Interior decorators choose furniture and accent pieces for clients redoing their living spaces. Furniture manufacturers and design centers, which are typically located in major cities and are where many manufacturers display their items to sell to the trade, remove taxes on sales to interior designers. They do this on the understanding that interior decorators will resell those pieces to their clients, who will pay the tax. Interior decorators need a sales tax identification number before they can receive interior decorator discounts.
To get a sales tax identification number, you must first obtain an employer identification number, also known as a federal tax identification number. To obtain this number, you must go through the multistep process of becoming a business and paying applicable fees. Becoming a formal business involves creating a business plan, choosing a name, having a business address and phone, establishing a legal structure, such as partnership or sole proprietorship; and filing formation documents with your state.
You can apply for a federal tax identification number online at the IRS website Monday through Friday, between the hours of 7 a.m. to 10 p.m. Eastern time, or file a Form SS-4 by fax or mail. The EIN Online Assistant allows you to receive the number immediately; using fax takes up to four days, and by mail, four weeks. The IRS wants to know basic information, including what kind of structure your business has, the date it started, number of employees and its main business activity.
With your federal tax identification number, you can contact your state department of revenue to apply for a state sales tax identification number. This is sometimes known as a resale number or resale certificate. The process involves filling out a form that asks basic questions about your business. Presenting this number from the state permits you to purchase items for clients without paying tax on them.
Some formerly to-the-trade-only design centers now also permit members of the general public to visit and shop. However, the center might have rules stating that members of the general public must be accompanied by a professional and that any purchases be made through the professional. Interior decorators who obtain items at wholesale prices for members of the general public typically add a markup to the cost to cover their time for handling the order.
