Are Wholesale Sales Taxable in California?

California Sales Tax Overview

  • California Sales Tax Rates

    • Statewide rate: 7.25%
    • Average after local surtaxes: 8.44%
    • Total rates range from 7.25% to 10.25%
  • Sales Tax Collection

    • All businesses need to register to collect and remit sales tax
    • Use software or manual calculation

Sales Tax Nexus in California

  • Nexus Criteria

    • Physical presence like store, warehouse, or office
    • Exceeding $500,000 in sales in California
  • Responsibilities

    • Calculate and pay correct amount of sales tax
    • Obtain sales tax license if nexus exists

Wholesalers and Sales Tax in California

  • Wholesalers’ Obligations
    • Required to collect and remit sales tax if sales exceed $500,000
    • Add 10% to wholesale cost and charge applicable sales tax
    • Remit sales tax to state authorities

Use Tax in California

  • Overview
    • Charged at the same rate as sales tax
    • Applies when sales tax is not charged
    • Paid along with income tax filing

Exemptions and Non-Taxable Sales

  • Exemptions
    • Groceries and prescription drugs
  • Taxable Sales Criteria
    • Retail sales of tangible personal property
    • Attendance at trade shows leading to sales
  • No Sales Tax on Use Tax Payment

Conclusion

  • Compliance
    • Retailers and wholesalers must understand and adhere to sales tax laws
    • Proper calculation, collection, and remittance of sales tax are essential

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