How to Sell online in California on Startup Shopify Store?

Overview: Why Do I need a seller’s permit to sell online in California?

It’s a common question nowadays, “Do I need a seller’s permit to sell online on Shopify in California?”

Yes (if you are looking for a short answer).

However, various factors need to be considered including the type of products sold on the Shopify store, the tax nexus, and others. While starting a Shopify store requires minimum documentation, there are certain legal requirements including permits and licenses which have to be acquired; mainly for the purpose of tax collection on behalf of the state.

Now, in this blog, we will be exclusively looking for the seller’s permit requirement for Shopify stores in California. So, if you are looking to start an online Shopify store, continue reading as we list all the relevant details you need to know about tax collection and seller’s permit for new developed Shopify store in California.

What is Seller’s Permit in California?

A seller’s permit is a special type of business license which is also known as a tax permit or sales tax permit. It is required for all businesses selling taxable goods or services in California. The basic purpose of a seller’s permit is to be eligible for tax collection on behalf of the state.

Acquiring a seller’s permit is necessary for all businesses selling taxable goods or services in California. However, in certain states with no state sales tax, like Delaware, Oregon, Alaska, Montana, and New Hampshire, obtaining a seller’s permit isn’t necessary. However, apart from these states, all other 45 states in the USA (except for Missouri, and Florida), obtaining a seller’s permit is necessary.

Also, the terms and conditions under which a seller’s permit is necessary vary among states. For instance, in most states, a seller’s permit is only required for businesses that make at least 100k in sales. However, in Oklahoma, the seller’s permit is required for stores making 10k in sales. Similarly, in Kansas, a seller’s permit is required for all remote sellers from the very first sale. Similarly, in California, you are required to register for a seller’s permit if you sell three or more taxable items.

How do I get a seller’s permit in California to sell on Shopify?

Obtaining a seller’s permit in California is easy and rather straightforward. You can easily apply for a seller’s permit through the online portal of the California Department of Tax and Fee Administration (CDTFA). On the portal, you can simply click on “Register” and then “Register a New Business Activity” to get started. Also, if you want to get register in person, you can visit any field offices of CDTFA (while this may seem a hectic task, you can get the seller’s permit faster this way).

Please remember that you may need to submit your California Secretary of State Number. In case you aren’t based in California, you can always call the CDTFA office for any queries and assistance.

Read Also:  How do you need a business license to sell online in Canada?

Below are some important documents which you will require to register and acquire a seller’s permit for an online Shopify store in California or newly developed Shopify App in California;

• Date of birth
• Driver license number
• State ID number (or other IDs e.g. military ID, passport, etc.)
• Social security number (corporate officers are excluded for this)
• Email address
• Bank account details (all the bank accounts)
• Details of suppliers (name and addresses)
• Details of bookkeeper or accountant (name and address)
• Details of personal reference (name and addresses)
• Estimated monthly sales (Average)
• Details of previous permit information (in case you have acquired an existing business)

These details are also required for corporate officers, company managers/officers/members, and partners of limited liability companies.

How much does a seller’s permit cost in California for opening an online Shopify store?

A seller’s permit is required for businesses selling taxable goods and services in California. The seller’s permit allows the business to collect sales tax from customers on behalf of the state and report the same on a regular reporting period. Officially there is no charge for registering for a seller’s permit in California to start an online Shopify store; however, at times you may be required to submit a security deposit.

How long does it take to get a seller’s permit in California online?

Obtaining a seller’s permit won’t take too long. Most applicants will be able to receive the permit within a couple of days. Whereas, in-person applicants may receive the permit on the same day.

How long does a seller’s permit last in California?

There isn’t an expiry date for a seller’s permit in California, thereby you won’t need to renew the permit.

How do I get a temporary seller’s permit in California?

In California, you can apply for a temporary seller’s permit if you intend to make sales for less than 90 days (for instance, if you only intend to run a store on Christmas or another holiday season).

In California, you are considered a temporary seller if you sell items for less than 90 days at a location, and thereby will be required to register for a separate temporary seller’s permit for each location you intend to make temporary sales. Alternatively, if you already have a permanent seller’s license for a business at a specific location, you won’t need to acquire a temporary seller’s permit for making temporary sales on the. Instead, you will be required to acquire for sub-permit for each temporary location.

Register for a Temporary Seller’s Permit

Acquiring a temporary seller’s permit for an online Shopify store in California is easy and doesn’t cost any fee. You can register with the California Department of Tax and Fee Administration (CDTFA) online portal for acquiring a temporary seller’s permit.

Temporary seller’s permits in California are issued to stores with no permanent business place and making temporary sales of no more than 90 days at one location. The overall registration process of a temporary seller’s permit is the same as the permanent seller’s permit. However, few things that you do need to keep in consideration when applying for a temporary seller’s permit include;

• A temporary permit must acquire 90 days before starting the business
• You will require to submit the exact start and end date for the temporary business
• As long as the 90 days period remains the same, you can register multiple locations on a single temporary seller’s permit

Once you are done registering for the permit, you can simply print it for each location.

Seller’s permit vs business license California: Which one is good for Shopify store startup in California?

A common misconception amongst online Shopify storeowners in California is that they don’t require a seller’s permit provided they already have a business license. This is a false belief, as both seller’s permit and business license serve different purposes and both are necessary to legally conduct online Shopify business in California.

Similarly, another misconception is that the seller’s permit and resale license are the same things. Again, in reality, these are two different licenses that serve different purposes. For instance, a resale license exempts businesses to pay additional tax on the purchase of goods they intend to sell, whereas, seller’s permit allows stores to collect sales tax from customers on taxable items on behalf of the state.

Shopify vs ETSY: Do I need a seller’s permit to sell on Etsy in California?

Yes. Shopify or ETSY you need a seller’s permit to legally operate an online store (if you intend to sell taxable goods or services) in California.

How long does a seller’s permit last in California?

Seller’s permit doesn’t need to be renewed in California, as long as you don’t change the location of the business.

What permits do I need to sell food online on Shopify store in California?

If you intend to sell food through Shopify store, you would need to get a permit with the county health department in California. You can choose between two different types of permits; depending on whether you wish to sell products directly to customers (B2C), or you are selling to local businesses like Café, or a restaurant (B2B).

Class A permit

Class A Permit for Food delivery in California is applicable for businesses looking to sell food items directly to customers in California. By acquiring a Class A permit in California, you become eligible to sell food items through Shopify store to festivals, farmers market, or any other place where individuals can purchase food items from you. To acquire a Class A permit, you will have to undergo a self-certification checklist; however, you won’t have to deal with physical kitchen inspection.

Class B permit

For sores looking to sell food items to other businesses (B2B) like restaurants or cafes, you will need a Class B permit. You may want to check out the permissibility of selling food items indirectly to customers outside your own county in California. For acquiring a Class B permit, you will have to pass the physical inspection for the kitchen as well.

Some information that you will require to get Class A or Class B permit includes;

• List of sources for the ingredients
• Detailed labels for all products
• Ingredients of all recipes
• Kitchen floor plan
• List of equipment
• Certification for food processor course (duly approved by California Department of Public Health)

How do I get a temporary seller’s permit to sell on Shopify in California?

You will need a temporary seller’s permit if you intend to sell for less than 90 days at a location in California. To acquire a temporary seller’s permit, you can simply register with the California Department of Tax and Fee Administration (CDTFA).