Business

Know the Difference Between a Seller’s Permit and a Resale Certificate

State sales tax collection is based on two terms familiar to many business owners: the seller’s permit and the resale certificate. Some states choose to use one term over the other and come join the two documents as one document. However, there is a distinction to be made between the two phrases that must be understood before applying for business permits through your state’s department of licensing and regulations.

Seller’s permit

A CA Sellers Permit allows a state to identify a business as a sales tax collector. Some states may call this a “sales tax” permit or license. Seller’s permits are required for sole proprietors, partnerships, limited liability companies, and businesses that sell the tangible property to the public as a wholesaler or retailer. Tangible goods are physical items, such as a toy, jewelry, or a vehicle. These may also include building materials for homes and repairs. Some states may require service-oriented businesses (accountants, lawyers, therapists) to charge a tax, which would require the business to obtain a seller’s permit. Some states require that temporary vendors (holidays, holidays, rummage sales) obtain a temporary seller’s permit. Although most companies with a resale certificate have a seller’s permit, some manufacturers never sell a product for resale and only provide components for other products. These businesses cannot hold a seller’s permit because they do not charge a sales tax.

Resale certificate

Resale certificates identify a business that has the right to make certain nontaxable purchases. These include wholesale items for resale and items that are purchased for use in manufacturing products for resale. Resale certificates prevent double taxation on the sales of products. Sales tax is collected at the end of the road when the item is purchased by the end customer. The seller of the original items will require the buyer to provide a copy of a resale certificate to keep on file for tax purposes.

Pay sales tax

Any business that sells material goods for direct resale needs a seller’s permit to legally operate in any state. The sales permit is usually obtained free of charge and provides the business with a California Sellers Permit number. Sellers typically collect sales tax at the time the buyer makes a purchase from the business. Sales tax is paid to the state by the business owner on a quarterly basis by entering the sales tax permit number on the state tax payment form.

Buyers with resale certificates

Businesses buying for resale must provide a resale certificate to the seller to avoid paying sales tax. A copy of the certificate is the proof the seller needs if the state ever questions why they don’t charge tax on the purchase. Resale certificates typically require the business to identify the items they need to purchase duty-free to avoid purchasing other items. 

Small Business Permit Basics Guide

Information

The permits required for small businesses are use permit, firefighter endorsement, environmental health endorsement, categorical exclusion certification, and in some cases a sanitary license. Here you will find basic information about the main permits that a small business needs.

What is a license?

A license is a written permit issued by the Permit Administration (OGPe) or an autonomous municipality, a new activity established to create new employment and a specific activity operated without an appropriate license. Gives an exemption. Economic movement. The application fee starts with a $ 100 browsing.

What is a Fire Endorsement?

Fire certification (Firefighter Approval) is issued as part of the evaluation process for granting a license to use. This certification is awarded by the Office of License Administration (OGPe) Health and Safety, a professional or an authorized inspector. It is delivered to the owner, operator or administrator of a public body where it is assessed for compliance with fire protection-related requirements, regulations and applicable laws. Application fees range from $50 to $100, depending on the size of the venue.

What is Environmental Health Accreditation?

Environmental Health Certificates (Environmental Health Endorsements) are issued by the Office of Management’s Health and Safety Division as part of the evaluation process for granting licenses to use. This certification is provided to owners, operators or administrators of public institutions by professionals or authorized inspectors. This certification assesses a business’ compliance with environmental health-related requirements, regulations, and applicable laws. The application fee is $35.

What is the Categorical Exclusion Certification?

The Categorical Exclusion Certification is a written determination filed by the applicant for a Final Determination or permit before the Permit Management Office or before an Authorized Professional Person. It certifies that the proposed action is one that, in the normal course of its execution, will not have an environmental impact and/or that it has been expressly excluded from the environmental planning process by means of a Law or Regulation. For the purposes, categorical exclusions are predictable or routine actions that in the normal course of their execution will not have a significant environmental impact. In addition, the actions determined by the Environmental Quality Board through regulations or resolutions to that effect will be considered a categorical exclusion. The filing fee is $75.

What is the Sanitary License?

The health license is a permit granted by the Department of Health to any person, corporation, or institution that starts a food business, a child care center, or a care center for the elderly. The cost of filing starts at $35 and will depend on the type of operation.

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