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Seaman & Seaman, A Law Corporation
Addressing Legal Issues For Your California Family’s Past, Present And Future

How often must small business remit California sales taxes?

| Aug 30, 2018 | Tax Law

There’s so much to know and so much to do when you open a business in California. One of the biggest things to learn about?

It involves these two little words: sales tax.

Sales tax is a tax imposed by state and local governments at the time a purchase is made. In California, that state tax is 7.25 percent, but some jurisdictions can add more than one district tax. In Gold River, in Sacramento County, for example, the tax charged on purchases is the base of 7.25 percent. In the city of San Francisco, it’s 8.5 percent. And in some locales, it’s even higher.

As the owner of a small business, you must, by state law, charge and collect sales tax – and then pass it on to the state by a specific date. When you apply for a sales tax permit, the state will let you know how often you must file. That schedule is based on the amount of taxable sales you project, and the state can require you to pay any number of ways: quarterly, monthly or yearly, for example.

You will need to collect sales taxes with a few exceptions.

  1. Nonprofit organizations. You do not need to collect sales tax from nonprofits that present proper documentation.
  2. Raw materials. If you sell items that constitute the raw material to create other items for sale, those items are exempt from taxes.
  3. Wholesale items for resale. You do not need to pay tax on items you purchase wholesale that you will resell. Ultimately, the consumer who buys the item will pay the sales tax.

Sales tax collection can be confusing, but don’t let your confusion keep you from remitting sales taxes to the state. Not paying taxes due to the state can lead to financial penalties – or worse. A California attorney who is knowledgeable about tax law can assist you or answer any questions you might have.