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Do you need a resale license if you sell over the web from your own home?

September 13, 2014 by Paul Edwards 7 Comments

“I want to start a resale business out of my house, do I need a resale license? What is this and where do I get one?” Also what about a federal ID number and a business license?

A resale license or permit, which may have a different name depending on your state, enables you to buy products for resale without paying sales tax on them until you resell them to a purchaser, from whom you collect theGet licensed. tax. You may also have suppliers who will sell to you only if you have a resale number, which indicates to them that you are a legitimate merchant. You can find the name of the tax agency in your state responsible for sales taxes on your state’s web site or from sites like www.govengine.com and http://www.lexisone.com/legalresearch/legalguide/states/states_resources_index.htm. From your state’s tax agency site, you can also get the forms you’ll need for reporting your sales. The states are quite interested in collecting all the taxes they can and have compliance officers.

If your sales are going to be on the web, such as on eBay, you’re obligated to collect and pay tax on sales to buyers from your own state. The Supreme Court reversed the Quill decision with the Wayfair decision that enables states to require collecting sales tax to residents of their states. Usually, states provide a threshold before a small seller is required to collect the tax. You need to check this out for your business.

You only need to get a federal employer ’s tax ID number if you have employees, are a partnership, or are incorporated. You do this with Form SS-4, which you can get at www.irs.gov. It’s one of IRS’s most requested documents and reachable from the home page.

Usually, you get your business license from a county office but check with your state’s agency or office that provides assistance to small businesses. Links to such state agencies and offices can be found at http://www.irs.gov/businesses/small/article/0,,id=99021,00.html.

If you think we can help you, we offer webinars and consulting. mail://paul@elmstreeteconomy

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Adapted  from a prior column in BYOB

 

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Filed Under: Counseling, Sustainable Home Businesses, The Future Tagged With: federal ID number and a business license, Resale license

Comments

  1. home business says

    June 15, 2015 at 3:46 am

    Whilst you will need to master some internet marketing skills to drive traffic to your site,
    anyone can learn these if they are prepared to spend the time
    working at it. This keeps customers out of your house,
    and may even be legally required for certain businesses in certain municipalities.
    If you still have a day job, please don’t quit just yet.

    Reply
    • Paul and Sarah Edwards says

      July 14, 2015 at 9:27 am

      While everyone is able to find a suitable job, self-employment is an option. You make a good point about some communities restrictions.

      Reply
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  5. Paul Edwards says

    October 21, 2022 at 12:17 pm

    If what you sell is taxable, then you need a resale certificate from the Board of Equalization in California.

    Reply

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Paul with his wife, Sarah Edwards, are award-winning authors of 17 books with over 2,000,000 books in print.

Paul provides local marketing consulting through the Small Business Development Center. He is co-founder of a new website: DigitalDocumentPros.com.

Prior to becoming an author, I practiced law, served as CEO of a non-profit, and operated a public affairs consulting practice. [Read more...]

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