Sellers Permit vs Resale Certificate - What's the Difference?
HTML-код
- Опубликовано: 13 дек 2024
- Seller's Permit and Resale Certificate - What's the Difference?
Confused about the differences between a Seller's Permit and a Resale Certificate? Even though these terms are related, they are in fact, different. Check out this video where I explain each one, how to use them, and which ones your business may need.
Resources:
How to register for a Seller's Permit (referred to as a sales tax permit or sales tax license in some states) - startup101.com...
How to register for a Resale Certificate (referred to as a Wholesale License or Reseller's Permit in some states) - startup101.com...
DISCLAIMER: While I have over 21 years of experience helping people start their businesses, please note that I'm not an attorney or accountant. Also, this channel is supported by affiliate links. This means that if you click one of these links, I may receive a commission that supports my channel so I can continue creating honest and accurate information to help people get their businesses started right.
You are a freaking legend man! Sometimes the simplest porcess can take 2 days to understand. Thank you so much for explaining it so elegantly.
Thank you for that! Means a lot!
Thank You! It's great to find current, straightforward ,and easy to follow information. No doubt I will be sharing this with others. I followed your youtube video from your website.
Awesome, thank you for stopping by!
@4:09 this form isn't filed with the state. i was looking everywhere and wanting to get this. but didn't know we don't file it with the state.
thank you so much
The resale certificate isn't filed with the state. Instead it's provided to the vendor you are purchasing from. This certificate provides the vendor documentation that you are a real business selling their product and that they shouldn't be charging sales tax.
Hope this helps!
Hello quick question. I currently got my LLC set up and my EIN. However, I will be buying products from overseas to sell in Shopify do I need a Resale certificate or seller permit? Please advise!
Congrats on getting your LLC set up! You will at a minimum need the seller's permit from the state where you are operating. Here is info for how to register in each state - startingyourbusiness.com/how-to-register-for-a-sales-tax-permit/
In the future, you may need additional seller's permits if your sales exceed the state threshold in sales or number of transactions (most are 200 transactions or $100k in sales in a calendar year). Here are the thresholds for each state - www.avalara.com/us/en/learn/guides/state-by-state-guide-economic-nexus-laws.html.
If you are buying all of your inventory from overseas, the resale certificate won't be needed. The purpose of this certificate is so business won't pay state sales tax on things they resell, and since you aren't buying from a business in the US, you can ignore it.
Let me know if you have any other questions!
Greg
great straightforward no fluff video. I'm subscribed!
Hi! I'm selling on etsy and they collect the sales tax for me and I'm not required to have a sellers permit according to Etsy, but I need a resale certificate for wholesale purchases. Should I still get both and register my business with the state or only send the wholesaler the resale certificate. I did get an EIN is this all I need?
Even though Etsy doesn't require the seller's permit, you will need to get one before you can get the resale certificate. Not a huge deal, but here's a link to our site with the directions for each state if you want to see the process - startingyourbusiness.com/how-to-register-for-a-sales-tax-permit/
Also, the EIN is a different registration from sales taxes and is essentially a social security number for a business.
Thanks for the great questions. Let me know if you have any others!
Greg
Hello. Thanks for your videos. I have a question. I am a new Amazon seller. I have a seller permit in my state of Illinois (I have an LLC here, meaning physical presence). Amazon itself distributes the product to its warehouses in different states for storage. Does this count as physical presence or economic nexus in the states where my product is stored? Do I have to get a seller permit in these states? Please help me figure this out.
Hi There! Since Amazon is considered a marketplace facilitator, they are responsible for collecting sales tax. You still need the seller permit in Illinois since that is your base of operations, but for all sales through Amazon, you won't have worry about getting a permit or collecting sales tax in the other states - www.amazon.com/gp/help/customer/display.html?nodeId=202211260
Hope this helps!
Greg
@@_StartUp101 Thank you so much! And if I sell on Amazon and have over 200 transactions in a year in a certain state, I still don't need to get a seller's permit for that state since Amazon is the middleman? I don't need to file zero returns like I do in my state of Illinois?
as a ebay drop shipper. do i need 50 resale? or just my state? i use amazon\walmart\homedepo
You'll just need the resale certificate from your state. Thanks for the question!
Hi sir I want to know .I do Fba business on Amazon in New York do I need sales tax id first and then resaler permit because of all the tax Amazon collect first I pay 5:03 tax to vender for buying stuff and then Amazon collect all the tax plz guide me how to get reseller permit without sales tax I’d thanks
Even though Amazon collects sales tax, since you have a physical presence in New York, you will need to get a sales tax id (officially a Sales Tax Certificate of Authority) startingyourbusiness.com/how-to-register-for-a-sales-tax-certificate-of-authority-in-new-york/.
An additional benefit of getting this permit is that you can buy the merchandise that is resold without paying sales tax, by filling out a Resale Certificate - startingyourbusiness.com/new-york-resale-certificate/.
