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For example, in California, a wholesale license is known as a seller's permit, and you must register with the Board of Equalization. You do not need to pay a fee. Feb 8, 2018 - NJ marijuana legalization: How to get a marijuana license in. Applicants should have a perfect criminal and financial background,.
- 1 What Is the Difference Between Resale & Retail License?
- 2 Do You Have to Have a Retailer's License to Sell Crafts?
- 3 Apply for Tax-Exempt Status for a Wholesale Business
- 4 Income Tax Vs. Sales Tax
If you are a wholesaler who intends to start a small retail or service business, you must first check if your state requires you to obtain a wholesale license. This has a different name in various states, but its essential purpose is to allow a wholesaler to purchase goods by bulk from manufacturers without paying tax. In addition, it also legitimizes the reselling of wholesale items.
Wholesale License Names
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In most states, if you have a business that consists of reselling wholesale items, you must obtain a wholesale license to legally conduct transactions. For example, in California, a seller who makes three or more sales of wholesale products during a 12-month period must have a wholesale license. Although the wholesale license allows you to not pay tax on your purchases, depending on the state, you must charge your retail customers sales tax. However, depending on the state, wholesale licenses may receive different names and functions, such as resale permit license, seller's permit or resale certificate.
Employer Identification Number
To apply for a wholesale license, you must first apply for an Employer Identification Number with the Internal Revenue Service. Having an EIN is crucial, as it allows you to obtain various kinds of licenses for your business needs, not only a wholesale license.
You must provide basic information on yourself and your business in order to apply. You may also apply for an EIN online on the IRS website (see References). The application process for an EIN takes up to two weeks.
Sales Tax License
You also need a sales tax license from the Department of Revenue or the appropriate authority in your state. Along with this, you also must apply for a state tax ID number, which allows you to charge taxes to your retail buyers, pay your state taxes and pay your employees. Depending on your state, you also must pay fees related to obtaining a wholesale license.
For example, in California, a wholesale license is known as a seller’s permit, and you must register with the Board of Equalization. You do not need to pay a fee for obtaining this license, but you may have to pay a security deposit in case your business closes. The board determines this deposit at the time of application.
Effect on Your Business
Once you obtain a wholesale license, you must use this certificate to buy from your manufacturer without paying taxes. The fact that a wholesale license allows you to buy without paying tax benefits your small business. If you had to pay taxes every time you purchase a bulk of goods from a manufacturer, you would have to spend a greater amount of money on each purchase, thus raising the prices that you would have to charge your customers.
A wholesale license helps you to be more productive by increasing your small business' efficiency. A wholesale license also is the tool by which the government tracks the tax-exempt products you purchase, and these in turn are taxable to your clients.
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About the Author
Ronald Kimmons has been a professional writer and translator since 2006, with writings appearing in publications such as 'Chinese Literature Today.' He studied at Brigham Young University as an undergraduate, getting a Bachelor of Arts in English and a Bachelor of Arts in Chinese.
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How do you get a wholesale license Arizona?
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