How to Get a Seller’s Permit for Your Sales Tax
Many states across the U.S. impose a “sales and use” tax on the sale of certain products and services. This sales tax is typically added to the price of goods and charged as an extra to customers. Sellers then collect this sales tax and pay it to their state department of revenue on a regular basis.
Sales tax rates and rules vary widely between states, and regulations that apply to one state may not apply to another. Sales tax can be influenced by whether you have a “nexus” in a state, and may be applicable to your business whether you’re selling locally or online. If you’re required to collect sales tax on the goods and services you sell, you will be required to obtain a seller’s permit or sales tax permit from your state’s Department of Revenue.
When to Obtain a Seller’s Permit
You will typically need to get a seller’s permit when you start your business or expand into a new state where you’re selling goods and services. These expansions into new states may also require you to register as a foreign business there, or get a Certificate of Authority
Seller’s permits may be called something else depending on your state. Common related terms include permit license, sales tax license, sales tax permit, reseller license permit, resale permit and reseller number.
The Types of Businesses That Need a Seller’s Permit
Your business will typically need to get a seller’s permit under the following circumstances:
- You are selling goods and services locally into a specific state, and sales tax is payable on those goods or services.
- You have a “nexus” in a state, such as employees or contractors that are operating on your behalf or selling or shipping products to a buyer in the state.
- You are selling remotely into a state and the total revenue you are bringing in is above a certain amount, or you complete a certain number of transactions.You will need to get a sales permit for every state where you are making sales.
There are other circumstances where you may need to get a seller’s permit. Because every business situation is unique, we recommend talking to an accountant with a specialty in sales tax for any states you’re planning to expand into.
Does a Registered Agent Count as Having Nexus in a State?
Online Sellers and Sales Tax Permits
Online sellers and ecommerce stores may be liable for paying sales tax on products they sell into a state, although the rules do vary. In general, you need to sell over a certain amount into a state or complete a certain number of transactions. The Streamlined Sales Tax Governing Board
provides a useful overview of these requirements.
The Process for Getting a Sales Tax or Seller’s Permit
Most states will allow you to register for sales tax and get a seller’s permit online. This is the typical process:
- Gather together information about your business, such as its legal name, any tax identification numbers (for example, your Employer Identification Number) and other identifying factors.
- Find your state’s Department of Revenue website, typically by searching “state name” and “department of revenue.”
- Go to the “Sales and Use Tax” section of the website.
- Review the rules and regulations there to see if you’re liable to pay sales tax.
- See if you can register for sales tax and a seller’s permit online.
- If you have any questions, speak to the Department of Revenue.
You will likely need to provide additional information about your business, including:
- When your business operates during the year
- When you are going to start collecting sales tax
- The types of products and services that you sell
- The NAICS codes for your type of business, products and services — these are standardized codes that define what you sell
- How much sales tax you estimate you will collect and pay
States That Don’t Collect Sales Tax
There are some states that do not impose sales taxes: Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon. Many localities in Alaska do have their own local sales taxes.
Best and Worst States for Small Business Taxes
Sales Tax Rates Can Vary Within a State
States will often impose a flat rate of sales tax that applies to all taxable transactions there. Counties and local municipalities may also apply their own local sales taxes on top of those rates. We have a very helpful sales tax calculator
that shows sales tax rates across all states and most big cities and regions in the U.S.
Collecting Sales Taxes
Sales tax is collected from clients and customers at the point of payment. For example, if a customer is purchasing from your local retail store, your point-of-sale software should add the sales tax amount to the transaction total. If you’re sending out an invoice for goods or services, you can add the sales tax there. You will need to keep accurate records of the sales tax you have collected.
Reporting On and Paying Sales Taxes
Your state will require you to file reports on the sales tax you have collected. These reports, and the methods for filing them, vary between states. You will also need to pay the sales tax you have collected to the state on a regular basis. Your state’s department of revenue will provide instructions on how to file your reports and how frequently you should pay sales tax. You will typically need to pay sales tax on a monthly or quarterly basis.
Other Types of Business Permits and Licenses
Seller and reseller permits for sales tax are not the only types of permits and licenses that your business might need. Many businesses will require additional permits and licenses based on a number of factors:
- Where you’re located, as your city or local municipality may require you to obtain a business license
- What your business does, as certain types of business must obtain special licenses
- Federal regulations may mean you need additional licensing
- Zoning restrictions may mean you need a specialized permit to operate
Incfile offers a complete Business License Research Package
that tells you exactly what permits you need to operate your business.