California sales tax and internet businesses


A

angusm

I'm a resident Californian contemplating starting an
internet retail business, probably an S-corp but not
certain. To get much of the information for this business to
see if I can make money doing it I need to get a resale
license (partly for credibility reasons dealing with vendors
to get pricing info). Because of tax issues I may be doing
many of the things of running a business (eg businesses
taxes) before I know if I have a viable idea.

Because I would be competing with internet companies that
don't collect CA sales tax and CA is one of the largest
markets I may need to relocate out of CA to be able to make
a go of it.

Will I be painting myself in a corner by going through the
motions of starting in CA (registering for the sales tax id
in CA etc) only to discover if I relocate out of state that
CA knows everything about my business and will require me to
collect CA sales tax?

I know having a physical presence in CA requires you to
collect sales tax in CA. Does this still apply across time
ie if you once had a presence in CA then you always have it?

Alternatively, could I start a business in CA and then just
restart again under a different name and tax id or am I
letting myself in for some hidden liabilities. But this
route seems a hassle for me anyway.

Thanks.

============================================================
Moderator:
Because you correctly spelled "Kal-E-Forn-Ya", the State
expects you to pay them taxes. :))))
============================================================
 
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F

Frederick Jorden

angusm said:
I'm a resident Californian contemplating starting an
internet retail business, probably an S-corp but not
certain. To get much of the information for this business to
see if I can make money doing it I need to get a resale
license (partly for credibility reasons dealing with vendors
to get pricing info). Because of tax issues I may be doing
many of the things of running a business (eg businesses
taxes) before I know if I have a viable idea.

Because I would be competing with internet companies that
don't collect CA sales tax and CA is one of the largest
markets I may need to relocate out of CA to be able to make
a go of it.

Will I be painting myself in a corner by going through the
motions of starting in CA (registering for the sales tax id
in CA etc) only to discover if I relocate out of state that
CA knows everything about my business and will require me to
collect CA sales tax?

I know having a physical presence in CA requires you to
collect sales tax in CA. Does this still apply across time
ie if you once had a presence in CA then you always have it?

Alternatively, could I start a business in CA and then just
restart again under a different name and tax id or am I
letting myself in for some hidden liabilities. But this
route seems a hassle for me anyway.

============================================================
Moderator:
Because you correctly spelled "Kal-E-Forn-Ya", the State
expects you to pay them taxes. :))))
============================================================
To avoid CA, and I would like to, you must not live there
and sever all ties to CA.
 
K

Katie Jaques

I'm a resident Californian contemplating starting an
internet retail business, probably an S-corp but not
certain. To get much of the information for this business to
see if I can make money doing it I need to get a resale
license (partly for credibility reasons dealing with vendors
to get pricing info). Because of tax issues I may be doing
many of the things of running a business (eg businesses
taxes) before I know if I have a viable idea.

Because I would be competing with internet companies that
don't collect CA sales tax and CA is one of the largest
markets I may need to relocate out of CA to be able to make
a go of it.

Will I be painting myself in a corner by going through the
motions of starting in CA (registering for the sales tax id
in CA etc) only to discover if I relocate out of state that
CA knows everything about my business and will require me to
collect CA sales tax?
When you discontinue your business in California, you would
surrender your California seller's permit and file form
BOE-65.
I know having a physical presence in CA requires you to
collect sales tax in CA. Does this still apply across time
ie if you once had a presence in CA then you always have it?
No.

Alternatively, could I start a business in CA and then just
restart again under a different name and tax id or am I
letting myself in for some hidden liabilities. But this
route seems a hassle for me anyway.
Not a good idea. Just cancel your California seller's
permit, and register as a seller with the state where you
continue your business.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.
 
K

Katie Jaques

I'm a resident Californian contemplating starting an
internet retail business, probably an S-corp but not
certain. To get much of the information for this business to
see if I can make money doing it I need to get a resale
license (partly for credibility reasons dealing with vendors
to get pricing info). Because of tax issues I may be doing
many of the things of running a business (eg businesses
taxes) before I know if I have a viable idea.

Because I would be competing with internet companies that
don't collect CA sales tax and CA is one of the largest
markets I may need to relocate out of CA to be able to make
a go of it.

Will I be painting myself in a corner by going through the
motions of starting in CA (registering for the sales tax id
in CA etc) only to discover if I relocate out of state that
CA knows everything about my business and will require me to
collect CA sales tax?

I know having a physical presence in CA requires you to
collect sales tax in CA. Does this still apply across time
ie if you once had a presence in CA then you always have it?
No. When you close your business in California, you will
surrender your California seller's permit and file BOE Form
65. Read State Board of Equalization Publication 74.
Alternatively, could I start a business in CA and then just
restart again under a different name and tax id or am I
letting myself in for some hidden liabilities. But this
route seems a hassle for me anyway.
Not necessary. Just turn in your seller's permit when you
are no longer going to carry on your business in California.
If you operate your business somewhere else, and ship
tangible personal property to California customers from
inventory located outside California, you will not be
required to collect California sales or use tax from your
customers.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.
 
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K

Katie Jaques

I'm a resident Californian contemplating starting an
internet retail business, probably an S-corp but not
certain. To get much of the information for this business to
see if I can make money doing it I need to get a resale
license (partly for credibility reasons dealing with vendors
to get pricing info). Because of tax issues I may be doing
many of the things of running a business (eg businesses
taxes) before I know if I have a viable idea.

Because I would be competing with internet companies that
don't collect CA sales tax and CA is one of the largest
markets I may need to relocate out of CA to be able to make
a go of it.

Will I be painting myself in a corner by going through the
motions of starting in CA (registering for the sales tax id
in CA etc) only to discover if I relocate out of state that
CA knows everything about my business and will require me to
collect CA sales tax?
No. When you move your business out of CA, you must
surrender your CA seller's permit to the State Board of
Equalization for cancellation. Here is a link to an SBE
publication explaining the closeout of a seller's permit:
http://www.boe.ca.gov/pdf/pub74.pdf
I know having a physical presence in CA requires you to
collect sales tax in CA. Does this still apply across time
ie if you once had a presence in CA then you always have it?
No.

BUT you will NOT be able to close out your seller's permit
or stop collecting tax on sales shipped to California
customers if you leave any part of your business, including
any inventory, in California. You must get EVERYTHING out
and do NOTHING but solicit sales from outside California and
ship the merchandise from outside California.
Alternatively, could I start a business in CA and then just
restart again under a different name and tax id or am I
letting myself in for some hidden liabilities. But this
route seems a hassle for me anyway.
More trouble than it would be worth.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.
 

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