Hope this helps. Let me know if you have any other questions!
Greg
Hi thanks for helping but when I was submitting sales tax application I put information s corporation but I have c corporation do I leave like that or contact to departments fix this ? Plz guide me thanks a lot
You will want to change that. You can contact the Department of Taxation at. 518-485-2889 or www.tax.ny.gov/help/contact/contactus-bus.htm
Short and concise video. Thank you!
Hi, how does it work if I buy equipment to print wall graphics (printer, plotter, laminator). My vendor did not charge any sales tax because I have the exemption, but do I need to report the unpaid taxes anywhere?
Hi there! The answer to this depends on the state you are located in and whether the business is selling a product or service.
In most states, if equipment is used directly in the manufacturing/production process to create products for sale to customers, it qualifies for a manufacturing/production equipment exemption. No sales tax would be due in this case, and there's no need to report the exempt purchase.
However, if you're using the equipment to provide a service rather than selling physical products, or if the equipment is used for both taxable and exempt purposes, you may need to pay use tax on the purchase or report on your state sales/use tax return.
Hope this helps!
Greg
You may have got this question many times, but I have a resale cert for my Hat embroidery business, but I do want to sell some hats online most likely through Shopify, BUT what would I need to be able to sell to customers that are buying from me if they are from another state?
At a minimum, you need both the seller's permit and resale certificate in the state where your business is located.
Selling to customers out of the state is confusing because each state treats out-of-state sellers differently. For most states, you don't have to register for a seller's permit until you exceed 200 transactions or $100k in sales to that state in a calendar year. Some are less, but this resource should help - startup101.com/sales-tax-nexus/
Let me know if you have any other questions!
Thanks!
Greg
Hello question quick 2 questions ,I want to buy pallets liquidation from USA and ship them to overseas. So what do I need to get resale certificate or seller permit? And do I need LLC? Advise please .
Hi! To get a resale certificate, you'll need to be set up as a business and get a sales tax license from the state where you're set up. You don't have to set up as an LLC.
Here is a guide to setting up a business in each state that should be helpful startup101.com/state-guides/
Hope this helps!
Greg
@@_StartUp101 thank you so much
If I'm a countertop Installation business . I wanna resale the countertops to my customers. For example, I'll buy them im bulk to get cheaper or whatever the case may be, but then I would sell them the countertops for a slightly bigger cost... I know I need the Resellers Permit, but when I pay taxes at the store I get countertops from, does tax end there or do I need to report or pay more taxes once I sell it to customer with installation?
can i get Seller’s Permit and Resale Certificate as a Hong Kong Company?
You sure can, but it will requre you registering the business in a state and then registering for the Seller's Permit and Resale Certificate afterwards.
Thanks for the question!
Greg
Thank you, l have an LLC and EIN, l am selling on Etsy with POD so will l need both of these forms and will l need multiple resale certificates for each company l use ? Thank you
An LLC would only need one seller's permit since it is a registration with the state, but each company you purchase from will need a resale certificate.
Hope I answered you question, but if not, let me know!
Greg
So the CRT61 resellers permit. Can it be used on businesses expenses like building materials, vehicle, signage other business essentials? I just started a trading card store with the CRT61. I recall my parents restaurant having blanket tax exemption on supplies for the restaurant but don't know which they had.
The CRT61 (for anyone else reading is the Illinois Certificate of Resale) can only be used to purchase items that are being resold.
So, for a trading card company, you don't have to pay sales tax for the cards and other merchandise you buy to sell to customers, but the items used in the business aren't tax-exempt because the business is the end user of the product.
The purpose here is that the sales tax will be paid, so the business doesn't have to use its cash to pay for sales tax while it waits to sell that product.
Hope that clears this up, but if not, let me know!
Greg
Hello how are you thanks for all your information what is exactly the certificates that I need if I want to purchase flower for resale the whole sale flowers company required a certificate can you help me please?
We have free guides to help you get your seller's permit and resale certificate here - startup101.com/how-to-register-for-a-sales-tax-permit/
Thanks!
Greg
Hello, if I am going to sale a product through a vendor online but I’m never going to touch the product just be the middle man. Do I need a resellers permit to get the product tax free and sellers permit in order to charge tax as a sole proprietor?
Even though you don't physically touch the product, you will probably need a seller's permit and resale certificate. There are a few vendors who dropship and essentially give you a commission from the profit of the product. Most however are selling the product to you to wholesale and you sell to the end user of the product at retail. Ask your dropshipper how the process works and they will let you know what documentation they need.
Hope this helps!
Greg
If I have a Sales and Use tax number in Texas, if I am looking at buying inventory from overseas, would I need a reseller’s certificate or a sellers permit?
