Out-of-State Businesses Must Pay California Sales Taxes
Mar 8 2023 0

Out-of-State Businesses Must Pay California Sales Taxes

The State of California Employment Development Department describes firms as a single establishment or many establishments that have their own Employer ID number. In quarter one of 2022, EDD reported that there were 1,285,712 California firms operating throughout the state. The majority of these firms, 972,344, had anywhere from one to four employees. There were also many firms that had thousands of employees. In Q1 of 2021, 326 firms had at least 3,000 employees or more.

Operating a business in California is competitive. Whether you are offering services or products the state is home to a vast amount of businesses, and many of these may be in your industry looking to contend with you to attract the same customer base. Trying to stick out and be successful takes plenty of work and effort. 

But it is not only companies within the state that California-based businesses have to deal with. Online stores that offer similar products or services are yet another obstacle business owners in the state of California have to deal with. Additionally, these entities may also be operating from other parts of the country. The rules that they have to abide by can be different and give them an upper hand.

Online Businesses and Taxes in California

Out-of-State Businesses Must Pay California Sales TaxesThere was a time that online businesses could sell to residents of California and not be subject to paying the state’s sales tax. This undoubtedly gave these companies an advantage and put California-based companies behind. 

In 2019, everything changed. The South Dakota v. Wayfair, Inc., 5-4 decision out of the United States Supreme Court ruled that in most situations, when a seller is out-of-state, they must still abide by the sales tax laws of the state they are selling to. This decision meant that a business did not have to physically be located in a certain state to pay the state’s sales tax.

Yes, California businesses still have much to grapple with in keeping their businesses viable and successful. But, not having to contend with out-of-state operations that could avoid adding California sales tax is no longer an issue.

Under California’s sales tax and use laws, sellers who are not located in the Golden State will have to register and then pay the sales taxes that they collect on their products to the state when Californians purchase said products. The laws indicate that this kicks in when a seller makes either a minimum of 200 sales in the state or sells at least $10,000 in sales. 

Speak with an Attorney At Leiva Law Firm Today

If you own a business in California, it is not just competing with others that you have to deal with. You may also have various legal disputes and challenges to manage. Legal suits can be stressful, not to mention take away much of your time while also being costly. 

For help with filing a suit or defending against one, please call the Los Angeles business litigation attorney at the Leiva Law firm to schedule a free consultation at (818) 519-4465.

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