If you sell physical products online, you need to get a resale certificate.
Most states require that sales tax be charged on goods sold within their state. Those collected taxes should then be paid to the state. Many online sellers question why they need a sales tax number. If you sell a few items per year, it may not be a big deal. If you only buy at garage sales, I wouldn’t worry about registering with your state. If you sell more than one item per month, you should look into getting a state sales tax number. (Bold disclaimer: I am not a tax expert, a liscenced tax adviser and / or an tax attorney. Please contact a tax professional in your state for the most correct information on your business’ needs.)
In my opinion, there are three main reasons for having a state sales tax number. These are also called Resale Certificates or a Resale Number depending on the state where your business is located. Here are reasons on why you should considering registering your business:
- It is the law. If you sell goods on Amazon, eBay, Etsy or any other place on the internet AND ship items to someone in your same state, you have to collect (charged to the buyer) sales tax and then pay that tax to your state. However, if you sell less than $4 million in annual sales, which covers nearly all online sellers, you do not have to collect or pay sales tax on sales where you deliver the goods to an out-of-state buyer.
- You can purchase items to sell without paying sales taxes on these units. When you buy something that you plan to resell, you can purchase it without paying sales tax by sharing your resale certificate with the vendor. It must be for resale. You can not buy a new computer to use in your office and not legally pay sales tax on it. However, if you go to Overstock.Com and buy a computer that you plan to sell on Amazon or eBay, then you can buy it without paying sales tax.
- Most manufacturers and wholesale companies require a sales tax certificate. Most all legitimate wholesale companies and product manufacturers will ask for your resale certificate before they will sell to your company.
If your state does not charge sales tax, you will be issue some type of Business License that will serve the same purpose for wholesale companies. Getting a sales tax number is easy and inexpensive. You can link to any of the states below to get information on obtaining a “sales” or “use” tax number. Most of the states allow you to apply online. If you can not apply online, it is most likely a simple download and mailing a form.
Government websites tend to chang. If one of these links does not work, try typing in www.xx.gov. Just replace the ” x x” with the two letter abbreviation. For example, www.wv.gov will get you to West Virgina’s website.
* These states do not have a state sales tax. A link is provided where you can find more info on that state’s tax, business, and/or licensing requirements.
Businesses can use their resale number to avoid paying taxes when purchasing shipping supplies. Shipping is technically part of your product cost, you should not have to pay sales tax on shipping supplies. (2nd Bold disclaimer: I am not a tax expert, a liscenced tax adviser and / or an tax attorney. Please contact a tax professional in your state for the most correct information on your state’s rules on tax exemption for shipping supplies.)
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