Consequences of Doing Business Without a Valid Seller’s Permit
If you engage in business in the state without a wholesale license in California and are caught doing so, you can be found guilty of a misdemeanor. This charge can take the form of a fine of up to $5,000 or one year’s jail time, or both. This applies to each violation.
In corporations, each officer can be found guilty and charged the above fine and/or jail term for each violation. Being charged not only places your business at risk but also can make it far more difficult to obtain a seller’s permit in the future.
Avoiding Seller’s Permit Revocation
There are many ways to avoid revocation of your seller’s permit. Your records must include physical or digital books of account, with some form of a summary of your income and expenses.
To avoid revocation, it’s also vital to ensure there are documents which support the information reflected in your records. These include receipts, contracts, bills, invoices, and other documents. The gross income of your business must be supported by receipts for the lease and sale of any merchandise.
You must also file tax returns for sales and use with the Board of Equalization (BOE) on a periodic basis, and have copies of the worksheets and documents used to prepare these returns. All deductions you have claimed on your tax returns must also be reflected in your records.