In Texas, a wholesale license is referred to as a Sales and Use Tax Permit. Generally speaking, this license is required for businesses that sell or resell products and services and then collect sales and surcharge taxes on the transactions.
Reasons To Get a Permit
Gtting a Sales and Use Tax Permit enables a business to purchase of products from manufacturers, distributors and suppliers at wholesale prices without being required to pay the sales tax. Businesses aren’t required to pay a sales tax when purchasing wholesale goods because the tax will be collected from retail consumers at the point of sale. It then will be paid to the state by the business. A second reason to get a Sales and Use Tax Permit is that manufacturers, distributors and suppliers generally require a business to have a permit to ensure they aren’t selling to retail customers.
How the Permit Works
As an example of how this process works, the Texas Sales and Use Tax Permit could be presented by a jeweler to a supplier for the purpose of buying loose gemstones at wholesale prices. The jeweler also buys sterling silver from a second supplier in the same manner. The gemstones and sterling silver then are used to fabricate rings, necklaces and bracelets, which are marked up to retail prices and sold. With each sale, the jeweler collects the sale tax based on the purchase price. The jeweler then submits the sales taxes that resulted from the sales to the Texas Comptroller’s office. These taxes are due either quarterly, monthly or yearly, depending on the amount of sales from the business.
Getting a Permit
Obtaining the required permit requires the submission of the appropriate taxpayer ID for the business entity, the tax ID numbers of officers and directors of a corporation and the North American Industrial Classification System code for the business. The NAICS code is used to identify the type business for the purpose of statistical studies conducted by Federal agencies. This information can be used to apply for a Sales and Use Tax Permit either online or in person at a field office of the Texas Comptroller. The application also can be downloaded and mailed to the main office of the Comptroller.
After submitting the application, it takes about 2 weeks to receive the permit.