A resale license allows businesses to purchase inventory to be resold without paying taxes on the purchase. The taxes are then collected from the business' customers in the form of sales tax. The business then pays the sales tax to their county, city or state, depending on location. Each state's Department of Revenue issues resale licenses to businesses or individuals operating as a sole proprietorship. The fees associated with obtaining a resale license vary by state, but are typically less than £65 and in some states are subject to annual renewal fees. Prior to obtaining a resale license, the business must have an IRS issued employer identification number, referred to as an EIN (see Resources section below for more information).
Go to a local branch of your state's Department of Revenue. If your state does not have a Department of Revenue, the licenses will be often be issued by the State Comptroller. To find the nearest location, visit your state government's website and select Department of Revenue (sometimes referred to as DOR) or Comptroller. Once you are on the DOR or Comptroller home page, click on the "Location" or "Offices" tab to locate your local branch.
Tell a representative that you would like to apply for a resale license. The representative will provide you with the forms required by your state. The information required on the forms will vary from state to state, however, you will always be required to disclose basic information such as you business name and address, EIN number and type of business.
Submit the forms to the Department of Revenue, along with a check in the amount of the application fee if one applies. You will also be required to sign a disclosure stating that you understand that you are to only purchase items to be resold with your resale license. Approval times vary by state, but typically you will be notified by mail within 14 business days of your application. If approved, you will be issued a resale license number, which is to be given to wholesalers and retailers from whom you wish to purchase goods tax free.
Things you need
- Employer Identification Number