Hotel Collection Lux Scenting Hotel Collection Lux Scenting Hotel Collection Lux Scenting Hotel Collection Lux Scenting Comprehensive Manual for Handling Sales and Business Taxes in California for Online Retailers and Etsy Stores | Rise Startup | Guide to Launching & Growing Successful Startups
Monday, June 24, 2024

Guide to Launching & Growing Successful Startups

Perfecting Your Presentation: 4...

Many companies face the daunting task of raising funds for their operations at...

A Beginner’s Guide to...

A comprehensive guide to building a mobile app for the first time ...

Entrepreneurship Unmasked: Dispelling Common...

It's no secret that the world of entrepreneurship is riddled with misunderstandings and...

Establishing a Digital Following:...

Segment 3 of 6 Guidelines for Selecting Social Media...
HomeStartup & InnovationComprehensive Manual for...

Comprehensive Manual for Handling Sales and Business Taxes in California for Online Retailers and Etsy Stores

Guide to Understanding and Paying Sales Tax in California for Online Retailers and Etsy Stores

Welcome to our detailed guide on handling sales tax for Etsy and online stores in California. The world of sales tax may seem intimidating, but with the right guidance, it’s not as complex as it appears. Let’s simplify it together.

If you’re looking for a quick summary, here it is:

  1. Determine your State base rate and your local sales tax rate. Add these two to figure out the sales tax to charge. Visit this page for current sales tax rates in your city and county, in California. For other states, consult your State website.
  2. Understand if your state is “origin-based” or “destination based” – more on this later
  3. Input the total sales tax you need to charge in your payment processor (Stripe, Square, Shopify, Paypal etc)  settings
  4. Your customers will now be paying that tax amount and you will forward all that collected sales tax to the California Department of Tax and Fee Administration annually.

>> Visit this page for current sales tax rates in your city and county, in California.
For other states, consult your State website.

Table of Contents

  1. Grasping Sales Tax Fundamentals
  2. Sales Tax in California: The Essentials
  3. Applying for a Seller’s Permit
  4. Origin-based vs. Destination-based sales tax States
  5. How to Gather Sales Tax from California Customers
  6. Submitting Sales Tax in California
  7. Paying Etsy and Online Store Sales Tax in California
  8. Navigating Business Taxes in California
  9. Maintaining Records for Taxes
  10. The Influence of Tax on Your Ecommerce Store’s Profits
  11. Resources to Assist with Sales Tax and Business Taxes
  12. Initial Steps You Can Take To Begin

Grasping Sales Tax Fundamentals

If you’re new to online retail or running an Etsy shop, you might be asking, “how do I handle sales tax in California?” Let’s start with the basics. Sales tax is a consumption tax imposed on the sale of goods and services. In most states, including California, consumers pay sales tax at the point of purchase.

handling sales tax in california

Sales Tax in California: The Essentials

Sales tax in California varies by locality, but as of this writing, the base state rate is 7.25%. Local tax rates can add between 0.10% to 1.00%, making the total sales tax rate anywhere from 7.25% to 8.25%. This means when you sell a product, you must add this percentage to the sale price, and this additional amount is what you’ll remit to the state.

Applying for a Seller’s Permit

Before you start gathering sales tax, you must apply for a seller’s permit through the California Department of Tax and Fee Administration. This is a straightforward process that can be completed online and is an essential first step for any new online retailer or Etsy shop owner.

Determine if your state is an Origin-based or Destination-based sales tax state:

What does it mean that California is an origin-based sales tax state?

There are two methods to determine sales tax rates: origin-based and destination-based.

Origin-based sales tax: In this system, the sales tax rate is based on the location of the seller.

For instance, if your business is based in California and you sell a product to a customer in New York, you would charge the California sales tax rate, regardless of the customer’s location.

Destination-based sales tax: In this system, the sales tax rate is based on the location of the buyer. If you are a California-based business selling to a customer in New York, you would charge the New York sales tax rate, even though your business is located in California.

Most states use a destination-based sales tax system. 

However, there are a few exceptions such as Alaska, Delaware, Montana, New Hampshire, and Oregon, which use an origin-based sales tax system.

Below is a list of all the origin-based states and all the destination based states.

It’s important to understand the specific sales tax regulations in each state and jurisdiction to ensure compliance and accurate tax collection. Consulting with a tax professional or accountant knowledgeable in sales tax can provide valuable guidance tailored to your business’s circumstances.

Origin-based States:

(you collect the sales tax rate from your city and county within the state):

  • Arizona
  • California
  • Illinois
  • Mississippi
  • Missouri
  • Ohio
  • Pennsylvania
  • Tennessee
  • Texas
  • Utah
  • Virginia

Destination-based States:

(you collect the sales tax rate from your city and county within the state):

  • Alabama
  • Arkansas
  • Colorado
  • Connecticut
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Nebraska
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • North Dakota
  • Oklahoma
  • Rhode Island
  • South Carolina
  • South Dakota
  • Vermont
  • Washington state
  • West Virginia
  • Wisconsin
  • Wyoming

Get notified whenever we post something new!

spot_img

Create a website from scratch

Just drag and drop elements in a page to get started with Newspaper Theme.

Continue reading

Evaluating the Expenses of a High-Quality Website: Advantages, Disadvantages, and Comparisons

Discover all you need to know about the cost of a quality website – including advantages, disadvantages, and comparisons. Ever asked yourself, “What is the cost of a quality website?” This is a typical question for anyone looking to build...

‘The Development and Importance of Organizational Behavior in 2024’

Think of organizations as colossal apparatuses, with individuals serving as the integral components that keep them operational. The exploration of these components and their interactions is known as Organizational Behavior (OB). In essence, OB examines the conduct of individuals...

Initiating a Business: What Should I Do Next?

Don't feel daunted.Discover the steps to initiate a small enterprise and embark on your journey today Embarking on a business venture is an exhilarating endeavor, but it can also be daunting. With a plethora of “steps to initiate a business”...

Distinctive Traits That Make Outstanding Human Resources Managers Stand Out

In our rapidly digitizing world, empathy is quickly becoming a scarce commodity. As individuals are increasingly viewed as resources, those in charge of managing these resources must devise creative strategies to engage with real people. Human Resource (HR) managers who...