A resale license is required in most states for anybody who plans to go into the business of buying and selling merchandise. By obtaining this certification, you can legally collect sales tax from customers and submit the revenue to your state government. In addition, you can purchase stock from licensed factory wholesale providers. Depending on your particular state, the license may be referred to as a resale license, resale certificate, wholesale ID or seller’s permit.
Set up your business in the county where you plan to sell merchandise. Resale license forms contain lengthy fields inquiring about the nature of your business, and you must be prepared in order to ensure your approval. Make a list of possible business names and then contact your local county clerk’s office about establishing a DBA (“Doing Business As),” sometimes called a fictitious business name. This is a name, such as “Bob’s Electronics,” under which you can legally conduct business. Fill out the DBA form and return it to the county clerk’s office. Upon approval, most counties require you to print the name of your DBA in a local newspaper for two or three consecutive issues. Your county clerk will inform you of the exact laws in your jurisdiction, and the process for filling.
Write an outline of your projected sales. The figures need not be precise, but your resale license application will include questions about the types of volume and revenue you plan to produce, so it helps to prepare in advance. Estimate the amount and dollar value of merchandise you hope to purchase and sell in an average month, and the approximate amount of profit you hope to produce.
Apply for a Federal Tax ID, also called an Employer ID number (EIN). This free process takes only minutes, and you can complete the form online and receive your ID number immediately. The Tax ID is essential for obtaining a resale license, as it allows the state and federal governments to process your business taxes.
File a resale license application through your state’s revenue department. The exact department varies from state to state, but you should find the department that handles sales and use taxes. The IRS has a complete list of relevant departments in each state. Find the department in your state, visit the website, fill out the resale permit form and submit it to the department. The office will review your application and notify you of your approval status.
Before filling out the DBA form, check your county clerk’s website and find out if the site offers a free DBA search. This feature allows you to enter your desired business names and find out which names are still available for use. Finding out in advance can save you immense time during the filing process.