You wouldn't need a resale certificate as you don't pay state sales tax, but you will need a sales tax permit since your business operates in Texas. Here's how to register - startup101.com/texas-sales-tax-permit/
Hello. I'm a new business and I sell handmade candles on Etsy. I already have my sales tax permit that I got before I opened my store a few months ago. Prior to opening my online Etsy store, I was buying materials to test and make my candles, but I was paying sales tax here in California because I didnt have the permit yet. What do I do about that tax I paid, do I claim it as a deductible? Also, do I need a resale licence if I sell my handmade candles and buy my candle materials from different companies online?
Congrats on starting your candle biz!
Technically, I don't think you can get a sales tax reimbursement from the candles you were testing (unless you sold them), but check with the California Department of Tax and Fee Administration - www.cdtfa.ca.gov/contact.htm. Also, all materials purchased (whether testing or being sold) would be a deduction.
To get a refund on sales taxes that you paid but should have a refund, here is the process to file a claim for a refund - www.cdtfa.ca.gov/formspubs/pub117
I would absolutely get a resale license for the materials you buy from companies online. This way, you aren't shelling out cash for the sales tax and waiting for a refund. It may not be a lot of money starting out, but this will help your cash flow a lot.
Thanks for the questions!
Greg
My company will be a candle light service in which I burn candles for the client. I will buy my candles from wholesale. Would I need both?
Requirements vary slightly by state, but in general you would need to get the seller's permit in the state where your busines is located. Here is more info on the requirements by state - startup101.com/how-to-register-for-a-sales-tax-permit/
Since the customer wouldn't be purchasing the candle, you are considered the end-user of the candle. This means your business would pay the sales tax.
Hope this helps. Please let me know if you have any other questions.
@@_StartUp101 thanks
Hello greg, and thank you for the vid.. very helpful.. although i did understand the vid, i have a cpl questions just for clarity.. I've started an LLC to do dropshipping with amazon(fba) but i dnt want to be limited to purchasing products oversees... i want to have that wholesale freedom.. what are all the permits i need to operate within the legal parameters?? Pls help me sir Greg.. thank u! Im in Georgia
Setting up a business to sell wholesale starts like any other business. The seller's permit will be needed to sell your products in the US, though if everything is being imported, the resale certificate won't be of much use since it postpones state sales taxes.
You usually won't need a license to import, though some US agencies require licensing or certification. US Customs has some helpful info on what items may need licensing and tips that should be helpful -www.cbp.gov/trade/basic-import-export/importer-exporter-tips.
Hope this is a good start, but if you have any other questions, please let me know!
Greg
From what I read, except for 12 States, you're allowed to use a resale certificate from State A to be exempt from tax on State B. Would I then need to charge tax on sale made on state C?
If I understand your question correctly, if you are purchasing inventory to resell from a state that doesn't accept resale certificates from out-of-state retailers (and the vendor you're buying from doesn't realize this..), your best option would be to register for a sales tax permit from that state and then not pay the sales tax.
This article may help with more details - thetaxvalet.com/blog/which-states-dont-accept-out-of-state-resale-certificates
Thanks for the great question!
Greg
@@_StartUp101 while your answer does have merit to it, as it’s a valid question being answered, maybe I did not formulate my question properly. Let me try again.
Let’s say that I have a resell certificate from Wyoming (therefore I must have met some criteria for nexus, otherwise they would not give me said license, and currently it’s either a physical location or hitting the $100k gross sales threshold) then I buy product from a wholesaler in a state that does accept ‘out of state resale certificates’. I would then resell this product to a retail customer in a state where I have no nexus, therefore no need to collect sales tax.
My question is - would I have to collect sales tax on this retail sale, since I used my resale certificate to purchase said article, or would the nexus rule of nexus apply and therefore no sales tax will be collected?
If you are buying inventory from overseas (China/India), is the resale certificate still necessary, or does it only affect purchases made in the US?
That is a great point - and no, a resale certificate is state-specific and since you are buying inventory overseas, there won't be any state sales taxes.
Thank you for the video. I have a question. I just opened an LLC in FL. This gives me a EIN number. I was under the impression I could use this number to purchase goods to resale tax free. So I wouldn’t need a resale certificate and I wouldn’t need a sellers permit because I use eBay which collected the taxes from the customers. So is just the LLC good enough in this case?
Hi Adam - The EIN and seller's permit are two different things.
The EIN is like a social security number for a business and is issued by the IRS. The seller's permit is a state-issued permit that is used for businesses that sell taxable products and services.
In many states, even if the business doesn't sell a taxable product or service, they still have to get one because they have what's called nexus. Nexus, in this case, refers to when a business is physically operating in a state (such as operating a business, has warehouses, employees, etc.)
Florida is one of those states that requires a business that has nexus in the state to register for a seller's permit - startup101.com/how-to-register-for-a-sales-tax-permit-in-florida/
Also, just to double check, you mention you mentioned that you opened an LLC which gave you an EIN. This is a separate registration with the IRS, and just wanted to be sure you did that.
