When conducting business in California, you should be aware of when you have to calculate sales tax. If a business owner fails to calculate sales tax on certain services, they could face a number of stiff penalties from the IRS and the California Franchise Tax Board. Fortunately, you do not have to manage these complex tax issues alone. If you need accounting assistance to determine your sales tax liability in California, you should consult with an experienced Roseville sales and use tax exposure resolution accountant as soon as possible. The Cook CPA Group is here to offer you the small business accounting services you need to calculate your sales tax liability for services provided by your business. We understand that remaining compliant with sales tax laws can be an intricate process, and we are here to address your concerns. The Cook CPA Group is here to discuss whether services are subject to sales tax in California.
When are Services Subject to Sales Tax in California?
It is true that services are subject to sales tax in California. However, there are many exceptions that can affect whether a taxpayer is required to calculate sales tax in certain transactions. As a result, this makes it challenging for a taxpayer to determine when they must consider sales tax, and when they are permitted to ignore sales tax regulations in California.
Normally, the State of California does not provide tax services unless the service was a core factor in a taxable transaction of property. In California, sales tax must be apportioned to transactions involving tangible personal property or physical property. Note, however, that this does not include real estate. If a service does not involve tangible personal property, it will likely be excluded from California sales tax laws. Our team of accountants can work with you to determine whether the services you provide are subject to the sales tax.
It is important to note that fabrication is also a form of service that will be subject to California sales tax laws. Fabrication or manufacturing is when a person or company provides labor when producing tangible personal property. For example, if a seller sells and assembles a piece of property for a buyer, this may count as fabrication, which means that a sales tax must be apportioned to the service.
A seller should also understand the difference between a sales tax and a use tax. As mentioned, the sales tax is attached to the sale of tangible personal property, and the seller must report and pay the sales tax to the state. The use tax must be included when an out-of-state or online retailer has an item delivered from another state to California. Under these circumstances, the use tax will be for the use, storage, or the consumption of the property transported from another state.
If you wish to know more about how the sales tax works in California, you should continue reading and contact an experienced Roseville accountant to discuss the details of your business.
Registering for California Sales Tax for Services
If you operate a business and you have discovered that you must include a sales tax when providing certain services, your next step should be to apply for a seller’s permit. Filing for a seller’s permit will allow your business to collect sales tax that must be paid to the California Franchise Tax Board (FTB).
Our experienced accountants can help you register for a seller’s permit, be sure to have the following information to help you get started:
- Social security number and date of birth
- Driver’s license, State ID, or other forms of ID
- The names of the banks where you opened an account
- Names and addresses of suppliers
- List of personal references
- An estimated average of monthly sales and the percentage of monthly sales that are subject to the sales tax
Once you have successfully applied and received your seller’s permit, you can begin collecting sales tax. One of the first tasks you will face is determining the amount of sales tax that must be applied to each customer’s purchase. If you fail to collect the accurate amount of sales tax for a transaction, this could lead to a number of problems, such as a sales tax audit.
There are multiple types of sales that can change the amount of sales tax that must be applied. For example, a seller may have to apply a different rate for an in-store sale than to an out-of-state sale or a sale that requires shipping within the state.
If you are unsure about when you should be applying sales tax to your business transactions, the Cook CPA Group is here to offer you the accounting services you deserve.
Consult with Our Committed California Sales Tax Accountants Today
If you require accounting services to calculate your sales tax liability in California, you should contact an experienced Sacramento accountant immediately. At the Cook CPA Group, we pride ourselves on using our extensive accounting experience to assist individuals and businesses with a variety of accounting services. We recognize that California’s sales and use tax laws can be difficult to interpret, and we are here to work with you. To schedule a free consultation to discuss your sales tax liability, contact the Cook CPA Group at (916) 432-2218. You may also contact our firm online to schedule your free consultation.