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A seller’s permit authorizes a business owner to collect sales tax on behalf of the state with a specific seller permit number. You’ll need a seller’s permit if you sell items or offer services that are subject to state sales tax, and you’ll need one in each state where you do business. This is an essential step when starting your business.
Businesses who sell sales taxed products and services are functioning as agents for the government. Customers pay the sales tax, but companies are responsible for collecting it and remitting it to the state. Seller’s permits allow businesses to collect sales tax and provide a means for the taxing agency to track payments and guarantee they are received on time.
The state Department of Revenue normally issues a seller’s permit, also known as a sales tax license, vendor’s license, retail license, certificate of authority, or business tax account. In certain states, it is issued by the Secretary of State, the Department of the Treasury, the Board of Equalization, or the Department of Taxation.
Seller’s Permit vs Resale or Wholesale Certificate
Have you been curious about how to get a seller’s permit, only to find out about wholesale certificates? A seller’s permit is not the same as a resale (aka wholesale) certificate. Businesses frequently purchase items or resources for resale. A retail store, for instance, might purchase food from a distributor to sell in their shop. In some states, these purchases are not taxed; the tax is paid when the shop sells the snacks.
The owner of the retail store must get a resale certificate from the state to demonstrate that the transaction is not taxable; this certificate may be issued every year. To learn more about resale certificates, contact your state’s taxes authorities.
Seller’s License for Online Sales
You might be asking if you need a seller’s license if your company sells online. Internet sales taxes are evolving. States are enacting legislation to take advantage of a recent Supreme Court rule that gives them additional authority to tax online purchases.
Some states require a minimum number of sales or transactions. Some states, for example, impose an annual minimum for online transactions of $100,000. Your business would not be required to collect, record, or pay sales taxes in that state if you are under the state’s minimum.
How to Obtain a Seller’s Permit
Getting a seller’s permit is usually pretty straightforward, although it might differ depending on your jurisdiction. In most cases, all you have to do is fill out an application and submit it to the appropriate government.
You can generally find the form on the website of your local company regulatory body. You’ll likely need the name and location of your business, your Social Security number (SSN) or employer identification number (EIN), expected monthly sales, and supplier names to apply.
You can then mail or hand-deliver the completed form. You might be able to submit it online as well. In most cases, there is no charge for requesting a seller’s permission.
Documents Needed to Apply for Your Seller’s Permit
The specific documents needed can vary slightly from state to state. Most commonly you’ll need the following when you fill out a seller’s permit application:
- A social security number
- Bookkeeper or accountant’s name and address
- Your birthdate
- Your driver’s license number, state identification number, or another form of identification (e.g., passport, military ID)
- Individual references’ names and addresses
- If you’re buying an established firm, you’ll need to give the prior permit information as well.
- Bank names and locations where you have accounts
- Vendors’ names and addresses
- Expected average monthly sales and the taxable portion of those sales
- Your e‐mail address
Partners, corporate executives, and managers/members/officers of limited liability companies must also give information.
How to Renew your Seller’s Permit
Non-Renewal States
Now that you know how to get a seller’s permit, what about renewal? Some states make it simple for business owners by continuously renewing sales tax permits or just issuing one that has no expiration date. You won’t have to worry about your permit expiring once you have it in these states.
Keep in mind that if you make significant changes to your business, such as changing its name or relocating, some states need you to renew or apply for a new permit. Unless you sell cigarette and tobacco items, you won’t have to worry about renewing your sales tax permit.
If you sell tobacco items, you’ll have to renew your permission every year. For all other types of enterprises, your permit will be valid until you cancel it.
Non-renewal states include:
- California
- Texas
- Michigan
- Virginia
Renewal States
So what about the states that make it mandatory for vendors to renew existing licenses? Again, each state has its own set of laws for how to proceed, but here are some examples of what to expect.
You must renew your Colorado sales tax permit every two years if you have one. You’ll have to pay a fee of $16 each time you do it. Indiana as a state has a two-year renewal policy as well, but you won’t be charged for it.
If your permit in Louisiana is about to expire, you’ll need to renew it. But, you’ll have 60 days after the permit’s end date to renew it. Pennsylvania makes things a bit simpler for dealers by only requiring permits to be renewed every five years at the most.
Isn’t that a lot to keep track of? The best way to be sure you’re following the rules is to contact the department of revenue in the states where you’re registered. Every state’s contact information is included in this list.
In Short
It’s important to contact the state department in charge of providing seller’s permits before starting your business. In most jurisdictions, getting further information about state-specific regulations for seller’s permits should be done through the department of revenue or the state board of equalization.
Contacting a local business or consumer affairs office or a local business attorney for advice on the requirements and processes for getting a seller’s permit is another smart place to start.
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1 Minimum $50 deposit required. See your Deposit Account Agreement for more details.
North One is a financial technology company, not a bank.
Banking services provided by The Bancorp Bank, N.A., Member FDIC.