Hope this clears things up, but if not, let me know!
Greg
Hello I need some help I have a LLC clothing business and live in state of Florida. Just obtained by EIN number but so confused on the next steps.
Am eligible to get a tax exempt form so I do not have pay taxes on business materials?
From my knowledge a resale certificate is required for shirt companies that sell at a wholesale price. Does this still require you pay taxes? And how do I obtain one?
Last do I need a vendor license to sell merchandise at local events? I’ve heard people mention SSE what is that?
Having a hard time finding information and links to each one along with fees? Any help would be appreciated!
Hi there! The next steps you need to take are to file the Florida Business Tax Application (Form DR-1) taxapps.state.fl.us/IRegistration/.
Among other things, this registration sets your business up to collect sales tax on items you sell in Florida. Then, in your account, you will be able to print the Florida Annual Resale Certificate for Sales Tax that you would give to your wholesaler.
There is no cost if you register online, but there is a $5 fee to register by mail.
I have some more info here explaining the process - startingyourbusiness.com/florida-resale-certificate/
For the SSE, I can't find anything about that. Is it possibly a local vendor registration?
I hope this helps. Let me know if you have any other questions!
Greg
@@_StartUp101 Thanks for the feedback was able to navigate thru your helpful links. Completed the DR 1 Tax Application and awaiting approval for the Resale Certificate.
Question: If a school/ business provides me a tax exempt me certificate are there any steps I need to take besides keep a copy for records of why taxes where not collected? Who eats up this tax especially if I am using my resale certificate which provides me from not getting taxed on materials with the intent to collect from customer at time of sell?
Any information on how to obtain a vendor license and what that is primary used for if I plan to sell at local events or schools? Thanks for the great detail information!
@@aziajones5332 Awesome!
Public schools are unique since they are supported by the state, and anything they buy is tax-exempt (get the certificate, though). In this case, the state eats the taxes, and the reason is that since they receive funding from the state, it's a wash anyway. Many non-profits can receive this exemption as well.
The best practice when a business gives you a tax-exempt form is you want to reasonably expect that the merchandise you are selling them is going to be resold. You would keep their resale certificate and track your tax-exempt sales. The business you are selling to is reselling your merchandise at a higher price to the final user of the product, and they collect sales taxes based on the full value of the product.
Unless there is a local city vendor license or the event you are selling at has a specific requirement, there wouldn't be any additional tax registrations than what you have with the FL Department of Revenue.
Hope that helps! Let me know if you have any other questions!
Greg
@@_StartUp101 thanks so much! You definitely have a new subscriber.
I only have my EIN at the moment and am POD on printify. Do I need my certificate of authority AND a ST-120? Or do I need to COA form to get my ST-120 on the printify site?
Before you can get a resale certificate in New York, you will need to get the Sales Tax Certificate of Authority first from the NY Department of Taxation and Finance. Then submit the resale certificate to Printify and you won't be paying the sales tax (your customers will)
Hope that answers your question!
Greg
@@_StartUp101 thank you ! I just got done submitting the application! Is there a fee for these or no?
I want to sell goods on Amazon or other platforms do I need seller permit ? Or resale certificate? Please sir let me know
It depends on your state, but you generally need both. As was said in the video, the seller's permit comes first - startup101.com/how-to-register-for-a-sales-tax-permit/
What permit is required for people who sell stuff online?
Regardless of whether you sell online or in a store, if the state where your business is located requires a seller's permit, you'll need to get one. See each state's requirements here - startup101.com/how-to-register-for-a-sales-tax-permit/. If you are buying product, you would want to get a resale certificate so you don't pay sales tax and wait to get reimbursed.
In addition, if you exceed thresholds when you sell to residents in other states, you will need to get a seller's permit (most are $100k in sales or 200 transactions in a year). More info - startup101.com/sales-tax-nexus/
Hope that helps!
Greg
Thank you. This is very helpful! I wonder if I a seller's permit to sell digital product. Such as fonts and PDFs.
Most states don't require a seller's permit for selling a digital product, but the may require one for a business that is operating in the state.
I have a breakdown on each of the states requirements here - startingyourbusiness.com/how-to-register-for-a-sales-tax-permit/
I would like to ask, my company is in Delaware, but there is no resale certificate in Delaware.but a resale certificate is required to register a wholesaler account. What should I do?
That's a great question! For a business that operates in a tax-free state, like Delaware, the wholesaler won't charge sales tax on the purchase. This eliminates the need for a resale certificate, which a tax-free doesn't issue anyway.
Thanks!
Greg
@@_StartUp101 So is there any solution?
@@xuezhongyu5853 If your supplier requires one, you may just need to contact them. Sometimes online registration systems don't recognize tax-free states and won't let you move forward. Since your state has no sales tax, they don't provide resale certificates, but should be easy enough to take care of.
