How to get a Resale License --- Sales Tax ID


by salehoo_group - 15 Jul 2007

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(Applies to US Sellers Only)

A resellers permit (or resale license) is required in order to avoid paying sales tax on items you are going to resell.To get a resellers license you first have to enroll with your state tax department, which involves getting a Sales Tax ID number.

What is Sales Tax?

Sales tax is different from an EIN/TIN number.

Sales tax is charged on all sales of physical goods to buyers within your state. Some states also charge sales tax for some services.Not all states charge sales tax: if you live in Delaware, Oregon, New Hampshire, Montana, Alaska and Hawaii, then sales tax either does not apply or applies only in certain circumstances.

For all other sellers: sales tax applies to you! Sales tax must be collected by sole proprietors, Schedule C businesses and incorporated businesses alike. In general, you do not need to collect sales tax from buyers who live outside your state.

You can find your state's sales tax rate and tax department website at the link below. It is important that you do this as there are significant variations between states. For instance, some states have one rate that applies state-wide, while in others, the rate varies between counties and cities.

State sales tax rates and websites

Note: In some states you also need to collect sales tax on shipping and handling.

How do I get a Sales Tax ID and Reseller License?

You apply for a sales tax ID and reseller certificate/license with your state tax department.

For instance, if you are in New York, then you would go to the New York State Department of Taxation and Finance (either online, by phone or in person) and fill in the appropriate form.

Once you get your sales tax ID, the state will start sending you monthly/quarterly statements.

Business location

The physical location of your business is what matters to the authorities, not where it is incorporated. So, if you are running your business from New York but have incorporated in Delaware, you will be collecting the New York rate of sales tax from New York buyers.

Buying Wholesale and Reseller Permits

If you are a US citizen purchasing wholesale goods from a wholesaler within the US, then you will probably need a resale certificate or license from the state in which your business is located.

A resale certificate or license enables you to purchase goods wholesale without paying sales tax. It also allows you to collect sales tax from your customers, the end consumer.

Without a resale certificate you will have to pay sales tax on the goods you buy wholesale and then also charge sales tax. In this case you can add the sales tax you paid as a deduction on your return, but it is much less complicated to just present your reseller license when you buy.

Most wholesalers will ask to see a sales tax ID or reseller's license before they will sell you the goods. This is because they are legally obliged to check whether you are able to collect sales tax from the end user.

Use Tax

Another thing you may come across is something called ‘use tax'.This tax is in place to discourage people from shopping in states with lower taxes than their own.

Use tax means that if you purchase goods in another state, you owe tax equal to the amount you would normally have paid in your own state.It will also apply to you if you buy goods intended for resale and then end up keeping them for your own use.

Obviously you could potentially get away without paying Use Tax because it works on an honor basis.However, should you be audited, Use Tax is something auditors like to hone in on and subsequently many new businesses are caught out. Therefore it is wise to make sure that you pay it and keep the appropriate records.

Collecting Sales Tax on eBay or your Website

It's easy to collect sales tax on eBay. When you are setting up your item description, just select the sales tax option. By selecting the state where you business is located, you can ensure that proper tax is calculated for purchasers who also live in your state.

How to Setup Sales Tax on eBay:
  1. Go to My eBay
  2. Click the Preferences link from the left-hand navigation bar
  3. Click Show in the Payments from Buyers section.
  4. In the Use Sales Tax Table section click Edit.
  5. The Sales Tax Table page appears.
  6. Find the state you want to start charging sales tax in (the state where your business is operating) and put in the correct sales tax amount in the Sales Tax Rate field. You can also opt to charge sales tax on shipping and handling too if required.

For your website, there are plenty of tax software that will help you keep track of tax you need to collect and pay such as Avalara and CCH.

Records to Keep

You need to keep your resale certificates or file as part of your business records. You must be able to match your sales records with resale certificates for audit purposes.

Reporting Sales Tax

How often you need to complete Sales and Use Tax reports will depend on your monthly sales turnover and the state you are working from.

It's very important you are sure to collect the correct amount of sales tax as you will be held liable for any owing.

Note: Trading Assistants do not need to collect or remit sales tax.

