Retailers Need a Resale Certificate for California

If you want to buy goods from a manufacturer or wholesaler and resell them, you likely need a resale certificate for California. A resale certificate lets you collect sales tax from the selling of goods or services on which the state levies a sales tax. You need to have an established business license and obtain the proper permits to sell goods and collect sales tax. After collecting the sales tax, you need to transfer the tax proceeds to the state. The resale certificate makes that possible. It also makes it possible for you to buy wholesale goods without paying a sales tax on that transaction. Without it, you could not do business in California without either breaking the law or going bankrupt from excessive costs.

Why You Need a Resale Certificate for California

The resale certificate is a retailer’s best tool for obtaining goods for eventual retail sale to others. The certificate ensures the state that your business is not the final buyer of the products. Instead of paying a sales tax, you collect that tax on the state’s behalf. Without the certificate, any sales of taxable goods or services is illegal. Depending on the amount and frequency, the state might opt to file criminal charges for essentially bootlegging taxable goods.

When a Certificate is Not Needed

You only need a resale certificate if you intend to sell goods or services that require collection of California sales tax. Most consumer goods, though, fall under the realm of sales tax. Examples of items that do not require sales tax collection include drugs, medicine, animal feed, aircraft and aircraft parts not intended for use in California, and other tangible goods. The state produces a list of goods and services that do not trigger sales tax collections. Most retail businesses do not qualify for sales tax exemptions due to the nature of the goods they sell to the general public. Odds are, your business needs one, too.

Start the Certificate Process Now

You can start the process to get your resale certificate for California. You will need a copy of your business license or a declaration that you are the sole owner. The state wants to know the nature of your business, and the types of taxable goods or services you might offer. You will need to give a full accounting of the business plans and how you intend to turn a profit to stay open. Once the state determines your business qualifies, you receive your resale certificate for California and can start obtaining the goods needed to sell for profit and collect state sales tax in the process.