Starting a business that sells retail or wholesale goods requires several licenses and permits before it can be considered a legal operation. Whether you’re operating out of the home, online, at a farmers market, or from a brick and mortar structure, knowing what a sellers permit is and how to get one will save you a lot of stress in the long run.
Each state has their own name or title for a seller’s permit, which include a resell permit, permit license, resale ID, and state tax ID number.
If you’ve ever had to ask yourself, “what is a seller’s permit?” then the information provided here will help you to avoid fines and a possible shutdown of your operation.
Not every state has the same requirements or process to get a seller’s permit. The price of the permit, or fees, will also vary from state to state. There are however, some requirements common among most states.
If you will be selling any kind of goods or services, a permit is required by law. This means that sole proprietors operating under their social security number, LLCs, and corporations alike must obtain a seller’s permit to operate legally. To get that permit, you need to decide beforehand what status your operation will be licensed under.
Having more than one location or type of business will require multiple sellers permits. For instance, if you’re running a retail business online and decide you want to set up at some local fairs and markets in your area, you will need to obtain a second permit, even if you’re selling the same items.
Transferring a seller’s permit is not an option. Most states require individual permits for those who own the business. If an operation is sold or transferred to a relative, that individual is now responsible for getting the necessary permits.
Most seller’s permits are also known as sales tax permits. While most states require an individual or company to have the permit, that doesn’t mean your business will always apply a tax on certain items.
Sales that are made to customers out of state, also known as remote sales, don’t require the operator to collect a sales tax. This law may change at some point as state and federal regulators are not happy about losing out on potential tax earnings.
Before you bring in that first sale, contact your state agency responsible for issuing sellers permits. A good place to start is with the department of revenue or the state board of equalization. You can also contact a local consumer affairs office or business attorney.