Hope that helps!
Greg
@@_StartUp101 Thank you very much for your reply
Thank God the right video!!!
I feel you
Hello sir I am French resident I can’t apply for these documents. How can apply from foreign country coz I have no US adresse and social security number?
I'm not an expert in this area, and I recommend working with someone familiar with international business setup; however, even without a U.S. address or Social Security number, you can form a U.S. company remotely by:
- Setting up a corporation or LLC
- Using a registered agent service that provides a U.S. business address
- Having the corporation or LLC apply for an EIN (Employer Identification Number) from the IRS as the IRS allows foreign applicants to obtain EINs without an SSN.
- The entity can then register for a seller's permit and resale certificate.
I would also recommend checking if you need to comply with any French regulations for foreign business ownership and understanding your tax obligations in both countries before getting started.
Hope this helps!
Greg
thank you for the video. Would I need any of them if I’m a small business from home selling baked goods in tx
You will need to get a sales tax permit since you are selling a taxable product. Here are the steps to get one - startup101.com/texas-sales-tax-permit/
The resale certificate will allow you to purchase your raw ingredients without paying sales tax on them, which will help free up your cash flow until your baked goods are sold. Here is how you get one - startup101.com/texas-resale-certificate/
Hope this helps, but if you have any other questions, please let me know!
Greg
Hello, question i would like to buy gasoline in bulk wholesale and resale it. Do I need a resale certificate or seller permit? This would be in Florida.
You would want to get both as the Seller's Permit allows you to sell items and collect sales tax while the Resale Certificate allows you to purchase items for resale without paying sales tax.
Thanks!
Greg
Hi Nice explanation. 1 question. Im a new Amazon seller and my Non resident LLC is registered in Texas. Do I need a Seller permitt if I sale a product via Amazon FBA to another state?
Since the LLC is located in Texas, you will need to get a Texas sales tax permit - startup101.com/texas-sales-tax-permit/
The need to register for a sales tax permit in other states will vary (most require registration once you sell over $100k annually or 200 transactions). Here is more info on the thresholds - startup101.com/sales-tax-nexus/
Hope this helps!
Greg
@@_StartUp101 Thanks.
Hi thanks sir helping me I have a question when I was submitting sales tax application I put corporation s but I have corporation c do I have to contact with tax department to amendment or leave like that plz guide me thanks
Most states are asking this question to get a count of the different entities, as it won't affect the amount of sales tax you will charge. But, I would still contact them just in case. It should take more than a couple of minutes.
So glad I found this video. I'm in the state of AL & they've asked for personal info such as what my sakes are, what is going into my account as far as money wise, my expenses & just all kind of information & I've yet to receive the certificate. Initially I was asked for my ID, a copy of the vendor's catalog, & they wanted a link to my Amazon store. Is this normal as I know each state differs, but this seemed like too much personal info being needed.
Just for clarification, are you registering for the salex tax license on the Alabama Department of Revenue's website? myalabamataxes.alabama.gov/_/# I went through to verify, and unless I missed something, the process only takes a few minutes and asks for the entity type, NAICS number, address, owner's info, etc.
i haven't come across any state asking for a copy of the vendor's catalog and link to an Amazon store, and what makes this especially odd is that Alabama doesn't issue a resale certificate. Instead of a resale certificate, you will give the vendor a copy of your sales tax permit.
I agree the info being requested seems suspect. Double check that you are registering directly with the Alabama Department of Revenue and that the request for more info is actually coming from the department. Also it should only take 3-5 days to get your certificate.
Hope this helps. Let me know what the outcome is and if we need to do any more research!
Yes I'm trying to get the certificate to do wholesale & I found all this to be so odd the information they asked for. I'm going to reach back out to them & see what's going on. Thank you so much. I'll reach back out if I need more help.
Do you know what form I should be sending Amazon for tax exemption when I live in Colorado?
To keep from paying sales tax on inventory that you are going to resell, you would need a sales tax exemption certificate from the Colorado Department of Revenue. startup101.com/colorado-sales-tax-exemption-certificate/
Thanks for the question!
Greg
thanks for the video. Do we need to apply for sales tax ID for Tradeshow and Exhibition Sales in other slates? For example, if our LLC is registered in texas and if we perform sales in other states like California, do we need to register for California Sales tax permit? Consider our sales are lesser than 10k.
That's a fantastic question - but the answer is that it depends on the state. There are two factors to consider. 1. Some states (sometimes enforced by the trade show organizer) require collecting sales tax (also some at the end of the show). Here is a good resource that may help - www.taxjar.com/blog/does-attending-a-trade-show-create-sales-tax-nexus. 2. Probably not in your situation, but worth mentioning is that each state has a threshold for out of state sellers (usually $100k or 200 transactions to their residents. If they go over either of those, they are required to collect sales tax. Here is an overview of sales tax nexus and state thresholds - startup101.com/sales-tax-nexus/.
