When starting or expanding your business, you must obtain the necessary licenses and permits. They protect you from legal issues and allow you to perform your business activities faultlessly. Among various licenses, a seller’s permit is essential for any business operating in the US (except for the states with no sales tax). Whether conducting a brick-and-mortar business or an
ecommerce company, you’ll need a seller’s permit.
It can be complicated for new businesses to understand where to start. This article outlines a seller’s permit and the step-by-step process to obtain it.
What is a Seller’s Permit?
A seller’s permit is also often called as a sales tax permit, retail license, sales tax license, vendor’s license, use tax permit, or certificate of authority. Every business, whether ecommerce or onsite, must obtain this to conduct business in a state.
It is a document that authorizes permission to collect sales tax on taxable goods and services from customers on behalf of the state.
After getting a sales tax license, a business becomes an intermediary between the customer and the government for sales tax collection. The customers pay sales tax to the business and each taxable item’s sales price. The registered seller collects and remits the sales tax to the state’s taxing authority.
How to get a Seller’s Permit?
Getting a seller’s permit is simple, but the process may vary among different states. The
cost of a seller’s permit also varies. Most states don’t charge any fees for the license. Still, some states require a registration fee, security deposit, and renewal charges.
You can find the seller’s permit application on the website of the Department of Revenue of each state. For instance, the applications in
Florida and
California are available on the respective states’ websites.
Steps
- Fill out an application,
- Complete the documentation and pay the required fees (if any), and
- Submit the application.
Documents Needed
The following documents are usually required for sales tax permit registration. However, depending on your business entity and the nature of your business, the requirements may vary.
- Name and location of your business
- Social Security Number (SSN) or Employer Identification Number (EIN)
- Business entity structure
- Expected monthly sales
- Contact information and form of identification
- Bank account information
- Vendors’ information
Cost of a Seller’s Permit
Out of 45 states that impose state or local sales tax, only 15 states charge a fee for issuing a sales tax permit. The fee ranges between $5 and $60. Florida charges the lowest cost ($5) with no requirement for a security deposit. Wyoming charges the highest cost ($60) and does not require sellers to renew the license. In Ohio, only in-state sellers have to pay the application fee, and out-of-state sellers can get it for free.
Find the cost of a sales tax permit in each state before filling out the application. Remember that the cost can also depend on the mode of application. For instance, Florida offers free online sales tax license registration but charges a $5 application fee for mail-in applications.
Renewal of Seller’s Permit
Some states require sellers to renew their permits, while others issue permits without an expiration date. The renewal requirements also vary among states that charge sales tax. The following states are examples of a few states that do not have a renewal requirement:
- Texas
- California
- Michigan
- Virginia
On the other hand, states like Colorado, Indiana, Louisiana, and Pennsylvania issue renewable seller’s permits. The permit’s validity period, renewal fees, and other requirements vary from state to state.
Things to Remember
Consider a few important things when getting a sales tax certificate:
- Depending on the state, getting your seller’s permit may take a few days to weeks.
- Some states impose penalties on businesses conducting their activities without a permit.
- Some states require businesses with a physical location to display the permit.
What is the Difference Between a Seller’s Permit and a Reseller Permit?
Although they sound similar, there is a difference between a seller’s permit and reseller permit and what they are used for. A reseller’s permit is a document issued by the state that allows sellers to buy products intended for resale without paying sales tax. It is also known as a reseller’s license, resale certificate, or wholesale certificate. It is used and accepted differently in every state.
When you sell items online, unless you manufacture the items yourself, you will likely need a reseller permit to give to vendors when purchasing raw materials, packaging, and products. A resale certificate can only be used to buy items you intend to resell or parts you intend to use directly in items you plan to resell. The resale certificate helps avoid double taxation of sales tax on products as the sales tax is collected from the end consumer.
Keeping it simple, resellers can purchase items tax-free for resale if sales tax is charged on those items when sold to the end customer.
Let TaxHero process your applications
Applying for a seller’s permit, fulfilling all the requirements, getting all the documentation done, and finally getting the permit are time-consuming and mundane. Let TaxHero take the burden off your shoulder so that you can focus on growing your business and focus more on value-added activities. Book a call today and let TaxHero handle all seller’s permit applications from all states.
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