What is a seller’s permit?
A seller’s permit allows a state to identify a business as a collector of sales tax. You will use this permit number to pay sales tax to the state every quarter.
The main reasons why your state requires a seller’s permits is to enable them to collect sales tax on your business transactions. Failure to use a seller’s permit could result in penalties and fines.
A sellers permit may also be called a resale permit, resell permit, permit license, reseller permit, reseller number, resale ID, state tax ID number, or reseller license permit. It is usually free to obtain.
It is important to note that a sellers permit is separate from a business license.
There are several states that do not have a sales tax,
- New Hampshire.
You don’t have to worry about a seller’s permit in these states.
How to determine whether you are required to obtain a sellers permit
Do you sell a tangible item?
If so, you will will most likely need to pay sales tax. A tangible item would be something like clothing or toys.
Some states require a seller’s permit if you are offering services. This gets confusing. For instance, a photographer could be viewed as a service provider in one state as they take photographs. That same photographer could be be viewed as having a tangible item as they are selling photographs. i
In some states digital items are taxed whereas in other states they are not.
Some things to keep in mind,
- Seasonal workers or temporary sellers may be required to obtain a sellers permit as well.
- Individuals or businesses that have more than one location for conducting business must obtain a seller’s permit for each location.
Taxes vary depending on the item.
Medical devices and food are taxed differently, it really depends on what you’re selling.
How to you obtain a sellers permit?
You can register for a seller’s permit through your state’s Sales Tax Commission. To help you find the appropriate offices, find your state on this IRS website.
You will need,
- Social Security Number
- Date of birth
- Contact information
- Driver’s license number or passport for identification
- Incorporation date
- Bank account information
- Projected monthly taxable sales
What is a resale certificate?
Resale certificates identify a business as having the right to make certain non-taxable purchases. this is different that a sellers permit.
These include wholesale items for resale and items that are purchased for use in the manufacture of products for resale. Say for instance you needed to buy ingredients to make a lotion. You would not be required to pay taxes on the ingredients but would be expected to pay taxes on the lotion once it is completed and you are selling it.
Resale certificates prevent the double collection of sales tax on products.
You can find what taxes you need to pay depending on what state you leave in. Each state has its own rules. This is important as different states will have different requirements.