Hope this helps!
Greg
@_StartUp101 Thank you for the detailed explanation 🙏
I registered my company in Wyoming .but sometimes I sell in other state ,do I need every state to get the seller's permit? thanks
You will possibly need to register for a seller's permit in multiple states. This is confusing and a huge burden for small businesses, because each state has different requirements of when a business needs to begin collecting sales tax.
In general, most states require an out-of-state business that sells over $100k or 200 transactions to residents of that state to begin collecting and remitting sales tax.
Here is some more info about sales tax nexus and thresholds by state - startup101.com/sales-tax-nexus/
Hope this helps!
Greg
@@_StartUp101 Thanks a lot,This is helpful.
My LLC formed in Delawarebut I live and operate my business from Florida, I do selling stuff on Amazon. Should I get the resale permit from Florida?
Since you are operating from Florida as a Delaware LLC, you are technically supposed to register as a Foreign LLC with the state of Florida - dos.fl.gov/sunbiz/forms/limited-liability-company/#flllcforms. Then with the registration, you would be able to get a resale permit from the Department of Revenue.
I'm not saying this is your case, but it's an important topic to bring up for others, is that there is a lot of promotion of "best places to form an LLC" with Delaware, Nevada, New Mexico, and Wyoming at the top of the list. These states are popular becuase of certain business friendly laws, lower taxes, or privacy benefits and for some types of businesses (and Amazon sellers can be one), it can be beneficial. The problem is that it can get really complex and expensive (multiple entity filings, tax forms, income taxes, etc.), and really needs to be guided by an accountant and maybe attorney.
Hope that helps, but let me know if you have any other questions.
Greg
Hello there, I am planning to sell physically products shipped from China and Canada through public storage in IL. Please advise me what type of certificate or license I need to get to operate the business ?
There are actually several things to be set up. This resource should help you get started - startup101.com/how-to-start-a-business-in-illinois/
Hi thank you for the video! I have a trading company in Ohio buying goods all over the state and supplying direct to clients ,from the seller factories ,we don`t have a physical warehouse or store in Ohio ,do we still need the sales permit even though we are not directly selling to residents in Ohio ? Thank you
One of the factors that require an Ohio Vendor's License (Ohio's equivalent of a sales tax permit) is having economic nexus in the state. I'm assuming your company's operations are in Ohio, which means you have a physical presence in the state. Here is some more info on the Vendor's Permit - startup101.com/ohio-vendors-license/
Hope that answers your question, but if not, let me know!
Greg
If I have a non US entity and use it to register reseller certificates, I got sales, then buy products from a supplier to ship to my customers (in this case, I'm actually a reseller, and buy stuff to resold), will my entity eventually be responsible for sale tax?
In order to first get a resale certificate, you have to get a state sales tax number. The challenge that you face is whether you have a physical presence (or nexus) in the US, which would be needed in order to be provided the sales tax number.
There are a few factors to take into account, but I would recommend working with a US based accountant to get a definitive answer based on your operations, but here is a article that I think will help - www.taxjar.com/blog/do-international-sellers-have-to-deal-with-sales-tax-in-the-us
So in NJ I have a certificate of authority. I was wondering if that was the same as a sellers permit and if not what would I need to do to apply for my sellers permit? Thanks for any help you can give
Hi Kevin - The resale certificate is different from the sales tax certificate in New Jersey. Here is what you need to do - startingyourbusiness.com/new-jersey-resale-certificate/
Thanks!
Greg
Hey! I have an online business through Shopify where I resale vintage clothing in the state of Florida. I ship to a decent amount of states but primarily Florida.
Does Shopify handle the sales tax for me? Do I need the permits you discussed in the videos if so which one? Is being a sole proprietor better?
I really appreciate any advice. Thank you in advance.
Hi Brady! The short answer is that Shopify doesn't collect sales tax for you, so you will have to get set up with the state and start remitting sales tax - startup101.com/does-shopify-collect-sales-tax/
You will want to get both, and here are the instructions:
Florida Seller's Permit - startup101.com/florida-sellers-permit/
Resale Certificate - startup101.com/florida-resale-certificate/
The most common option for an individual owning a business is a sole proprietorship or LLC. The sole proprietorship is much less expensive than the LLC, but the LLC offers personal protection should the business get sued and greater tax flexibility that may lower your taxes. I'm not an attorney or accountant, so take this for what it's worth, but starting out, you may not have a lot of liability concerns, and the tax flexibility isn't usually a benefit until the business is making a $40k-$60k profit. While it may be a little bit of a pain to switch over, you can start as a sole proprietorship to get up and running quickly and inexpensively, and then once the business grows
start an LLC. Here is some more info on the two that may be helpful - startup101.com/sole-proprietorship-vs-llc-whats-right-for-you/
Hope this helps!
