Great news for entrepreneurs in CA who had to register with the Board of Equalization in order to collect and remit sales taxes. A security deposit will no longer be required when applying for a permit. The State Board of Equalization has previously required deposits when opening a new account. The deposit was required to guarantee that sales taxes would be paid by business owners and had to be paid in order for the sales tax permit to be issued. Deposit amounts ranged from $2000-$50,000. Business owners had to pay in cash, get a surety bond, or give another type of personal guarantee. If sales tax was not paid, the security deposit could be applied to the balance due. The deposit would be refunded after being in good standing for 3 years.
With the 5-0 vote from the Board of Equalization, new businesses will no longer be required to post a security deposit, and the approximate amount of $300 million currently on the books will be refunded to entrepreneurs. Only business owners with a history of late payments or failure to pay the taxes due will be required to maintain a security deposit. This is a welcome change as those funds will help new business owners with their cash flow when having money accessible is especially important.
Hopefully other state sales tax agencies will consider the same action as it will be helpful to both new and existing businesses by giving them additional capital.
Of course if you need help applying for a permit or calculating/paying the sales tax due, we can help. We can be reached at 310-534-5577 or [email protected].
