How to Get a Resale Certificate in California

If you’re purchasing goods intended for resale in California, you may be overpaying by taking on the sales tax burden for your purchases. As a registered reseller, you can avoid paying sales tax when you buy and collect it later from your customers instead.
Before you can take advantage of this tax exemption, however, you’ll need to apply for a California resale certificate. This saves your business money while staying in compliance with California’s tax laws.
Steps to Getting Your California Resale Certificate
To start purchasing goods tax-free and issuing resale certificates to suppliers, your California business needs to get official with the state. The first step in the process is to register an online account and obtain a seller’s permit.
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Step One. Get a California Seller’s Permit
Selling goods in California means you’ll need to apply for a seller’s permit with the California Department of Tax and Fee Administration (CDTFA). This process is relatively straightforward, but you will need to be prepared with detailed information about your business, its owners and officers, and the sales you intend to make.
You’ll apply for your seller’s permit through your CDTFA online account registration.
Business information you’ll provide:
- Business name, address, entity type, and contact information
- Federal Employer Identification Number (EIN)
- State Employer Identification Number (SEIN) or payroll tax account number (if you hire employees)
- North American Industry Classification System (NAICS) code or Standard Industrial Classification (SIC) number
- For California corporations: corporate name, corporate number, and states and dates of incorporation
- Bank name and address where you hold a business account
- Name of your credit card processor and your account number
- Contact information for your bookkeeper or accountant
- Contact information and address for suppliers (only one required)
- Estimated monthly sales, taxable and otherwise
- The types of products you’ll sell
Along with the information you’ll need to provide about your business, California requires additional info.
Company owner and partner information you’ll provide:
- For California LLCs: member Social Security numbers (corporate officers are excluded)
- Contact information for partners, corporate officers, members, and managers
- Valid form of identification (driver’s license, state ID, etc.)
- Applicant or primary contact email address
- Contact information for personal references (if applicable)
California’s CDTFA provides answers to common seller’s permit questions on its website.
Step Two. Fill out the California Resale Certificate form
Once you’re a registered seller in California and you’ve obtained your permit, you can begin offering your goods to customers in the state. As a California reseller, you can save on sales tax by providing an accurate resale certificate to each supplier you purchase your retail goods from.
Filling out California’s resale certificate (CDTFA-230) won’t take long. You’ll need to provide all the relevant information about your business and the items you’re purchasing, which includes:
- Your seller’s permit number
- The types of goods you sell
- The name of the vendor you’re buying from
- A clear statement that the property is being purchased for resale
- A description of the items being purchased
- Name and address of the purchaser (your business)
- A signature on behalf of the business
- The date of the purchase
Using the state’s form is the easiest route, but a certificate can be custom-drafted so long as it includes all of the information listed above.
Step Three. Use the California Resale Certificate for purchases
After verifying that the type of purchase you’re making qualifies as tax-exempt, per the CDTFA’s Sales for Resale (Publication 103) guide, you can provide your completed and signed certificate to a supplier at the time of purchase. As the purchaser, you should retain a copy of each resale certificate you provide.
What is a California Resale Certificate?
A resale certificate indicates to the state, and to the vendor from whom you’re buying, that the goods you’re purchasing are intended for resale. This exempts your purchase from California’s sales tax, since you’ll collect said taxes from the eventual end customer.
Who needs a resale certificate in California?
Any business owner who intends to sell tangible goods in California can use a resale certificate to restock their inventory without paying taxes. This applies to finished goods, raw materials that become part of the finished product, as well as items you’ll hold on display during the course of your regular business operations, before eventually reselling.
Remember: Misusing a resale certificate, such as for items you’ll consume personally, can leave you liable for unpaid tax, interest, and penalties.
California resale certificate vs seller’s permit
While the similar names can cause some confusion, a California seller’s permit and a resale certificate function in two distinct ways. Here’s how these two types of state permits differ:
- California seller’s permit – gives your company the right to sell goods in the state.
- California resale certificate – allows your business to purchase products tax-free if you intend to resell them.
While both relate to selling goods in California, a seller’s permit is required before you can apply for a resale certificate and begin waiving taxes on your vendor purchases.
Operating as a Reseller in California
As a California reseller, your margins shouldn’t be sacrificed to pay unnecessary taxes. If you’re purchasing goods solely to resell to customers in California, make sure that you take advantage of the tax break afforded to you by obtaining a resale certificate. Every penny counts, and every penny saved and reinvested in your business can help you grow that much faster.
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