Why Your Business Needs a California Resale Certificate
Any business that sells goods within California state or online to customers located in California is required to collect sales tax from the buyer. All businesses that collect sales tax in California must pay taxes to the state, and are therefore required to file for a certificate, or may face a penalty.
Does my business require a Tax Resale Certificate?
You may need a Tax Resale Certificate if any of the following describe your business:
- You sell consumer goods in California and/or plan to sell or ship product to another party or customer in California
- You have a physical location in California - This includes an office, distribution center, sample room, warehouse, or other place of business
- You have salespersons in California – This includes a representative, agent, salesperson, canvasser, independent contractor, or solicitor operating for the purpose of selling, delivering, installing, assembling, or the taking of orders for your business
- Your business has an affiliate or commission employee or agent referring potential clients to your business
- Your business operates at trade shows
I do business online to customers located outside California, do I still need to provide the state with my tax information?
Yes! Even if you do not charge sales tax to customers located outside of California state, you must report the exempt tax sale to the State of California.
My business resells items that I purchase through wholesale - if I’m not paying taxes on wholesale purchases, why is a Tax Resale Certificate required?
All legitimate wholesale companies in California require a sales tax resale certificate for purchases, and should require a copy of your resale certificate before they sell to you at wholesale prices as a commercial retailer.
My business provides services (example: plumbing, graphic design, etc.) to clients - do I need a Tax Resale Certificate?
Services in California are generally not taxable, so you may not need to collect sales tax from your customers. However, if you’re also selling any products in tandem with your services, you will need to collect sales tax on the tangible merchandise.