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How to Get a Resale Certificate in California

How do you apply for a resale certificate in California?

If you are a small business owner who sells online to customers in the US or have an e-commerce store and sell to customers in the US, you may need to know about resale certificates. Resale certificates are documents that allow you to buy products from wholesalers or distributors without paying sales tax, as long as you intend to resell them in your business. In this blog post, we will explain what a resale certificate is, how it works, how to get one in California, and how to use it properly.

What is a California Resale Certificate or Reseller Permit

A California resale certificate, also known as a reseller permit, is a form that you fill out and give to your supplier when you buy products for resale. It shows that you are a registered seller in California and that you are buying the products for resale, not for your own use. By giving a resale certificate to your supplier, you can avoid paying sales tax on your purchases.

A resale certificate is different from a seller’s permit, which is a license that you need to obtain from the California Department of Tax and Fee Administration (CDTFA) before you start selling products in California. A seller’s permit allows you to collect and remit sales tax from your customers, while a resale certificate allows you to buy products without paying sales tax to your supplier.

How Does a California Resale Certificate Work

A California resale certificate works as follows:

  • You obtain a seller’s permit from the CDTFA and register as a seller in California.
  • You find a supplier who sells the products that you want to buy for resale.
  • You fill out a resale certificate with your name, address, seller’s permit number, description of the products, and signature.
  • You give the resale certificate to your supplier when you place your order or when you pick up your products.
  • Your supplier keeps a copy of the resale certificate for their records and does not charge you sales tax on your purchases.
  • You resell the products to your customers and collect and remit sales tax to the CDTFA.

What is a California Resale Certificate Number or Reseller Tax ID

A California resale certificate number or reseller tax ID is the same as your seller’s permit number. It is a unique number that identifies you as a registered seller in California. You need to have a seller’s permit number before you can issue a resale certificate to your supplier. You can apply for a seller’s permit online at the CDTFA website or in person at a local CDTFA office.

Is a California Sales Tax Permit the same as a California Resale Certificate

No, a California sales tax permit and a California resale certificate are not the same. A sales tax permit is a license that you need to obtain from the CDTFA before you start selling products in California. A resale certificate is a form that you fill out and give to your supplier when you buy products for resale. A sales tax permit allows you to collect and remit sales tax from your customers, while a resale certificate allows you to buy products without paying sales tax to your supplier.

California Seller Permit vs Resale Certificate

The main difference between a California seller permit and a resale certificate is that a seller permit is a license that you need to obtain from the CDTFA before you start selling products in California, while a resale certificate is a form that you fill out and give to your supplier when you buy products for resale. A seller permit allows you to collect and remit sales tax from your customers, while a resale certificate allows you to buy products without paying sales tax to your supplier.

Another difference is that a seller permit is valid for as long as you are in business, while a resale certificate is valid only for a specific transaction. You need to issue a new resale certificate for each purchase that you make from your supplier. You also need to update your resale certificate if any of the information on it changes, such as your name, address, or seller’s permit number.

Who Needs a California Resale Certificate

You need a California resale certificate if you are a registered seller in California and you want to buy products from wholesalers or distributors without paying sales tax, as long as you intend to resell them in your business. You do not need a resale certificate if you are buying products for your own use or consumption, or if you are buying products that are not subject to sales tax, such as food, medicine, or services.

Why Do You Need a Certificate of Resale in California?

You need a certificate of resale in California for two main reasons:

  1. To avoid paying sales tax on your purchases from your supplier. If you do not give a resale certificate to your supplier, they will charge you sales tax on your purchases, which will increase your costs and reduce your profits.
  2. To comply with the law and avoid penalties. If you buy products for resale without giving a resale certificate to your supplier, you are violating the California Revenue and Taxation Code, which can result in fines, interest, and criminal charges.

What Information is on a California Resale Certificate?

A California resale certificate contains the following information:

  • The name and address of the purchaser (you).
  • The purchaser’s seller’s permit number (unless they are not required to hold one).
  • A description of the property to be purchased for resale (the products that you are buying from your supplier).
  • An explicit statement that the described property is being purchased for resale.
  • The date of the document.
  • The signature of the purchaser or someone authorized to act on their behalf.

You can use any form of resale certificate, as long as it contains the above information. However, the CDTFA provides a blank resale certificate that you can download and print from their website.

How to Get a Resale Certificate in California (Steps)

To get a resale certificate in California, you need to follow these steps:

  • Obtain a seller’s permit from the CDTFA and register as a seller in California. You can apply for a seller’s permit online at the CDTFA website or in person at a local CDTFA office.
  • Find a supplier who sells the products that you want to buy for resale. Make sure that the supplier is a legitimate and reputable business and that they accept resale certificates from their customers.
  • Fill out a resale certificate with your name, address, seller’s permit number, description of the products, and signature. You can use any form of resale certificate, as long as it contains the required information. You can also use the blank resale certificate provided by the CDTFA.
  • Give the resale certificate to your supplier when you place your order or when you pick up your products. Keep a copy of the resale certificate for your records, and make sure that your supplier does not charge you sales tax on your purchases.
  • Resell the products to your customers, and collect and remit sales tax to the CDTFA. Report your sales and tax payments on your sales and use tax return, which you can file online at the CDTFA website or by mail.

