If you run a new or established retail business in the San Francisco area, you may want to take a minute to brief yourself on tax laws for businesses. According to California tax laws, as imposed by the California State Board of Equalization, every non-exempt retail business that sells tangible, personal property for storage, use, or other consumption is required to charge sales tax, collect it and provide a receipt to the purchaser, and remit it to their taxing authority.
What Constitutes a Retail Business?
A retail business sells physical goods rather than services and charges consumers money for these material products. Any retailer engaged in business and having a significant presence in California, also known as sales tax nexus, for the purposes of commerce, constitutes a retail business and must charge, collect, and remit sales tax.
Tips for Determining if Your San Francisco Retail Business Should Charge, Collect, and Remit Sales Tax
If you can answer “Yes” to any of the following questions, as a retail business, your business should be charging, collecting, and remitting sales tax.
- Does your business inhabit a physical location such as an office space, warehouse, storage room, or place of distribution?
- Do you have any person working for you such as a representative, sales person, or contractor?
- Has your business ever sold product at an out-of-state trade show?
- Have you used an affiliate to refer business via a website or other internet-based link to sell product? AND have sales from this person exceeded $10,000 in the preceding 12 months AND are your preceding 12 months’ in-state sales in excess of $1 million?
- Does your business incur income due to leasing rentals of tangible products?
Avoid Penalties for Not Complying with Business Tax Law for Sales Tax
As a business owner in California, whether in San Francisco or any other city and selling material goods, it is imperative that you charge, collect, and remit sales tax on any retail items you sell.
Failure to comply with the California sales tax laws for businesses could result in penalties, fines, additional interest, court costs, and an audit of your business.
You may be required to come up with the money out-of-pocket, which could cause hardship and undue stress. Failure to collect sales tax could be construed as tax fraud, in which case, criminal charges may be brought against you.
Helping Clients in San Francisco and Throughout California With Their Tax Law Questions
If you have questions related to business tax law and sales tax as it relates to your San Francisco business, please contact Mendes Weed, LLP. We have office locations in San Francisco, Sacramento and Walnut Creek and are available to meet by appointment.
Mendes Weed, LLP helps businesses comply with the tax laws, and we may be able to help you as well. With offices in Walnut Creek, Sacramento and San Francisco, we are conveniently situated to serve Northern California, but we assist clients throughout California and the U.S.
Disclaimer: The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.
Mendes Weed, LLP offices are located in Walnut Creek and our skilled attorneys provide family, tax, business, and trust law assistance for clients. For your convenience, we also have attorneys' offices in San Francisco and Sacramento by appointment only.
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