Greg
I have a question. I’m just starting my clothing line, I have a online store but no sales and just not quite finished setting it up. I went to buy some clothes, this lady ask if I had a tax sales permit to get wholesale prices without the taxes. Without me making any money, do I need to get that sales tax permit or the resale certificate? I’m just confused on what to do and don’t want to be penalized for something I have any knowledge of. Can you please give me your best advice and I stay in the state of Oklahoma.
Your first step should be to get a sales tax permit from the Oklahoma Tax Commission - startingyourbusiness.com/how-to-register-for-a-sales-tax-permit-in-oklahoma/. There is no cost to register and it registers your business with the state for the purpose of sales tax collection.
The need for a resale certificate is based on your vendor. They aren't forced to require one, though they should. Some of your vendors will ask for a copy of your sales tax permit, some may just ask for the number, some may not ask for anything at all.
You don't have to worry about the resale certificate, but you do have to get a sales tax permit.
Hope that helped. Congrats on setting up your new business and if you have any questions, please ask!
Thank you so much for the information, I really needed to know my next step and you have answered all my questions. I appreciate you again, have a good one.
How would this all work if I sell through eBay? eBay already collects sales tax from the buyer but I’d like to still purchase products without paying a sales tax on the item with a resale certificate
Even though eBay takes care of the sales taxes, you'll still need a seller's permit (or similarly named certificate, depending on the state) as you are physically operating a business there. Your sales tax filings will be $0 from the eBay sales, and after getting the seller's permit, you will be able to get the resale certificate.
Hope that helps!
Greg
@@_StartUp101 got it so to clarify I need to get both and I can use my resale certificate to purchase inventory but since eBay collects sales tax I don’t have to worry about collecting it myself nor filing it with my taxes. But if I was to say start my own store/site then I would have to collect sales tax and file it.
@@Mcgurkyyy101 That's it - you got it! Greg
Hi thank you for the video. Is it mandatory to have a seller permit if you sale online ? thank you in advance!
I wish I could give you a yes or no answer, but you will probably will need one. Each state is different, and a few don't have a sales tax. Some states will also require a seller's permit if you have a physical presence in the state too. Here is some more information on seller's permit for each state - startingyourbusiness.com/how-to-register-for-a-sales-tax-permit/
Another complicating factor that comes into play is how much you sell to residents of a state. Each state has different requirements, but most require out-of-state sellers to collect and remit sales tax if they sell more than $100k or over 200 transactions in a calendar year. Here is a guide with the thresholds in each state - www.taxjar.com/sales-tax/economic-nexus
Hope this helps!
Greg
Thank you so much for answering my question. I appreciate!
What if I’m reselling online?
Everything still applies regardless of whether you are selling from a storefront or online. One wrinkle is that when selling online is that in addition to getting one from the state where you are operating the business from, you may need to get in in other states too.
This varies by state, but most require a business to obtain a sellers permit when an out of state seller makes sales of over $100k or 200 transactions in their state in a calendar year. Here's some more info that may be helpful startup101.com/sales-tax-nexus/
Thanks!
Greg
Do you need an LLC to get a seller’s permit in California?
Hello! - The ability to get a seller's permit in California (or any other state) isn't affected by your business structure.
Some resources that may be helpful:
Here is a comparison of the different business entities - startup101.com/comparison-of-business-entities/
Also, you can check out Step 3 for how to set up the different business structures in California - startup101.com/california/
Thanks!
Greg
Hello! Quick question. I am currently waiting for the LLC for my new screen printing business to be filed with WI. I was under the impression I needed the resale certificate but after watching your video it seems that I would need the sellers permit as well?
Hi there! Before you can fill out the Wisconsin Sales Tax Exemption Certificate, you have to get the Seller's Permit number from the Department of Revenue. Here is some more info that may be helpful - startingyourbusiness.com/wisconsin-sales-tax-exemption-certificate/
Hope this answers your question, but let me know if you have any others!
Greg
I will be buying from a whole seller in California. My business will be in Louisiana would I also have to get a seller permit In California as well ?
Hi there! All you need to do is give your Louisiana resale certificate to your out-of-state wholesaler. The reason is because you can only get a resale certificate in a state where you also have a seller's permit, which is usually the state where your business is located.
Hope this helps, but if you have any other questions, please let me know!
Greg
Thank you so much this cleared up a lot of my confusion ☺️.
Does getting a Sellers Permit impose an obligation to file taxes with that state monthly? This is my main hesitation to seeking Resale Certificates for my print on demand business vision.
Once you sign up for a Seller's Permit you will need to file reports with the state, even if you had $0 in sales. Most states have a monthly, quarterly or annual reporting requirement, and the filing will initially depend on how much you expect to generate in sales. Once the business has been in operation, they may change the frequency.
Thanks!
Greg
Thanks for the video.