How Long Does it Take to Get a California Resale License

It does not take long to get a California resale license, as long as you have a seller’s permit from the CDTFA. You can get a resale certificate as soon as you find a supplier who sells the products that you want to buy for resale. You just need to fill out and give the resale certificate to your supplier when you make your purchase. You do not need to wait for the CDTFA to approve or issue your resale certificate.

How Much Does a California Resale Permit Cost

A California resale permit does not cost anything, as it is not a separate license or registration. It is simply a form that you fill out and give to your supplier when you buy products for resale. However, you do need to have a seller’s permit from the CDTFA, which is free to obtain, but requires you to collect and remit sales tax from your customers.

How to Fill Out a California Resale Certificate

To fill out a California resale certificate, you need to provide the following information:

  1. The name and address of the purchaser (you).
  2. The purchaser’s seller’s permit number (unless they are not required to hold one).
  3. A description of the property to be purchased for resale (the products that you are buying from your supplier).
  4. An explicit statement that the described property is being purchased for resale.
  5. The date of the document.
  6. The signature of the purchaser or someone authorized to act on their behalf.

You can use any form of resale certificate, as long as it contains the above information.

How to Use a California Resale Certificate

To use a California resale certificate, you need to follow these guidelines:

  • Only use a resale certificate when you buy products for resale, not for your own use or consumption.
  • Only use a resale certificate when you buy products that are subject to sales tax, not products that are exempt from sales tax, such as food, medicine, or services.
  • Only use a resale certificate when you buy products from a supplier who is located in California or who is registered to collect California sales tax.
  • Only use a resale certificate that is valid and accurate. Do not use a resale certificate that is expired, revoked, suspended, or falsified.
  • Only use a resale certificate that matches your seller’s permit number and business name. Do not use a resale certificate that belongs to someone else or that has a different name or number.
  • Give the resale certificate to your supplier when you place your order or when you pick up your products. Keep a copy of the resale certificate for your records, and make sure that your supplier does not charge you sales tax on your purchases.
  • Resell the products to your customers and collect and remit sales tax to the CDTFA. Report your sales and tax payments on your sales and use tax return, which you can file online at the CDTFA website or by mail.

How Long is a California Resale Certificate Good For

A California resale certificate is good for as long as you are in business and your seller’s permit is valid. However, you need to issue a new resale certificate for each purchase that you make from your supplier. You also need to update your resale certificate if any of the information on it changes, such as your name, address, or seller’s permit number.

How to Verify a California Resale Certificate

If you are a supplier who receives a resale certificate from a customer, you can verify the validity of the resale certificate by checking the following:

  • The name and address of the purchaser match the name and address on their seller’s permit.
  • The purchaser’s seller’s permit number is valid and active. You can verify the seller’s permit number online at the CDTFA website or by calling the CDTFA at 1-800-400-7115.
  • The description of the property to be purchased for resale matches the type of products that you sell.
  • The resale certificate is signed and dated by the purchaser or their authorized representative.

What Does a California Resale Certificate or Form Look Like?

A California resale certificate or form can look like any document that contains the required information, such as the name and address of the purchaser, the purchaser’s seller’s permit number, the description of the products to be purchased for resale, the statement that the products are being purchased for resale, the date of the document, and the signature of the purchaser or their authorized representative.

Do California Resale Certificates Expire

No, California resale certificates do not expire, as long as you are in business and your seller’s permit is valid. However, you need to issue a new resale certificate for each purchase that you make from your supplier. You also need to update your resale certificate if any of the information on it changes, such as your name, address, or seller’s permit number.

How Often Do I Need to Renew My California Resale Certificate

You do not need to renew your California resale certificate, as it is not a separate license or registration. However, you need to issue a new resale certificate for each purchase that you make from your supplier. You also need to update your resale certificate if any of the information on it changes, such as your name, address, or seller’s permit number.

Does California Accept Out-of-State Resale Certificates

Yes, California accepts out-of-state resale certificates from customers who are registered sellers in other states, as long as the resale certificate contains the required information and the products are being purchased for resale. However, California does not accept out-of-state resale certificates from customers who are not registered sellers in any state, or who are buying products for their own use or consumption.

Are California Resale Certificates Good in Other States

No, California resale certificates are not good in other states, as each state has its own rules and regulations regarding sales tax and resale certificates. If you are a California seller who wants to buy products for resale from a supplier in another state, you need to obtain and use a resale certificate from that state, if applicable. You also need to comply with the sales tax laws of that state, such as registering as a seller, collecting and remitting sales tax, and filing sales and use tax returns.

Do All Sellers Accept California Resale Certificates?

No, not all sellers accept California resale certificates, as some sellers may have their own policies or preferences regarding sales tax and resale certificates. For example, some sellers may require you to provide additional information or documentation, such as a copy of your seller’s permit or a letter of authorization. Some sellers may also charge you sales tax on your purchases, even if you give them a resale certificate, and then refund you the sales tax later, after verifying your resale certificate. Therefore, it is important to check with your supplier before you make a purchase, and to keep a record of your transactions and communications.

Conclusion

Resale certificates are important documents that allow you to buy products from wholesalers or distributors without paying sales tax, as long as you intend to resell them in your business. In this blog post, we explained what a resale certificate is, how it works, how to get one in California, and how to use it properly. We hope that this blog post has helped you understand the basics of resale certificates and how they can benefit your business. If you have any questions or comments, please feel free to contact us or leave a comment below. 

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