Resale Certificate: Purpose and Process
In South Carolina, a resale certificate allows a business to buy goods tax-free for resale. It differs from a sales tax license, which allows a business to collect sales tax from customers. Retailers, for instance, auto parts stores, use resale certificates to buy wholesale goods without paying sales tax.
To obtain a resale certificate, you must get it from the Department of Revenue. It’s not filed with the state but is instead kept on file by the seller. In addition, a separate seller’s permit is required to collect sales tax from South Carolina buyers.
Seller’s Permit and Business Registrations
Businesses like gardening stores, mechanic shops, wholesalers, retailers, and even online sellers need seller’s permits to collect sales tax. The type of permit or registration needed can vary based on the business’s trade structure. Using a company trade name might necessitate a Doing Business As (DBA) registration.
Certificate Validation and Record Keeping
When a seller is presented with a resale certificate, they must validate it before exempting tax. Proper record keeping of certificates is crucial for purchases or in case of an audit. Failure to manage these certificates correctly may lead to fines and penalties.
Sales Tax License and Costs
To apply for a sales tax license, businesses can do so online or with a form. Each license costs $50. Licenses will not be issued if there are outstanding taxes owed, and ownership changes require new licenses. Seller’s permits authorize sales tax collection within the state or local jurisdiction, and these permits are essential for operating within the law.
For more detailed consultation on specific business situations regarding resale certificates, it may be advisable to contact the South Carolina Department of Revenue directly or consult a tax professional.