I just set up a Wyoming LLC. I'm planning to purchase products from a CA based wholesaler and resell in the US domestically for now and potentially to overseas. In this case, which state should I obtain the sellers permit and resale certificate from? Both Wyoming and California? Thanks!
I only use a virtual address in Wyoming. The business nature is dropshipping. Thanks!
Sales tax can become a very complex subject. I can give you some basics, but just know that I'm not an accountant.
First of all since the LLC is in Wyoming, you have what's called nexus, meaning you have a physical presence. So you will have to get a sales tax license in Wyoming. State nexus can be triggered if you have employees, an office, warehouse, or if products are being dropshipped by a wholesaler. Here's a little more on sales tax nexus - startup101.com/sales-tax-nexus/ and www.avalara.com/blog/en/north-america/2022/02/what-is-a-drop-shipper-and-how-does-drop-shipping-affect-sales-tax.html
It's also worth noting that each state has different thresholds (usually over 200 transactions or $100k in sales) and once you cross one of those numbers in sales to residents to a state, you will also have to get a sales tax permit in that state.
If you are buying from a California dropshipper, you will also need to get a sales tax permit. Here is some info from the state that should be helpful -www.cdtfa.ca.gov/industry/out-of-state-retailers/doing-daily-business.htm
Hope this all helps!
Greg
Thanks!
Thanks
They say you have to have a resellers license when your a third party seller . So Amazon pays for your sales tax . An according the Louisiana department off revenue every period or month i make money I have to file 0 if i didn’t make any money an if I did I have to file my sales and put a code in which I’m assuming the code is for the irs to know that stands for im a reseller so They would then contact Amazon for my sales tax for the year with that code i believe. I wonder when filing monthly do I put in the sales I made or profit or do those the Louisiana department off revenue contact Amazon since they pay my sales tax to find out my profits an losses . Because I don’t want to
File 3 grand for month off November then They think i profited 3grand when that was only my sales for that month .
Even though Amazon handles your sales tax, businesses located in Louisiana will need to register for a Sales Tax License (startup101.com/louisiana-sales-tax-license/). Since Amazon files a return for the state each month, you do not have a calculation, collection, or remittance liability, but you have a reporting liability with the state.
A resale certificate on the other hand lets you buy your inventory to resell, tax free.
Hope this helps!
Greg
Hi I have my LLC'S my EIN number and my Certificate of Registration and also my Florida Annual Resale Certificate for sales Tax do I still to get a seller's permit to sell my food for my Catering Business what else do I need to safe I also waiting on my liability insurance what else do I need to Run my business I'm new at this but I'll been cooking on my job for 8 years
Hi Erica - Congrats on getting your catering business set up!
You will need the seller's permit (called a sales tax permit in Florida), but since you have the resale certificate you may already have it - startingyourbusiness.com/how-to-register-for-a-sales-tax-permit-in-florida/
There are a few other things that come to mind:
- State Catering License - www.myfloridalicense.com/CheckListDetail.asp?SID=&xactCode=1032&clientCode=2013&XACT_DEFN_ID=7630
Certificate of Occupancy - City license to legally operate out of a commercial location, if you also own the facility where food is being prepared
- City business license and/or business tax receipt - Not required everywhere, but you may need a license to operate. Not only at your home base, but also with the city where the event is taking place - startingyourbusiness.com/florida-business-licenses-permits/
- Florida Department of Health registration - martin.floridahealth.gov/programs-and-services/environmental-health/food-hygiene/index.html
- Employer registration if you plan to hire employees - startingyourbusiness.com/hiring-employees-in-florida/
Hope this helps. Let me know if you have any other questions!
Greg
HI! If I live in another state from where im purchasing wholesale items, do I need to acquire a reseller certificate for the state I’m purchasing from although I plan I selling In the state I live in?
Thanks for the great question! A little longer answer, but I wanted to give some context.
The only way to get a valid resale certificate from another state is to first apply for a seller's permit.
So, in this scenario where you don't have a physical presence in a state or meet the state's threshold of sales or number of transactions, you don't have a reason to register for a seller's permit in that state.
To finally get to your answer :) when you are purchasing inventory to resell from a vendor located in another state, (if they accept it - and most do) you only need to provide the resale certificate from the state where you live.
@@_StartUp101 Amazing! Thank you so much!!
@_StartUp101 I have small business of reselling car parts and accessories here in California, most of my inventory are bought outside the US. Do i still need a Seller’s Permit in order to resell these items here in the US? Thanks in advance for your advice.
Regardless of where the inventory is purchased, you will still need to get a Seller's Permit so you can pay sales tax on your US sales.
Thanks!
Greg
Thank you!!
You're welcome!
THANK YOU SSSSOOOOO MUCH.
You're welcome!
🔥🔥🔥
👏🏽👏🏽👏🏽🙌🏽🔥
Sound is off
Great job! Thank you