Starting a business is an exciting time. While there's a lot to do, it’s the beginning of an adventure for many entrepreneurs. From marketing to sales, operations to staffing, there are a number of activities small business owners need to develop processes for so they can run their businesses efficiently. One of the most important parts of setting up your business is applying for a seller’s permit, which enables your state to collect sales tax.
What Is a Seller’s Permit?
In the United States, if you start a business and sell products or services to customers, you need to acquire a seller’s permit. Through the seller’s permit, your business can collect, report and pay sales tax in your state. If you don’t have a seller's permit number in advance of starting your business, you may be on the hook for fines or other penalties, so be sure to apply for it well in advance of starting operations.
Some states, including Alaska, Delaware, Montana, New Hampshire and Oregon, don't have a state sales tax. In these cases, you don't need to apply for a seller’s permit. However, some of these states do allow businesses to charge and collect tax, so check with your state department to determine if you need a seller’s permit.
In most states, the department you'll need to contact to inquire about your seller's permit number is the Department of Revenue or the State Board of Equalization (BOE). If you’re unsure where to find more information about the seller's permit number, contact a local consumer affairs or consumer business office for details.
What Is a Seller's Permit Number?
Your seller's permit number is found on your seller's permit. Once you apply for and receive your permit, you'll be able to access your seller's permit number.
Keep in mind that in some states, the seller's permit may be called a different name. Seller's permits can also be referred to as:
- Resale permit
- Permit license
- Reseller permit
- Reseller number
- Reseller license permit
- State tax ID number
- Certificate of authority
Applying for a Seller’s Permit
In order to apply for a BOE seller’s permit number, you'll need to provide the state with the required documents for your business. The documents and information needed vary from state to state, but most will include the following:
- Business details like name and location(s).
- The estimated amount of sales tax you'll collect.
- Your social security number.
- Your driver’s license.
- Your banking information.
- Information on suppliers.
- Personal references with contact information.
Be sure to check the process for applying for a seller’s permit number with your state, as processes, forms and terminology can vary. For example, in California, the State Board of Equalization's seller's permit, which is used to collect BOE sales tax, does not have a fee associated with it. However, some states do charge a fee when you apply for your seller's permit number.
Understanding the Details
If your business has multiple locations, you'll need to apply for separate seller's permit numbers for each location, even if they're located in the same state. For example, if you own a coffee shop with three locations in your city, each location will need its own seller's permit number.
If you do business in more than one state, you'll need a seller's permit number for each state, unless that state doesn’t have a sales tax. In most states, you can't transfer a seller's permit number from one business to another. For example, if you own a clothing business and sell it to open up a shoe store, you can't use the old seller's permit number from the clothing business for your shoe store. You'll need to acquire a new seller's permit number for the shoe store.
Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.