How do you get tax exemption for a sole proprietorship business planning to shop in California?

Answer 1

And why would this business, or any, buying things ("shopping") in the State be tax exempt?

Lawyers, Accountants, business consultants, etc., etc., are NOT tax exempt. (Either sales tax or income). Business generally (except for Charities and some special instances) are more responsible for tax than individuals.

The sales tax is paid under the use tax in the State it is delivered to, or if for export and not touched in the State of purchase, the standard S&U procedures hold and you can claim a credit for the tax paid on your return in the receiving State. A sole proprietorship is a person using a business name. In itself, it doesn't change the taxability of anything.

AdditionThe answer above is absolutely correct based on the wording of the original message. Its possible, though, that the question itself is poorly worded. I've seen some small gift shop owners incorrectly use the word "shopping."

If instead of "shopping" the OP meant "purchases for resale in my own business" it would change the answer. I do not practice in CA, but all states with which I am familiar exempt products for resale from sales tax. The state should issue some kind of resale certificate for that purpose.

To address how it works, if someone is buying for resale:

Not taking possession, just being shipped to other State. -- Never taxable anyway, no resale certificate needed, unless the vendor is liscenced in the other State, in which case the buyers resale cert is needed, and it's just like he called the order in from his shop.

Taking possession: If in the same state as your licensed, obviously just provided the appropriate resale certificate using your license number, etc. If your from another jurisdiction: Pay tax on the item at that location for that jurisdiciton...which will be clearly noted on your invoice/receipt. The receipt of it there is considered "first use" under most laws. Bring it to your jurisdicition, put it in inventory and take a credit for the amount of tax paid to the other jurisdicition on you next S&U filing. Some states limit you to the amount of tax you would have paid...as in buy in NYC at 8.75% take to NJ at 7% and get the credit only for the amount of tax you paid as if the sale was done at 7%...the rest stays with the jurisdicition of original use.

So....always have the item shipped. Never a problem.