Useful Links

The Sales Tax Clearing House

eBay Workshop with Diane Kennedy, author of ‘Tax Loopholes for eBay Sellers'


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Comments

View all 208 comments (Currently displaying latest 50)
  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 03:05 21 May 2012

    @CLairekw: The resale license applies to US based resellers only. Declare to the suppliers where you are located and ask help from them to determine what documents will be required from you.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 03:00 21 May 2012

    @Derek: The resale license is for the purpose of reselling, that when you buy items in bulk the supplier will not require you to pay tax but you will collect this sales tax from your buyers. Buying at Costco is a retail purchase, you are buying as a consumer and not as a reseller.

  • avatar

    Derek

    Commented at 22:29 19 May 2012

    Hi,
    Does a reseller license only work when you buy in bulk, large quantity?
    For example, if i have reseller license and I am going to Costco to buy 1 laptop for resell. Do i still need to pay for tax?
    Thanks.

  • avatar

    CLairekw

    Commented at 15:04 18 May 2012

    Hi, I am based in England and want to get a tax resellers certificate to use a certain supplier. I 'rent an address' in Florida for items to be sent to, they then send onto me, should I use this address as my place of business and apply in Florida or is there another route for non residents who want to buy in the US?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 01:50 16 May 2012

    @Christine: As stated in the article above - You apply for a sales tax ID and reseller certificate/license with your state tax department. For instance, if you are in New York, then you would go to the New York State Department of Taxation and Finance (either online, by phone or in person) and fill in the appropriate form.

    If you do not know the site for you state tax department, you can try Googling it – Most states have an online form on their website these days. Most states also charge a small fee. This varies from state to state, but it's usually around $50.

    If you can’t find any information online on how to get a seller permit, then just contact or visit your local County Clerk Office.

  • avatar

    Christine

    Commented at 18:43 15 May 2012

    Hello, I have a EIN number but I was told I also need a retail sales license/resellers license in order to buy wholesale jewlery from different companies. I went on irs.gov to search for where I can obtain one but I can not find it. Please tell me what website I can go to in order to obtain this license ? Thank you

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 03:36 8 May 2012

    @naanaa: Tell the supplier that you are not going to resell in the USA, and that you will ship the goods to South Africa. They can help determine what documents will be required from you.

  • avatar

    naanaa

    Commented at 01:34 5 May 2012

    I live in the USA and I am planning on buying clothing wholesale to send to my boutique in Africa. The clothing company is asking for my resellers permit? Can I apply for a resellers permit in Colorado and send the items to Africa? And how do I pay taxes to the state here in Colorado since I will not be selling here. Thanks.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 12:15 30 Apr 2012

    @Kristi: You need to confirm this directly with the wholesale suppliers, as wholesale pricing is granted for resellers, just not sure for cases when you need to use it to create a design or a product first, before you sell it. :) Yes, a resellers license will allow you to get the products in wholesale prices, since you are licensed to resell it and collect sales tax from your buyers.

  • avatar

    Kristi

    Commented at 15:43 29 Apr 2012

    Hi. I am starting an interior decorating business as a sole proprietor in Michigan. I would like to get wholesale prices at design centers for furniture, art, rugs, etc. and provide to clients. Do I need a resale license for the furniture, art, rugs, etc, if I am charging the clients a total "fee" (which includes services, and furniture, art, rugs, etc all rolled together)? Also, is the resale license used to obtain wholesale pricing? If not, how is wholesale prices obtained?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 23:05 22 Apr 2012

    @Lisa: A lot of people operate home-based businesses and there is no specific state law that would prevent the situation of your office in your apartment. However, you need to check you lease provision. It may prohibit the operation of a business from the leased premises, and in that case you need to decide on a business location. You will need a physical business location to apply for a reseller's permit.

  • avatar

    Lisa

    Commented at 14:52 21 Apr 2012

    Hello,
    The application for a reseller's license (Alabama) asks for my business address location. I live in an apartment, and my business only exists in my head at this time. Also, you're not allowed to do business from an apartment.
    I'm interested in selling online only but am afraid to list my apartment as a business address. What should I list as my business location? Thank you

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 06:15 20 Apr 2012

    @Michelle: With a reseller license, the suppliers pass on the product to you without the tax, at wholesale prices, therefore you will need to collect it from your buyers, so the tax is based on your sales, not on how much you purchased them for.

