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  1. #1

    Question webhosting tax in CA

    Hey I was wondering since I live in California, near San Francisco, Marin County
    if I sell webhosting in CA do I have to do a sale tax of 7.25%?
    and how do I give to the county?

  2. #2
    Join Date
    Mar 2004
    I think you should contact your local lawyer or business council. There is a small business council in usa they say here in london that gives free advice to small companies startup. Maybe if you search for them on the web or in local ecommerce directory you might find them. Worth the search i say.
    "Web Hosting is not just about selling space, it is about facilitating customers needs with your plans and supporting the customer for a long lasting mutually beneficial relationship."- Yaser

  3. #3
    Join Date
    May 2002
    Sunny California
    In California, you are not required to collect sales tax on services (such as web hosting, web design, etc.)
    Erica Douglass, Founder, Simpli Hosting, Inc.
    I founded Simpli Hosting, and sold it in 2007 to Silicon Valley Web Hosting after over 6 years in the business.
    Now I'm blogging at!

  4. #4
    Join Date
    Oct 2002
    North America
    Simpli-Erica beat me to it. In California, goods are taxed. Services are not. I don't know how this decision was made, but it's been like that since I started paying taxes, in 1986.
    Lesli Schauf, TLM Network
    Linux and Windows Hosting: Scribehost

  5. #5
    Originally posted by living_media
    Simpli-Erica beat me to it. In California, goods are taxed. Services are not. I don't know how this decision was made, but it's been like that since I started paying taxes, in 1986.
    u guys 100% sure?
    because I don't want the IRS at my door if I don't give them tax money

  6. #6
    Taxable Services
    Services that are subject to sales and use taxation vary widely among the states. The taxation of services was historically limited to sales of utilities and amusements. In recent years, many states have broadened their tax bases to include additional services. More common taxable services now include repairs and installation; data processing and information; and tele-communications services.

  7. #7
    I've talked with the local city / state reps in Newport Beach, CA when we first step up our business. They mentioned there is no sales tax for Hosting/Programming. Just call the local government office. They'll give you a quick answer.
    Primal Blue Software, Inc.

  8. #8
    thanks primal

  9. #9
    Actually, intresting note on this subject.

    There is a tax bill in the works within congress called S-150, that will ban any tax on any internet related services forever.

    Currently, only ten states tax on internet related services and when and if the bill takes in effect, it won't be until 2006 until all states are required to comply with the new law.

    You can usually catch the conferences regarding this matter on CSPAN/CSPAN-2 around 8:00 p.m. EST.

    Please support the ban on this do to it allowing double taxation and the meire fact that the internet should be free for everyone.
    Value in web hosting.
    Competitive plans, pricing and complete toll-free phone support.

  10. #10
    Join Date
    Jan 2003
    Chicago, IL
    The Internet should be free for everyone? Last I checked the Internet isn't free for anyone :-)
    Karl Zimmerman - Steadfast: Managed Dedicated Servers and Premium Colocation
    karl @ - Sales/Support: 312-602-2689
    Cloud Hosting, Managed Dedicated Servers, Chicago Colocation, and New Jersey Colocation
    Now Open in New Jersey! - Contact us for New Jersey colocation or dedicated servers

  11. #11
    Join Date
    Feb 2004
    what about in Ontario, Canada?
    Dating Revolution Method - Book on how to meet and attract women

  12. #12
    Actually there is several places where you can access the internet for free, for instance libraries, schools and several other places within America.

    If the internet tax where to continue, there are several problems with it.

    First it allows any state to charge taxes where ever the money is processed and transfer from state to state until it reaches to you.

    Second, it would tax libraries and schools for internet usage because the internet service providers must charge it.

    The tax is also becomming very popular with DSL & Cable since lots of people are obtaining them, which raises prices and makes it harder to obtain one at a reasonible price.

    It also allows the states to charge not just for internet service providers but also web hosting companies.

    By not passing the internet tax ban it will allow any state, although there are only ten states that currently use it, to charge for any product or service that relates to the internet.

    The state can even charge you a tax if your customer transaction happens to go through a server that is based in their state, even though you, nor the customer, nor the merchant or gateway provider is based there.

    Does this make sense?

    No and thats why I want this internet tax ban bill to pass.
    Value in web hosting.
    Competitive plans, pricing and complete toll-free phone support.

  13. #13

    Just a quick note that might help out in the future. Sales taxes are a local matter. By this, I mean state or local city or county. And sometimes can be all of them. Meanwhile, income taxes are a federal matter. Federal means you get to deal with the Internal Revenue Service, the IRS, and your state's tax collection office to file the appropriate form that matches what the IRS is looking for if your state requires income taxes too.

    In case you have any doubts about the info you have been given (yes, Primal Blue is right), you can check with the local office of the Franchise Tax Board. They are the California officials who collect state taxes and will forward you to the other agencies if necessary regarding any other taxes.

    One tip in dealing with government agencies. If you approach them about taxes or starting a business, in most cases you want to tell them you're just starting out, your business is part-time and you don't expect to make a lot of money yet. Why? Because in California if you approach them with the "big business" attitude and saying you're gonna make a gazillion dollars a year they'll ask for quarterly payments (or worse) and possibly even a deposit against anticipated taxes, especially if you're an entity other than sole proprietor! Whereas if you tell them you don't expect to make a lot of money, they will say "okay, here's the form and pay us at the end of the tax year."

