Before we share the important benefits of having a California Seller’s Permit, let us first find out what a seller’s permit actually is.
What Is a Seller’s Permit?
A seller’s permit is a document that permits businesses to collect sales tax in their state of residence. This is an important document for any business to collect sales tax on the sale of any of their taxable goods and services. Businesses can get their seller’s permit in two main ways.
- By doing all the paperwork and groundwork themselves. Here, they would need to collect all relevant documents and submit it along with the seller’s permit application on the Department of Revenue website.
- By hiring an online filing agent to help them out. These companies have professionals who can collect and file all documents on behalf of the business in concern.
In many states like California, it is important for businesses to apply for a California Seller’s Permit if they are selling or leasing any merchandise, vehicles or other tangible property. It is because on the sale of each taxable goods and services, sales tax has to be collected and for that a seller’s permit is necessary.
Benefits of Having a Seller’s Permit
If getting a seller’s permit is so necessary there must be some important benefits associated with it. Here is a list of all such important benefits.
For Legality Reasons
The first and most obvious benefit that a business enjoys with a seller’s permit is legal protection. A business needs to apply for the seller’s permit to ensure it is running within the legal guidelines specified by the concerned state. Only about 5 US states do not require the businesses to apply for a seller’s permit as they do not collect any sales tax. These states are:
- New Hampshire
Apart from these states, all other US states require businesses to get the seller’s permit in their jurisdiction. So the first benefit is the action itself.
Collect Sales Tax Easily
The obvious benefit of having a seller’s permit is being able to collect sales tax in the state that the business is running in. It does not matter if the transactions are taking place online or offline, it is important to collect sales tax on each of them. Some states even collect tax on the shipping and the gift wrapping charges, so it is a must for businesses to get the seller’s permit.
Also, it is important to apply for multiple states’ seller’s permits if the business is running in many states simultaneously. This is important because not all businesses consider other states’ seller’s permits legit enough according to their laws.
Get Wholesale Benefits
Another factor that plays a key role in establishing the significance of a seller’s permit is the wholesale benefits that businesses enjoy. With a seller’s permit the legal identity of the business becomes irrefutable. Some wholesale vendors will not do any business with companies that haven’t got a seller’s permit. So it is important to apply for it.
In fact it is quite common for people to even display their seller’s permit on the premises of their offline companies to encourage trust and confidence among customers as well as the state authorities.
Avoid Fines and Penalties
If you wish to avoid fines and penalties that can be levied on you if you don’t have a seller’s permit, the only way you can escape them is by applying for it. If you have the seller’s permit, you will register each transaction with the state authorities and pay them the tax collected quarterly. This is probably the only way to make sure you have to serve no jail time or deposit any fines.