    The requirements in sending in your sales tax vary per state. Some will ask you to send in your sales tax quarterly, while other states want this tax to be remitted every month. This schedule may also depend on the volume of sales you have as a seller.

    It is quite easy to confirm these details by going to the state's website. Hope this helps! We wish you the best in your business.

  • avatar

    Michele

    Commented at 23:57 18 Apr 2012

    I plan to start a online business selling clothing and jewelry. Later open a small store where do I start. Should I start right off collecting sales tax even if I start so small and how does the state know how much I owe. And the sales amount based on how much I paid or how much the customer pays for the product?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 12:23 16 Apr 2012

    @milesww2290: You may sometimes need a reseller license in order to purchase from a drop shipper. This wholesale drop shipper needs to show this proof to the government that they can sell you the goods without charging you sales tax. However, please note that not all of the drop shippers will ask for this license because the tax reporting structure varies from state to state. Learn more about the steps needed to start a drop shipping business from http://www.salehoo.com/blog/how-to-start-a-drop-shipping-business-in-5-easy-steps Cheers!

  • avatar

    milesw2290
    New SaleHoo Member

    Commented at 23:51 15 Apr 2012

    So in order for me to start dropshipping items on ebay and I have to get a reseller license. And ill also need to keep records of my sale certicates for audit purposes. Where on this site does it explain on how to do that for people that are new to this.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 09:38 13 Apr 2012

    @Paola: I am not so sure how this will actually work and I am not happy to assume or give what could be incorrect information. I believe the box supplier will have a clearer idea of how sales tax collection would fall into this business set up, for this product. Kindly get in touch with them and let them know of this situation. Cheers!

  • avatar

    Paola

    Commented at 06:01 11 Apr 2012

    Irene thanks for this glob/page. I make and sell chocolates, and as candy in California doesn't carry sales taxes I only have a business license, and haven't needed a resale number (I buy boxes and non candy supplies paying the taxes). However some of the supplies I'd like to buy are sold by a company that deals only with businesses with a resale license, which means I'd be buying things like boxes for the chocolates without paying taxes. How do I handle that then since I can't charge taxes for the boxes with the chocolates when I sell them? Will I have to keep track of the number of boxes I've sold during the year and pay the box's part of resale taxes when I do my tax filing? And would this be only for state? Thank you

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 16:34 6 Apr 2012

    @ady: You can apply for your sales tax ID and reseller certificate/license with your state tax department. For California go to http://www.boe.ca.gov/info/reg.htm

  • avatar

    ady

    Commented at 04:50 5 Apr 2012

    So I'm in California, I want to start selling jewelry and accessories , but for me to get prices on wholesalers they are asking me for an id number. Do I need to get my license and then the id number or how does it work and where can i do that?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 22:17 2 Apr 2012

    @Cassie-Rea: Sales tax returns may be filed on a monthly, quarterly or annual basis. For Missouri sales tax, you may find detailed information from Missouri sales tax

  • avatar

    Cassie-Rea

    Commented at 21:50 30 Mar 2012

    Ok so I am trying to sell wholesale items such as diaper bags, purses, etc! I have been asking tons of people for help and I haven't been getting a straight answer...hopefully you can help! I am wanting to do an online business from my home in Missouri! So I will need the resellers license, but what else would I need! I'm not good with taxes and stuff, so will they just send like a tax return monthly or quarterly? I'm not familiar with business life, but have been doing a lot of research! I have 2 kids age 2 and 1 (work nights and hubby works days) so I am trying to find something I can stay home and do!

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 04:32 16 Mar 2012

    @Chelsea: Please note from the information provided above - The physical location of your business is what matters to the authorities, not where it is incorporated. So, if you are running your business from New York but have incorporated in Delaware, you will be collecting the New York rate of sales tax from New York buyers. You will be collecting sales tax from buyers within your state - Maryland Sellers are not required to collect sales tax on items shipped outside of the state, however buyers are technically required to pay "use tax" - to the state in which the good is purchased.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 04:17 16 Mar 2012

    @Heather: It was advised that you get a reseller license at least three weeks prior to opening your business. :)

  • avatar

    Chelsea

    Commented at 14:03 15 Mar 2012

    I'm confused. If I have a business incorporated in Delaware, but I'm currently in Maryland and I'll be selling online (one is an online gallery, another clothing) to customers across the country, what license do I need? If I'm selling online, should I just add the tax based on where the customer lives? Or where my business is?

