All About Resale Licenses and Why You Need One

By Clifford Woods

A reseller's permit is necessary for US-based retailers to prevent paying sales tax on products you are likely to resell. To obtain a reseller's license, you must first sign up with your state tax division by obtaining a State Sales Tax ID number.

About Sales Taxes: A sales tax is billed on every sale of physical merchandise to potential buyers in your state. A number of states might also charge sales tax for a few services. Not every state imposes a sales tax. If your business is located in the states of Hawaii, Oregon, Delaware, Alaska, or New Hampshire, then a sales tax will not be used or can be applied only in some instances.

For every other dealer, a sales tax is an important factor to keep in mind. Sales tax has to be gathered by all. Generally speaking, you don't have to collect sales tax from purchasers who live outside the state you are in. You can get your state's sales tax rate from the state website.

It is vital that you do this since there are major differences between states. For example, a few states have one main rate that is applicable throughout the state while in other locations the sales tax rate differs between county lines.

How to Get Sales Tax Identification: You can get a sales tax identification certificate and reseller license at your state tax office. After you obtain your sales tax ID, the state will begin mailing you regular monthly or quarterly claims. The actual physical location of your company is what makes a difference to the regulators, not the place it was created.

Therefore, should you be running your company from a different state, like Florida, yet have created it in Georgia; you will end up getting the Florida rate for the sales tax from customers and pay these on to the tax office.

Wholesale Permits: If you are a citizen of the United States who is buying wholesale products from a wholesaler inside the country, then you will most likely have to have a resale certification or resellers license from the state where your company is physically located.

This permit will allow you to buy products at wholesale prices without having to pay sales tax. Additionally, it enables you to gather sales tax from your buyers. If you do not have a permit to resell goods, then you will need to pay sales tax on the products you purchase at wholesale prices and then additionally impose a sales tax.

In cases like this, you can include the sales tax you paid for as a deduction on your return; however it is a lot less difficult to simply present your certificate whenever you buy from a supplier.

The majority of wholesalers will request to see your sales tax ID or permit before they are sell you any merchandise at all. The reason being is that they are lawfully required to confirm if you are qualified to collect sales tax from the consumer.

What is a Use Tax? Another factor you might run into is a tax referred to as a 'use tax'. This type of tax is in position to try to discourage individuals from purchasing in states with reduced taxes compared to their very own.

Use tax ensures that if you buy goods in a different state, then you owe tax comparable to the total amount you would normally have paid for in your own state. It will affect you if you purchase products meant for resale and then wind up using them for your own personal benefit.
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Clifford Woods is the owner of Rapid-Liquidations
We buy complete inventories of unwanted or discontinued consumer merchandise for cash and sell complete inventories of consumer merchandise at about 15 to 20% of retails prices!



If you are interested, we also have a complete, easy-to-follow manual on how to get started in the Liquidations business yourself.

Advice to Consider When Starting Your Own Liquidation Business

Advice to Consider When Starting Your Own Liquidation Business

By Clifford Woods

Regardless of whether you are just considering, or you have made the decision that you want to begin running a wholesale company, there are numerous items that you need to invest a lot of time planning and investigating before you go ahead and purchase products for resale.

Good planning and research cannot just help you save a lot of problems at first, but may also mean the difference between an effective wholesale company compared to a financial disaster about to happen in the future.

Below is some advice that may help direct you along the way as you start planning for your company.

Figure Out Your Reasons for Starting a Wholesale Business
Wholesaling is a challenging industry and may call for a lot of up-front investments, storage space, logistics preparation, and good customer service. As the primary link between manufacturer and stores, you might find yourself working with tens of thousands of products having to be transported across the nation at any time.

Keep an Eye on Your Competitors
It would not be a good idea to get into a market where there already exists well-known, reputable wholesalers for a certain product. Merchants would like to know that there is a reliable source of products that satisfies their conditions and will not make changes to their wholesalers for just any product. Simply because you constructed the warehouse does not necessarily mean they are going to come.

Make use of your local Chamber of Commerce, the web, and even consult with retailers to discover exactly what wholesalers can be found in your town. If you would like focus on a particular product, get in touch with the manufacturer directly to find out who manages wholesaling for them in your area. There might not be one near where you live, or there might be more than one across the road.

Figure Out and Plan Your Finances
Wholesaling can call for a large amount of investment and expenses before you actually see a dollar of earnings. Make sure to look beyond the startup expenses too. Workers, taxes, insurance, and rentals are only some of the expenses you will have to consider as continuous costs.

Create a Good Business Plan
A reliable business plan is definitely the first step toward any successful business. You have to ensure that you have clearly planned out what you plan to do and how you would like to accomplish it. Not only will banking institutions require this for funding, but usually other companies you work with may wish to view it too. It needs to be the principles that you stick to every single day in your business to obtain the goals you have established.

While creating your business plan, it is usually a good idea to employ a professional consultant to help. An excellent source that will help you find such professionals in your town with the required skills and record is the Small Business Administration (SBA) government website.

Do All Necessary Paperwork
As a wholesaler you will find that you must pay taxes along with other fees to your state as well as the government. One exception is that you are going to be provided tax-exempt rank for the merchandise you are relocating between the manufacturer and additional merchants. This is often a tricky practice and is dealt with by the state.

Once again, it would be best to make use of your state taxing expert in addition to the local Chambers of Commerce. Just one wrong mistake when it comes to important paperwork can bring about a ton of charges and fees that you wouldn't have to deal with otherwise.
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Clifford Woods is the owner of Rapid-Liquidations
We buy complete inventories of unwanted or discontinued consumer merchandise for cash and sell complete inventories of consumer merchandise at about 15 to 20% of retails prices!




If you are interested, we also have a complete, easy-to-follow manual on how to get started in this business yourself.