What is a California Sales Tax Bond?
California Revenue and Taxation Code Section 6701 states that some sellers in the state may be required to obtain a California sales tax bond, as determined by the SBE.
Typically, this bond is not required to obtain a seller’s permit in California, but may be deemed necessary by the Board if the applicant has a history of late payments and delinquencies or is a corporation/LLC.
The bond is used to guarantee compliance with the Revenue and Taxation Code as well as Local Sales and Use Tax Ordinances. It guarantees that bonded sellers will make their tax payments on time– including interests and penalties– as well as report their earnings according to regulation requirements.
Depending on their business, individuals may be required to obtain a fuel tax bond, a cigarette tax bond, an alcohol tax bond, or some other similar bond as determined by the relevant state agency.
If bonded individuals fail to comply with the above guarantees provided by the bond, a claim can be made against their bond by the SBE. The sales tax bond is a three-part agreement between the bonded seller (the bond principal), the SBE (the bond obligee), and the surety bond company.
So, if a claim is filed against the bond by the SBE, the surety will investigate the claim and make compensations if the claim is valid.
This does not relieve the seller of their obligations, though, and he or she will have to repay the surety for its backing in full. Claims can be long, arduous, and costly, which is you should always avoid them.
Get all the facts on the cost of your bond in the next section.
California Sales Tax Bond Cost
The cost of obtaining your bond is a small percentage of the bond’s full amount.
The maximum amount for this bond in California is $50,000. The exact amount varies from business to business, and is determined by the Board.
The percentage you need to pay is calculated by your surety when you apply for a bond. Your personal credit score has a strong impact on the cost of your bond. Less impactful, but still important, are your business and financial statements, liquidity and assets, and business records.
Applicants with a high credit score can expect to get a rate on their bond which ranges between 1% and 3% of the full bond amount.
Choosing the right surety is also important since not all surety agencies have access to the same rates or work with reliable surety companies. Bryant Surety Bonds works exclusively with A-rated and T-listed companies. These companies have an exceptional financial profile, and can provide us with some of the best rates on all bonds.
By choosing Bryant Surety Bonds, you can be sure you’re working with these top surety companies.
Bad Credit Bonds
Getting a sales tax bond in California with bad credit is still possible. Thanks to our Bad Credit Program, you can easily apply for and obtain a bond with less-than-perfect credit. This, too, is possible thanks to our great surety partners.
Getting a bond under this program costs more than do bonds under our standard programs. This is necessary because sureties need to account for the increased risk when bonding low-credit applicants.
Your exact cost will depend on the amount of your bond and your unique financial situation. At the same time, we are dedicated to finding the best rates for all our clients, regardless of their credit status.
How to Get Your California Sales Tax Bond
Applying for your California sales tax bond takes only a couple minutes. Simply fill in and submit our online surety bond application.
Since we always send out a free quote to all our applicants, you can also submit the application if you simply want to know how much your bond will cost.
Call us at 866.450.3412 if you have more questions regarding your surety bond or the bonding requirements for California, or if you need any assistance with your application. We’ll be happy to help!
