If you sell or lease tangible goods in California — even temporarily, even online, even from out of state once you cross the $500,000 economic nexus threshold — you need a seller’s permit from the CDTFA before your first sale. The permit is free and doesn’t expire. What it does is register you into California’s sales tax system: from that day forward you’re expected to collect, report, and remit — and you’re on the CDTFA’s radar.
Who needs a seller’s permit
The test is what you sell, not how big you are. You need a permit if you’re engaged in business in California and sell tangible personal property that would be taxable at retail. That includes:
- Retailers and wholesalers — wholesalers still need the permit, even though their sales are mostly for resale
- Online sellers with California inventory, employees, or more than $500,000 in annual California sales
- Temporary sellers — swap meets, trade shows, pop-ups; sales in place for under 90 days can use a temporary permit
- Service businesses that also sell goods — a repair shop selling parts needs one; a firm selling only services generally doesn’t
Each business location needs to be listed. Selling without a permit is a misdemeanor, and the CDTFA finds unregistered sellers through 1099-K data, marketplace records, and referrals from other agencies.
How to get one
Register online through the CDTFA’s online services portal. You’ll need your entity information, ID numbers, banking details, projected monthly sales, and supplier information. There’s no fee — but the CDTFA can require a security deposit if it thinks there’s a risk you won’t remit, which is common where an owner had a prior business that closed owing sales tax. The permit must be displayed at your place of business.
What most people get wrong: the permit is not a resale certificate
The seller’s permit registers you to collect tax. A resale certificate is a different document you give to your suppliers so you can buy inventory without paying tax on it — and you need a seller’s permit number to issue one. The audit trap runs in both directions: issuing resale certificates for goods you actually consume (that’s use tax you owe), and accepting bad resale certificates from customers without documenting them (that’s their tax the CDTFA collects from you). Our chapter on sales for resale covers the documentation standard.
What the permit commits you to
From registration forward, the CDTFA expects returns on the filing frequency it assigns you — even for periods with zero sales. Stop filing, and the system generates estimated assessments and collection activity on its own. Close or sell the business without closing out the permit properly, and the tax follows: successor liability lets the CDTFA collect a seller’s unpaid sales tax from the buyer of the business, which is why close-out clearances matter in any business sale.
And the registration data — projected sales, industry, supplier list — becomes the baseline the CDTFA measures your returns against. Reported sales that fall far below your projections or your industry’s markup norms are precisely how audit selection works, which is where what triggers a sales tax audit picks up the story.
If you’re already selling without a permit
Register now rather than waiting to be found — voluntary registration before contact is treated very differently from a CDTFA discovery, and back liability can often be limited. If there are years of unregistered sales, talk to counsel before you file anything: how you come forward shapes the lookback. That’s a fifteen-minute conversation worth having first — book a free 15-minute call, or see how we handle CDTFA matters.
Seller’s permit FAQ
Do I need a seller’s permit to sell online in California?
If you have California inventory, employees, or more than $500,000 in annual California sales — yes, before your first sale. Marketplace facilitators like Amazon collect for marketplace orders, but your direct-channel sales remain your permit, your collection duty.
Is a seller’s permit the same as a resale certificate?
No — and confusing them is a classic audit finding. The permit registers you to collect tax; a resale certificate is what you give suppliers to buy inventory tax-free, and you need a permit number to issue one. Misusing either creates liability.
How much does a California seller’s permit cost?
Nothing — registration through the CDTFA’s online portal is free and the permit doesn’t expire. The CDTFA can require a security deposit where it sees remittance risk, commonly when an owner’s prior business closed owing sales tax.
What happens if I sell without a seller’s permit?
It’s a misdemeanor, the CDTFA finds unregistered sellers through 1099-K and marketplace data, and the audit lookback stretches to eight years instead of three. Registering voluntarily before contact is treated far better and can limit back liability.