HOW TO OBTAIN A SELLER’S PERMIT IN YOUR STATE
You may need a seller’s permit to sell any taxable goods and services, depending on your state. A seller’s permit enables you to collect and remit sales tax to your state department of revenue. The idea behind a seller’s permit is to make the process of collecting, paying, and reporting sales tax manageable in the state. It is also known as a reseller’s permit, resale ID, permit license, resale permit, or resale ID. It may also have other names depending on your state.
Why is a seller’s permit necessary?
As a business owner in the retail industry, you must encounter sales tax when selling goods and services. Your business is responsible for collecting those taxes, reporting, and paying them to your state’s department of revenue. Therefore your business collects the tax on behalf of the state, holds the funds in trust, and you must pay them to your state by the end of a certain period, say monthly.
Note that the specifics of a seller’s permit differ from one state to another, and some states do not require one. For instance, you may need a Charlotte seller’s permit to open a business in the city, but you may not require one to open a business in a city in New Hampshire, Montana, Oregon, Alaska, or Delaware.
What determines if my business needs a seller’s permit?
Apart from the five states mentioned above, you need a seller’s permit to sell taxable goods in all other US states. Also, if you intend to sell or lease products or services in your business, you must apply for a seller’s permit even if you think you won’t collect sales tax. In some states, you may need to pay sales tax on gift wrapping and shipping charges if operating online.
Sales tax applies to products and services many businesses sell in the US. However, they vary from state to state depending on; types of products or services subject to sales tax and whether sales tax applies to online transactions. It is best to check with your state’s revenue department to find out whether you will be required to pay sales tax in your new business.
How to apply for a seller’s permit
After finding out that your business will be responsible for collecting and remitting sales tax, you will need a seller’s permit. Here are the things you need in order to make the process easy.
- Business tax ID number.
- NAICS code which classifies businesses depending on the type of goods or services they sell.
- Some information about your business, including business bank account, legal type, and when it was started.
In most states, you only need to find the application link online, register, and pay for the seller’s permit. You can also apply through an agency such as fastfilings.com. Other requirements include:
- Business name, type, and when it was launched.
- Any information about your business locations, even if temporary.
- Monthly sales, including online sales.
- The starting date for collecting sales tax.
- The estimated amount of sales tax you can collect to determine your filing frequency.
- Calendar quarters your business runs.
It is vital to establish accounting procedures to collect the sales tax on every transaction for manageable reporting.