“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 the 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. However, you’re not required to collect sales taxes on sales made to people or companies located out-of-state.

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