SALES TAX PERMIT

Before you sell anything, you need a Sales Tax Permit (sometimes called a Seller’s Permit or Sales & Use Tax permit).  The main purpose of the permit is so the government knows that you will be collecting and remitting sales tax.  Remitting is a fancy government word for sending in money.

 

You will get a sales tax permit from your state’s Department of Tax and Fee Administration (or your state will have some similarly-sounding entity.  You’d think they’d all be the same but no that’s too practical).  For my home state of California I was able to file online (www.cdtfa.ca.gov).  I filled out the seller’s permit application.  It was free.

 

During the application, you will be assigned a reporting schedule.  You’ll need to send in your collected sales taxes monthly, quarterly, or annually.  To determine this, they ask for your estimated sales.  I kept my estimated numbers low and was thankfully given the annually tag.  You don’t want to be doing that shit every month.  They declare your reporting schedule before the application ends, so you can backtrack and adjust your estimated numbers to get a different schedule.

 

Also if your reporting schedule is annual, double check to see if  you were assigned a Calendar schedule or Fiscal schedule.  You won't find out until after you've submitted.  But you can call in and have them change your schedule.

Calendar Schedule collects taxes during Jan - Dec.  Due by January 31st.

Fiscal Schedule collects sales taxes during Jul - Jun.  Due by July 31st.

You will also need to select a North American Industry Classification System Code (NAICS Code).  A NAICS Code describes your business activity.  This code is mainly used by the government for their own internal statistics.  You can select more than one code if your business has many activities.

NAICS Code 454100            Retail: Internet Sales

NAICS Code 451120            Retail: Hobby, Toy, and Game Stores

NAICS Code 454110            Wholesale: Hobby, Toy, and Game Stores

After submitting the application, I was instantly given my seller’s permit certificate (which you need to post in the workplace).  Then I was asked to make an account with the website.  You need to have an account so you can manage your contact info and actually send in all that sales tax money you’ll be collecting.  Before I could make an account, they mailed me an access code to my business address. 

Also if annual reporting schedule.  The reporting schedule determines when you have to send in all your collected sales tax, which you will do through their website.  You are either assigned a Calendar schedule or Fiscal schedule.  You can call in and have them change your schedule.

In general, you only collect sales tax from the state your business is within.  If you open up shop in another state, you need to file for another permit in that state.  If someone in another state orders a product from you, you do not charge sales tax.  And only the end customer pays sales tax.  If you sell to a local game store at wholesale, you don’t charge them sales tax on the order.  They will in turn charge sales tax to their customers.