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California Resale Certificate

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Old 12-28-2017, 01:30 PM   #1
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California Resale Certificate

I'm trying to figure out if I need one of these. One source says only if I do business greater than $4 million per year, other says I need it period. I don't do that much business and I buy materials, install them in the landscape and charge the customer a bid price. Any help appreciated thanks.
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Old 12-28-2017, 09:37 PM   #2
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Re: California Resale Certificate

Ca wants every penny they can get. They want you to pay tax on everything. Even tools not for resale that are purchased online. It’s a big pia for small sales. But the penalties for not paying the correct amount are small.

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Old 12-31-2017, 09:45 PM   #3
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Re: California Resale Certificate

I had a CA resale license 40 years ago, closed it and never had a problem.

When you do work for a contract price you have to pay sales tax when you purchase the materials and you don't pay sales tax when you lump the labor and materials together.

Look it as like a builder is building an entire house. The builder quotes one flat price for the house, pays for the materials as he purchases them and when the job is finished the contractor does mark up the cost of the materials and does not charge the new homeowner sales tax.

Where you have serious problem is if you charge your customers sales tax and then you don't have a resale permit.
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Old 02-04-2018, 02:56 AM   #4
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Re: California Resale Certificate

From my understanding, it depends on the type of agreement you have with the project owner. If it's cost plus a fee, or a lump sum contract, the contractor is considered the consumer of materials and fixtures, and buys them post tax. It gets into a bit more detail where you'll need to read the guide if you are doing a T&M contract, manufacturing the fixtures, or some other unique situations.

But basically, we purchase all of our materials post tax, and don't need to charge the owner sales tax on anything.
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