How Do I Become a Licensed Reseller?

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Manufacturers always welcome the chance to sell more of their product because higher sales means a higher profit margin. To achieve this goal they need to use every resource available where resellers come in. A licensed reseller is able to purchase products from manufacturers in bulk and resell them to consumers for a profit. For you to become a licensed reseller, there are steps that you must take to be accepted into any manufacturer's reseller program.

Decide what products you would like to sell. Most manufacturers offer licensed reseller programs. Even manufacturers who don't would be willing to work with you to create one if you can guarantee that you would buy a set number of goods from them every month.

Choose your selling platform. You have to decide how you want to sell the products. Three popular ways are online, in a physical store or through mail-order catalogs. Each has its own advantages and disadvantages and you should choose the option that best suits your situation. For example if you are on a budget, selling online is immensely cheaper than selling through a physical store. There are no infrastructure costs, rent, insurance, and if you use a drop-shipping service no storage costs.

Choose a business name. Being a registered business is a prerequisite to becoming a licensed reseller. Search your state's database before you choose a name to make sure it is not already registered.

Register your business with your relevant state authority. Your choices are sole proprietorship, limited liability company, partnership and corporation. Visit the Small Business Administration online for a wealth of free information at sba.gov. You should also consult an accountant about the specific tax obligations of each type of business structure to choose one that best suits your needs.

Get a resale certificate. This certificate allows you to purchase goods and services for resale without paying the retail sales tax. You can get one by applying at your state's Department of Revenue and Taxation Service.

Get a website. Whether you decide to sell products online or offline, a website not only helps your credibility but it allows customers and manufacturers the opportunity to quickly access information about your business.

Get a line of credit. Unless you already have the capital upfront, you will need a line of credit to purchase a large number of products in bulk. Although many manufacturers will extend a line of credit to resellers, it is usually only done after a history of positive transactions is completed. You can apply for a line of credit at a local bank or credit union.

Apply for licensing directly from manufacturers. Contact the manufacturers of the products you would like to sell for an application to become an official licensed reseller. The application will ask for your business information, selling channels, resale certificate and estimated future sales. Once everything is correct and approved, you will receive an official reseller licensing packet containing everything you need to start selling the products.

Warnings

  • Some companies have non-compete clauses which means that you can only sell their brand of products.

References

Resources

About the Author

An avid technology enthusiast, Steve Gregory has been writing professionally since 2002. With more than 10 years of experience as a network administrator, Gregory holds an Information Management certificate from the University of Maryland and is pursuing MCSE certification. His work has appeared in numerous online publications, including Chron and GlobalPost.

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