In order to run a business that resells products, you need a resale certificate to be compliant. The reseller’s permit or resale certificate will enable you to collect and remit tax to the Department of Revenue in your state. Here are four easy steps on how to get a resale certificate for your business.
Step One: Decide Whether You Need The Resale Certificate
In most states across the United States, you need a resale permit to resell products. The reseller’s permit acts as a business license even in states such as Oregon where you don’t need to collect sales taxes as a reseller. In other words, your resale certificate will act as a sales tax number to allow you to do business.
Regardless of whether you need to collect and remit tax or pass along the sales tax to your buyers, you need to be a licensed business. Reselling products through online marketplaces such as Amazon and eBay requires you to collect sales tax. This is a requirement in many states such as Arizona.
In other states such as Virginia, you may not require a resale certificate if you sell products worth more than $4,000,000/year. This means that it’s crucial that you determine whether you need the certificate before applying.
Step Two: Learn More About The Application Process
You need to know how the resale certificate application process works in your state. For example, while New Jersey residents should submit their applications to the Department of Treasury, California businesses should apply through the State Board of Equalization.
Do a quick internet search to find out more about the specifics of submitting a resale certificate application in your state. In some states, you may only be required to apply online, while in others you should do it in person.
Step Three: Put Together The Necessary Documents
You need to put together all the necessary documents for the resale certificate application process. You’ll be required to provide details such as a list of suppliers, SSN, state-issued ID, drivers license and business details. If you have a partner, he or she will also be required to provide these details.
Corporations or LLCs are also required to provide their EIN number, incorporation date and their corporate numbers. You’ll need to provide more information about the structure of your reselling business and personal references.
Step Four: Pay The Required Fee
In most states, you’ll have to pay a nominal fee to get a resale certificate. Pay it to the department that is in charge of issuing the resale numbers to new businesses. For instance, you’ll have to pay a fee of $50 in South Carolina.
Remember, applying through mail tends to take longer to receive your resale certificate. But, once you’ve applied for the resale number, you can start reselling products in your state and collect sales tax. Your resale certificate will be valid until it’s revoked by the relevant Department.
Final Thoughts On How To Get A Resale Certificate
Without a resale certificate, you may not be able to acquire stock from some suppliers or wholesalers. Furthermore, without the reseller’s permit, you won’t have a resale number which exempts you from paying sales tax when buying wholesale. So, follow these steps to ensure you’re running a legit business that is compliant within your state.