    Either way you'll end up paying the same amount of money on your taxes. So why create an additional overhead item when you're just starting out?

  14. #14
    Does anybody know off hand if the same is for New York also? I would rather not start a new thread about the same topic. Some information if anybody knows would be excellent.


  15. #15
    I don't know about New York, but I know where you can find out. There is an organization called SCORE. Service Core Of Retired Entrepreneurs. They provide beginning business people with tools and resources and info to start out and can be found in most major cities.

    I no longer live in California, but was very familiar with their system as I started my first business the summer between 1st and 2nd year of college only because I had no luck finding a decent summer job but still had to raise money to pay for books 4 second year.

    The business I started required a reseller's permit, which every wholesaler wants to see to make sure you're legit. If you show them your reseller permit, they don't charge you sales tax in most cases. At any rate, in CA you get the reseller's permit from the Franchise Tax Board.

    In Houston the local SCORE meet once a month or so and offer workshops and seminars to help educate those who need it. Don't know if the same is true for every major city or not, but it's worth checking into.

  16. #16

  17. #17
    why would I need a reseller permit? I am not buying products and reselling them.

  18. #18
    As for the reseller permit, you probably won't need it. But it is issued so that resellers do not have to pay sales tax, and issued by the same office that handles everything related to sales tax in California: Franchise Tax Board. Also, they will most likely be able to point you to other offices for other needs you may have related to government and/or licensing requirements. Even if they don't know, they probably know who/which gov't office DOES know.

    The link at looks good, but I have found that if it's not too inconvenient to visit the local county recorder's office you can often get a better deal on the same filing requirements.

    In Los Angeles County if you went to the county recorder's office you could pick up the forms and file a DBA and walk it through in anywhere from 5 to 30 minutes, depending on time of day and length of the line. And at the L.A. County Recorder's Office there were people there practically mugging you about filing a DBA ;-) the minute you walked in the building! They would hand you the forms (they're free anyway from the recorder's office) and try to get you to use their newspaper to publish your new DBA filing. (Publication in a paper is required to make it legal.) The fees for publication would run anywhere from $31 to $50, depending which smiling person you would approach and whether or not you tried to bargain with them. The DBA filing for L.A. County was $10, I think. I know I used to get it filed and published for about $50 total.

    Orange County was different, but the same end result in that it still cost $50 to get it done, but the county charged more ($31, I think) so the newspapers nearby charged less. And in Orange County the people in the clerk's office where you would file would give you a list of newspapers to go to when you filed with them. They seemed to be the most reasonable of all I had encountered for Orange County publications.

    I bring this up because you could also publish your filing in the local big paper, for instance the Los Angeles Times if you're in L.A. County. Would probably cost over $200 for the same result you'd get using the smaller papers that charged between $19 and $35 or so. So shop around if you can.

    Your county will be different, but basically the same in that it is the state that sets the requirements but the county that carries it out. What I mean is, each county sets the fees, but the fact that it must be published is written somewhere in the state codes or laws so the process from county to county is pretty close to the same, only what it costs to get it done varies from location to location.

    In each of the locations I mentioned above you are required to go and search to be sure that no one else has filed the same name you want to use before you. In California DBA's are required to be renewed every five years, so if someone has filed it 6 years ago and then did not renew then you could file and start using it. But here's the thing: checking to be sure the name you want to use is not already in use by someone else is on YOU, not the GOV'T. They'll take your money anyway, and then you'll find out later that you have a problem and you'll have to go and fix it.

    Nevada and Clark County (Las Vegas) are another matter entirely ;-)

  19. #19

    Almost forgot something. After taking a closer look at that link you mentioned at, I noticed they charge for filing a Federal and State Tax ID number.

    Getting a Federal Tax ID can be done by just making a phone call to the IRS. You get a copy of IRS Form SS-4, ( fill it out before you call their number (instructions and phone numbers are on the instructions attached to the form), and you call them. If you do call them they will ask you if you have the form filled out. And then they will proceed to test you on it! ;-) What I mean is, they will ask you to read to them what's on the form one line item at a time, but skip all over the form asking for "what's on line 8?" you give it to them, then they say, "and line 14?" "and line 4?" If you don't have it filled out first there's almost no way you can answer quick enough to get them to give you a number!

    Anyway, you can also get the form and then fax it to them. If you do, be sure to put a cover sheet with your fax number, then they will fax you back the form with your number written on it about 5 days later.

    The IRS calls this number an Employer ID Number, or EIN. But it's the "social security number" equivalent of an entity such as a corporation or LLC or LP, and most people call it your Federal Tax ID Number.

    I bring this up because I've seen some companies charge as much as $150-$200 for this, and yet all they do is fill out and either fax a form and wait, or they phone it in and then record the number and give it to you. There is no charge to get this number from the IRS - they require it in order to ensure they don't bill your company for some other company's taxes. And they provide instructions along with the form for how to fill it out.

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