If you plan to sell any products within the county of Los Angeles, you must first get a wholesale license. Also known as a seller’s permit, a wholesale license allows you to collect and pay sales tax for any products that you sell in the state of California. A permit obtained in Los Angeles is valid throughout the state.
Who Needs a Wholesale License?
Anyone who's engaged in business in the state of California and sells or leases tangible goods needs to get a wholesale license. That includes individuals, partners, corporations, limited liability companies (LLCs) and other organizations, whether wholesalers or retailers.
You're considered engaged in business in the state, even if you live out of state, if any of the following apply:
- You have an employee who works in the state.
- You have a place of business in the state, such as a warehouse or office.
- You get rent through leasing personal property in the state.
Tangible goods are those that are subject to Los Angeles sales tax, such as clothes, furniture, certain foods and the creation of items for individuals, such as jewelry or art.
How to Get a Wholesale License
Getting a wholesale license in Los Angeles is as simple as registering online through the California Department of Tax and Fee Administration (CDTFA) or visiting your local CDTFA office to fill out an application.
You’ll need to provide the following information in order to get a sales permit in Los Angeles:
- Your date of birth and Social Security Number.
- Your driver’s license or other valid ID.
- For corporations and LLCs, your date of incorporation, Employer Identification Number and corporate number.
- Your bank account information.
- The names and addresses of any suppliers and personal references.
- A valid email address.
You must also include your anticipated average monthly sales, including the amount that's taxable.
Once your application is submitted and approved, you should receive your wholesale license in a couple of weeks. Once you have your seller’s permit, you must keep sufficient records of your business, report and pay Los Angeles sales tax and use taxes, and always have your permit displayed.
What is the Cost for a Wholesale License?
There's no cost to get a sales permit in Los Angeles. If you failed to pay money due to the CDTFA in the past, such as Los Angeles sales tax, you may have to pay a security deposit if your business closes. The amount of the security deposit varies.
How Long is a Wholesale License Valid?
Your license is valid as long as you're actively engaged in business as a wholesaler. Once you're no longer engaged in business, your license is canceled.
You do need to let the CDTFA know if any vital aspects of your business change, such as your address or ownership.
Temporary Seller’s Permit
If you don’t do business in Los Angeles year-round, you may be able to get a temporary seller’s permit. For example, if you only do seasonal sales, such as Halloween costumes or Christmas trees, you don't need a general seller’s permit.
Any business activities that last 90 days or less at one location are eligible for temporary seller’s permits so long as the other qualifications for obtaining a sales permit in Los Angeles are met.
Penalties for Operating Without a Wholesale License
If you meet the requirements for getting a wholesale license and fail to get one or operate with a revoked permit, you may be charged with a misdemeanor violation. That can mean up to a year in jail and a fine of up to $5,000, in addition to other penalties.
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