What is a Business Resale License and How To Get One

Business resale license

Handling the legal aspects of starting a business, such an incorporating and obtaining the required licenses, can be time consuming, confusing and expensive, but there is no way around it. There are no shortcuts and never should any be taken or any important steps skipped. Doing so could come back to hurt you legally, financially, or both.

Despite the time and money involved to get your business off the ground, taking these steps, such as filing for your business resale license, helps to solidify your commitment to starting your own business and keeps you motivated and focused. After you’ve become an official, licensed business ready to start selling, it’s much harder to put off or delay your plans, which is a trap many entrepreneurs can fall in to after losing their drive.

What is a Business Resale License?

To first clear up some confusion, a resale license may be called several different names, depending on which state or region your business is located in:

  • Resale Permit
  • Resale Certificate
  • Sellers Permit
  • Certificate of Authority
  • Sales Tax License
  • Sales Tax Permit
  • And so on..

It’s important to do some research to first determine what the proper name of this license is where your business will be operating; which includes home-based businesses.

A resale license or permit allows your business to:

  • Purchase products from wholesalers, distributors, or manufacturers.
  • Avoid paying sales tax when purchasing your products.
  • Resell those products at retail.
  • Collect sales tax when selling your products to customers (if required).

Why Do I Need a Resale License?

You don’t necessarily¬†need a resale license or permit, but if you’re operating a store that sells products or services, online or offline, odds are that you will need one.

Most states will require any business that sells goods, and sometimes services, have a valid resale license in order to operate and collect sales tax; but some do not, especially those states that do not collect sales tax. In order to figure this out, you will have to visit the website of the state your business is going to be operating in. If your business is in multiple states, you will have to comply with the laws and regulations of each state.

If you plan to purchase your store’s merchandise from a wholesaler, distributor, or manufacturer, almost all will require that you have a resale license. Aside from any regulations, this ensures them that you’re not purchasing bulk goods at discount prices for your own consumption. It also allows the transactions to be exempt from state sales tax.

How Much Does it Cost?

The cost of the license or permit will completely depend on which method you use to obtain it and which state your in. You will have to do some more research given your exact situation, as it will vary for all business owners.

How Do I Get a Business Resale License?

While there are many ways to obtain a business resale license or permit, we listed the three most popular methods:

  • Use online legal service providers like LegalZoom or BizFilings. These websites allows you to easily file for just about any typical thing your business will require, including incorporation. While these services are a bit more expensive than doing the work yourself, you will save a lot of time and headaches having professionals handle the paperwork and filing for you and you can be ensured that things are done correctly. These companies specialize in these services and are fully aware of the regulations and procedures that each state requires.
  • Contact your state business department yourself, or research what needs to be done on their website. Many state websites are poorly designed and incredibly difficult to navigate in order to find the information you need. If you’re going to go this route, it’s recommended that you get in touch with someone over the phone or in person to ensure that you’re doing everything you need to and in the correct manner. This method will be the least expensive, but it will take the most time and is most prone to errors.
  • Most accountants that handle business accounts will have the resources and knowledge to handle the license filings for you. If your business already has an accountant, it’s worth asking what he or she recommends and if they can do it for you. This will probably cost you the most of any of these options.

 

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