales tax nexus footprint, schedule a call with a HOST representative today.

How Do You Register for a Sellers Use Permit in Calfornia?

To obtain a sellers use permit in California, follow the steps below.

1. Navigate to the California Department of Tax and Fee Administration’s official website.

2. Select the option “Register for a Permit, License, or Account” to initiate the process.

3. Follow the state guided prompts to complete your registration.

The registration process will require the provision of essential details about the business, such as its name, address, and tax classification, as well as information regarding the goods or services being sold. Upon successful completion of the registration, the CDTFA will provide the business with a sellers use permit number. You should save this number for your future reference.

What Information Do You Need to Register?

To secure a sales use permit in CA, some of the information that you will need is below:

Business name and location
Tax classification (e.g. sole proprietorship, partnership, corporation, etc.)
Contact number for the business
Information on the products or services offered
Name and social security number of the principal owner or officer
Information on any licenses held related to the business
Federal Employer Identification Number (FEIN), if applicable
Bank routing and account numbers for electronic funds transfer payments.
The effective date of when your business established nexus in the state

It’s crucial to have precise and current information during the registration process to prevent any issues or inaccuracies.

How Long Does it Take for the State to Process Your Sales Tax Permit?

The time it takes to receive a sellers use permit in California varies based on multiple factors, such as the completion time for the online registration, the number of applications being handled, and any additional information needed.

On average, the California Department of Tax and Fee Administration processes sales tax permit applications within several weeks. Nonetheless, it’s important to be aware that the processing time could fluctuate, especially during high-volume periods, and you should submit the permit application weeks ahead of starting sales activities in California.

If an urgent processing is required, expedited processing may be requested, although additional charges may be incurred. It’s advisable to call or email the state for current information on processing times and any supplementary requirements or fees.

Need Assistance Registering for a Sales Tax Permit?

In conclusion, obtaining a sellers use permit in California requires an understanding of the state’s sales tax regulations. The CDTFA provides an online registration process, but navigating the system can be difficult for those without expertise in sales tax. If you experience difficulties or have questions, you can reach out to the CDTFA for support through email or by calling 916-227-6600. For a hassle-free option, HOST provides a sales tax registration service that includes online account setup and complete registration assistance. Completing a simple form is all it takes, and we’ll take care of the rest for you.