A wholesale retail license is required by all parties that buy merchandise to resell the taxable items. The wholesale retail license is mandated by the government in order to ensure that taxes are paid on resold items. Most importantly, once you get a wholesale retail license, the wholesaler will not have to pay tax on the purchased items; instead, the taxes are paid by the consumer. These licenses also ensure that the person is buying the merchandise for resale and not private use.
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Fill out an application for a federal tax identification number. Prior to obtaining a wholesale retail license, you will need to be assigned a tax identification number, often referred to as an EIN. You can apply for an EIN online through the IRS government website.
Visit a branch of your state's Department of Revenue. You will need to fill out information about your business in order to apply for a wholesale retail license. You need to provide the company's location, business category and your EIN.
Sign an acknowledgement form in order to receive your wholesale retail license. The acknowledgement form must consent that you plan to resell the item without intermittent personal use. Once reviewed and approved, you will be issued a wholesale retail license through the Department of Revenue.
Provide the manufacturer with your wholesale retail license number each time you make a purchase. This will allow you to purchase the products at wholesale without applicable taxes applied. The seller will need to keep a record of the sale with the wholesale retail license for tax purposes.
Tips and warnings
- You will find online sites that offer to complete the wholesale retail license paperwork for you. These sites are unnecessary, and you will have to pay a fee in order to use the services.
- Not all states issue wholesale retail licenses. States that do not charge sales tax--Oregon, Delaware, Alaska, New Hampshire and Montana--will not require wholesale retail licenses.