If you are interested in selling products, whether online or in-person, there are a number of legal requirements that you will need to fulfill. One of these could be to acquire a Seller’s Permit. Below, we will explain how to get a seller’s permit and whether or not you will require one.Table of Contents:
- What is a Seller’s Permit?
- Who Needs to Get a Seller’s Permit?
- Information to Prepare before Registering for a Seller’s Permit
- How to Get a Seller’s Permit
- What to do after your Seller’s Permit is Issued
- Frequently Asked Questions (FAQs)
A seller’s permit is required in some states if you want to sell goods or services. A seller’s permit means that you have agreed to pay tax on any taxable sales. To do this, you will typically be issued a state tax ID number.
Other names are often used for seller permits, including the following:
- Reseller license permit
- State tax ID number
- Resale ID
- Reseller number
- Sales permit
- Permit license
- Resale permit
A lot of people get confused between a resale certificate and a seller’s permit. A resale certificate is issued to suppliers from the buyer so that they can purchase items without paying tax while a seller’s permit is setup to collect, report and remit sales and use tax.
So, do you need a seller’s permit? Well, you will definitely need one if you plan to sell any tangible items, including vehicles. In some states, you also need a seller’s permit if you sell services or one-time events, for example, online conference tickets or craft shows.
If you’re selling used items and hosting your own garage sale, you probably won’t need a seller’s permit. However, this does depend on the state you are based in, so you will need to check the rules in your location.
If your sales are made exclusively via foreign or interstate commerce, a seller’s permit may not be needed, as your buyers do not need to pay state sales tax.
If you require a seller’s permit and you don’t get one, you are violating the law and this is a serious offense. You could end up being penalized and receiving a hefty fine. For example, in the state of California if you are found to be operating a business without a valid seller’s permit or with a revoked permit you can be given a criminal citation for violation of the California Department of Tax and Fee Administration code section 6071. Violations of this code in California are subject to a fine of $1,000 to $5,000 and/or imprisonment of no more than 1 year.
Long story short, if you think you may need a seller’s permit don’t operate without one. If you are unsure if you do need a seller’s permit consult with a tax professional or hire a research firm to determine if you need one.
There are a number of things you have to get ready before registering for a seller’s permit. This includes the following:
- Get an EIN:
Your business will need to get an EIN. While the term EIN stands for Employer ID Number, you will still need it if you don’t have employees. Like a Social Security number, EIN is a federal tax number. You can make your application for this online.
Learn More about EINs: What is an EIN?
- Business Bank Account:
You will also need to set-up a business bank account for your company, as you will have to include these details in your application.
Learn More: How to Open a Business Bank Account
- Determine your NAICS code:
Finally, determine your NAICS code. This code is used to determine your business based on the sort of services or products you provide.
Resource: NAICS & SIC Search Tool
The good news is that it is fairly easy to get your seller’s permit. The process does differ from state-to-state. However, most of the time you simply need to fill out an application and submit it to the correct authority.
Visit the website of your local agency that regulates companies in your state, and you should be able to find the form on their website.
General Information you’ll need to Complete a Seller’s Permit Application:
- Business name
- Business address
- Supplier names
- Estimated monthly sales
- Employer identification number (EIN) or Social Security number (SSN)
Most jurisdictions enable you to deliver the form in person or mail it. You may also be able to submit it electronically. Requesting a seller’s permit will not typically come with a fee.
Where to apply by State:
Once the Seller’s Permit has been issued, it should be posted in a conspicuous location at your business premises, enabling members of the public to see it. You will want to establish the proper accounting procedures to collect sales tax on applicable transactions. You’ll also need to ensure you keep up to date on periodic reporting and payment requirements as required by your state and/or local authority.
If your business is selling to customers in your home state (where the business operates) or where they have a physical presence, you’ll need to collect sales tax from customers in that state. If you don’t have a physical presence, generally you won’t need to collect sales taxes, but this can vary from state to state.
No, you are not required to obtain a seller’s permit if you are only selling on Etsy. Etsy will automatically calculate, collect and remit sales tax for orders based on applicable laws. However, if you operate on Etsy but also sell via other methods you will need to get a seller’s permit.
No, you do not need a seller’s permit to start selling items on Amazon. This is because you are operating an online business, which means you will be exempt from needing such a permit. However, as mentioned, it is critical to keep up-to-date with the rules and regulations in your state and pertaining to your industry.
No, you do not need to have a seller’s permit or business license to sell items on eBay. However, if you want to set-up an eBay store, a business license may be required. It all depends on your local government’s statues, so do check this out. Furthermore, you may need a seller’s permit if you purchase wholesale items instate and then resell them.