What are the rules about collecting/paying sales tax?
- If you sell tangible goods within the state of California, you must have a seller’s permit so that you can collect sales tax. This applies even if you only sell things at craft fairs.
- You have the pay the sales tax rate for the particular county in which you sold your goods, not the rate for the county where your business is based. Since the San Francisco Bazaar happens in San Francisco, you need to pay 8.5% sales tax on everything you sell there, even if your business is based in Los Angeles, where the sales tax rate is 8.25%.
- If you have a seller’s permit (sometimes referred to as a “wholesale license”) you don’t need to pay sales tax on the things you resell. For example, if you make jewelry, you don’t need to pay sales tax on earring backings, clasps, etc. because they become part of the finished product. If you already paid sales tax on these items, you can deduct it on your sales tax return at the end of the year. This rule does not apply, however, to tools and supplies like scissors or markers. It also doesn’t apply to promotional or display materials, or to things you give away, rather than sell.
What if I (or my customer) lives out of state?
Sales tax rules apply to the state where the transaction takes place. Even if you live in Oregon and your customer lives in Texas, if you sold them something at the San Francisco San Francisco Bazaar, you have to pay San Francisco sales tax to California’s State Board of Equalization. When selling things online, you only need to charge your customer sales tax when your business and their shipping (not billing) address are in the same state (assuming your state collects sales tax).
I don’t want to have to use a calculator and make small change at the San Francisco Bazaar. Can I just have the tax be included?
Yes. Contrary to popular belief, sales tax is actually a tax on businesses for the privilege of being allowed to sell things in the state of California (or elsewhere). Most businesses pass this charge on to their customers, but you don’t have to. I tend to keep my craft fair prices in whole dollar amounts and just eat the sales tax to keep things simple. But you can also increase your prices here or there to make up for it. Just remember, whether or not your customers pay sales tax, you most definitely have to.
Okay, fine (heavy sigh). Where do I sign up to get the stupid seller’s permit?
Since Jamie already posted all of this info on the San Francisco Bazaar vendor page, I’m just going to copy it below (thanks, Jamie!). There is still time to get your seller’s permit, but not much, so if you haven’t applied for one yet, do it this week!
You can get tax information here:http://www.boe.ca.gov/info/reg.htm#sales or at their FAQ Page http://www.boe.ca.gov/sutax/faqscont.htm It is FREE to apply. Most of you (who do not already hold a seller’s permit) will need to fill out the BOE-400-SPA Seller’s Permit Application which available for download from this LINK. The completed application can be delivered in person, mailed or faxed to the local field office.
If you have any questions please refer to http://www.boe.ca.gov/info/reg.htm#sales Representatives from the State BOE are available to assist you with permit questions Monday through Friday (except State holidays) from 8:00 A.M. to 5:00 P.M PST. A registration packet will be mailed to you within 24 hours. You will generally receive your permit approximately two weeks after they have received your completed application. Incomplete applications may delay the process.
From TDD phones: 800-735-2929
From voice phones: 800-735-2922
Bay Area Local Field Office: (916) 227-6600 *Press 0 to talk to an agent, and they will give you fax information. This is probably the fastest way to process your paperwork if you do not have a lot of time.
You must have your permit by the time you vend. California law state that you must have a resale certificate in order to make sales. You are considered a retailer if you are selling any tangible items to customers.