  • avatar

    Heather

    Commented at 17:10 13 Mar 2012

    Thanks for the article; it was very helpful! Question: my sister and I are going to go into business selling jewelry we have made and other items online. Should we hold off getting a business license until we are actually ready to do business? I ask because we want to get a reseller's license so that we can buy items and materials wholesale both for reselling and for making our jewelry, but you have to have the business license to get the reseller's license. Should we go ahead and get the business license now, even though it could be six months or so before we actually start doing any real business?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 08:39 12 Mar 2012

    !Vanessa: The information is given from the article above. If you are in New York, then you would go to the New York State Department of Taxation and Finance (either online, by phone or in person) and fill in the appropriate form.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 08:35 12 Mar 2012

    @April: I don't think the information given to you is correct. As I have mentioned, the sales tax will be charged only in the place where the business has a physical location, and where it is conducting business from, Sellers are not required to collect sales tax on items shipped outside of the state, however buyers are technically required to pay "use tax" - to the state in which the good is purchased. For example, a buyer in California buys from a seller in Illinois, the seller then will not have to collect Illinois sales tax, but, the buyer is required to pay use tax at the California sales tax rate. I have provided this explanation in my earlier answers. Hope this helps.

  • avatar

    Vanessa

    Commented at 21:26 9 Mar 2012

    My friend are 22 years old and we live in New York City we would like to start a small jewelry business,hosting parties selling jewelry from our homes we tried buying wholesale jewelry from small stores in the UK and the US but the sites says we need a sales tax ID. How can we get one? Is there another way we can buy jewelry from those websites?!

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 00:15 9 Mar 2012

    @Derek: Yes, SaleHoo members have access to a list of suppliers in our directory who can ship internationally. You may send us your questions directly at http://www.salehoo.com/support and we will do our best to assist you.

  • avatar

    April

    Commented at 21:23 8 Mar 2012

    I am looking to buy books with a tax exemption from a company. I will then resell these books in several states. I have registered with my tax department in my state to pay sales tax. However, I was told I need to get resale certificates for ALL 50 states, because once the books ship they are required to charge sales tax. Is this even possible if my business is technically in one state? And if so, are there costs associated with all of these certificates??

  • avatar

    Derek Rooney

    Commented at 20:55 7 Mar 2012

    OK, I'm looking to buy wholesale items from America and sell them here in Dublin, Ireland can someone help me?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 01:22 7 Mar 2012

    @Tina: As stated above, if you are a US citizen buying wholesale goods from a wholesaler within the USA, then you will need this reseller license from the state in which your business is located. This does not cover buying the goods from HongKong.

  • avatar

    Tina

    Commented at 18:42 5 Mar 2012

    Okay, I wish to buy bracelets wholesale from a Hong Kong and possibly resell them here to friends, boutiques and keep some for myself. Do I need a resell license and/or apply sales tax?? I am still so confused over this issue.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 00:39 2 Mar 2012

    @botrinics: The sales tax Id is also called a Retail or Reseller's License, State Sales Tax Id, Tax Id, Resale Number, Resale Certificate, or Vendor's License. And is mainly for sales tax collection purposes

    This is different from the EIN/Federal Tax ID, which is used to identify a business entity. http://www.irs.gov/businesses/small/article/0,,id=98350,00.html

    Cheers!

  • avatar

    botronics

    Commented at 17:41 1 Mar 2012

    Hi Irene ,

    My business is interested in becoming a dealer of a big enterprise, they are asking me for a reseller state license , is that the same as a Tax ID number?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 00:08 28 Feb 2012

    @Daniel: Oregon is among the states that do not collect sales tax, so you do not need to. For those out of state buyers who purchase from you, they will be charged a consumer’s use tax at their end. :).

  • avatar

    daniel

    Commented at 03:06 25 Feb 2012

    Hi I live in Oregon and I want to start an online store in eBay buying from wholesalers and dropshippers. But since the state does not collect sales tax, what kind of tax do I need to collect from buyers? Rr do i not need to collect tax at all? I hope you can help me because I do not want to steal from the government

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 10:54 8 Feb 2012

    @Vee: Info regarding the current fee can only be confirmed with www.tax.ny.gov
    Sales Tax Information Center: (518) 485-2889

  • avatar

    Vee

    Commented at 06:10 8 Feb 2012

    How much does a resale license cost in the state of New York?

