You can apply for a resale certificate through your state’s tax department. This must be the state where you physically do business, even if you formed your business entity in another state. If you sell products in more than one state, you will also need to apply for a resale certificate in those states.
Purpose of a Resale Certificate
The main reason for obtaining a resale certificate is to legally avoid paying taxes on items that you intend to resell. It is illegal to purchase a product using the resale certificate and not resell it. Additionally, once you do resell it, you are required to collect the appropriate tax from the customer.
A resale certificate is a document issued by your state department of revenue certifying that your business makes purchases for manufacturing or resale.
Tax Implications and Legality
Sales tax is intended to be collected on products sold to an end-user. As the final link in the supply chain, a customer purchasing a product for personal use will be charged sales tax based on their local state guidelines.
Cost of Resale Certificates in Different States
- How much is a reseller permit in NY?
- How much is a resellers license in Florida?