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 01:41 8 Feb 2012

    @Rachael: The reseller license is a certification that you are legally permitted to collect sales tax from your end costumers, and the suppliers are obliged to ensure that the taxes will be appropriately collected by the resellers, in their respective states, and that the resellers are certified to do so. That is the reason the New York supplier is asking that you provide a North Carolina sales tax license. As long as the sales tax gets collected /paid then you are on the right track.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 01:25 8 Feb 2012

    @Scotty: The IRS will require you to declare eBay sales in your income tax returns once your eBay selling has progressed past the hobby of selling personal items online, to one which is a serious business with the intent to earn profit. Please refer to the article I found which can help you understand clearly - http://ezinearticles.com/?Do-I-Have-to-Pay-Taxes-on-My-eBay-Business?&id=3120906
    Hope this helps. :)

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 01:16 8 Feb 2012

    @Lauren: You can pay this tax to the Ohio state on a monthly, quarterly or even semi-annual basis. And it doesn't matter if the business is based at home, the reseller's license is about collecting sales tax from your buyers. I have found a detailed information that can help you http://www.ehow.com/how_7530300_pay-quarterly-ohio-sales-tax.html
    We wish you the best!

  • avatar

    Lauren

    Commented at 17:44 7 Feb 2012

    Also, since I'm working from home do I just need a resellers permit to sell their wholesale items or an EIN as well? Thanks so much.

  • avatar

    Lauren

    Commented at 17:27 7 Feb 2012

    I'm thinking of selling purses wholesale. The legal kind. Not knock off brands and the company requires we obtain a sales tax ID number. With this sales tax money I collect where do I send it and how often. I live in Ohio and have never done this type of business before any information you can give me would be very helpful. I don't want to get in any type of trouble. Also do I need to keep records of everything for my personal taxes each year such as total income, mileage, supplies, etc?

  • avatar

    Scotty

    Commented at 07:13 7 Feb 2012

    I have been selling on eBay my items which I built as a hobby. In order for me to continue my hobby, I sell them on eBay to buy other models and build them. Do I need to report this to the IRS?

  • avatar

    RACHAEL

    Commented at 00:50 7 Feb 2012

    Hi! I am a furniture retailer in CA, and I ordered fabric from New York, and asked them to ship to a third company in North Carolina who will upholster a chair that I will sell in my store. Can New York charge me North Carolina's sales tax? (I have the CA resale certificate but the NY company says I need a separate one for North Carolina).

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 05:31 6 Feb 2012

    @JoAn: You can get your reseller's license from your state's tax department. It follows that a wholesale supplier in New York will want to see that license, that you got from your state. They cannot ask all interested resellers to present a New York reseller's license because if the business nexus is not in New York they can't apply for the license in New York. The obligation of collecting the sales tax from the buying end customers is then passed on from the wholesale supplier, to you the reseller, since that license certifies that you are allowed to collect the tax.

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 05:12 6 Feb 2012

    @Andreia: There is very little legislation in this area, such that a lot pf people do resell items they have purchased retail. It somehow makes sense that once you have purchased a product at retail it is yours to use as you choose. You can decide to sell it again, to use it or to give it away. Please take note however, that there are brands which are quite strict with their trademark and that you are not supposed to use the brand name in your ads/campaign. There are also companies which have exclusive licensing deals. For example, a specific brand only permits its items to be sold in certain retail outlets or salons. Companies also protect their brands by ensuring that their products don't get sold for less than a certain price, they stipulate a Minimum Advertised Price (MAP). You may tend to face troubles if you are not aware of these facts, plus the importing rules, taxes etc on the country you plan to sell to.
    Custom duties are always paid for by the buyers, not by the sellers.
    Hope this helps. :)

  • new p2

    irene_salehoo
    SaleHoo Staff

    Commented at 02:28 6 Feb 2012

    @Rafael: It is not stated outright that you will be disqualified based on your credit records, but your accounts may be audited in the future to determine whether you have paid the correct amount of tax. http://www.boe.ca.gov/sutax/faqseller.htm

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