To get a reseller license, apply for a sales tax permit through the tax agency in each state where you sell, using your business identity, tax ID, owner information, and a description of what you sell; once the state issues your permit number, you can buy inventory tax-free with a resale certificate and start collecting sales tax from your customers. Forty-five states plus the District of Columbia collect sales tax, so most businesses selling tangible goods will need at least one permit, and possibly several if they sell across state lines.
What the License Authorizes
A reseller license, usually called a sales tax permit or seller’s permit, does two things at once. It lets you buy inventory from suppliers without paying sales tax on those purchases, and it obligates you to collect sales tax from your customers and send it to the state. The state is trusting you to act as a tax collector. That is not a metaphor. Sales tax you collect from customers does not belong to you; most states treat it as money held in trust for the government, and spending it or failing to remit it can trigger penalties well beyond what you would face for ordinary late payments.
Do You Need One
If you buy products to resell them, whether from a storefront, a warehouse, a website, or a craft fair booth, you need a reseller license in the state where the sale occurs. That covers traditional retailers, online sellers, wholesalers who also sell at retail, and anyone buying goods at wholesale prices to resell to end consumers. It also covers businesses that buy components or materials to incorporate into a finished product for sale.
Five states have no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. A business operating exclusively in one of those states does not need a sales tax permit. Alaska is a partial exception because some local jurisdictions there impose their own sales taxes, so a local permit may still be required depending on where you operate.
Information to Gather Before You Apply
State applications ask for roughly the same information, though the form varies. Have these ready:
- Your legal business name, any DBA name, and your business structure (sole proprietorship, partnership, LLC, or corporation).
- Your Federal Employer Identification Number (EIN). Sole proprietors without employees can typically use a Social Security Number instead.
- The physical address where you operate, plus any additional locations where you sell or store inventory.
- Names, home addresses, and Social Security Numbers for all owners, partners, or corporate officers.
- A description of what you sell: tangible goods, digital products, or a combination.
- The date you began or expect to begin making sales. If you have already been selling without a permit, be upfront about it. Applying late is better than not applying at all.
Where and How to Apply
The application form lives on your state’s Department of Revenue, Tax Commission, or Comptroller website. A search for “sales tax permit application” plus your state name will point you to the right agency.
Every state accepts applications online, and online is the fastest route. Some states issue your permit number within minutes of a complete online submission. Paper applications sent by mail or filed in person generally take longer, sometimes two to three weeks.
Most states charge nothing for the permit. Among those that do, fees typically range from about $10 to $100. A handful of states also require a refundable security deposit from new businesses, particularly when owners have a history of unpaid tax liabilities. The deposit is returned after you establish a record of timely filing, usually after a year or two.
Once approved, the state assigns you a sales tax account number and may mail a physical certificate to display at your location. Many states also make the permit available as a digital download. Some states require you to display it prominently at each location where you sell.
The Permit vs. the Resale Certificate
People use these terms interchangeably, but they are different documents. The reseller license is the state-issued registration that authorizes your business to collect and remit sales tax; you apply for it, receive a permit number, and it stays on file with the state. A resale certificate is a form you hand to your supplier when making a tax-exempt purchase. It includes your permit number and a statement that the goods are for resale. The supplier keeps the certificate on file as proof they were right not to charge you tax.
You need the license before you can use a resale certificate; the permit number is how the supplier confirms you are a legitimate, registered reseller. Some states provide a standardized certificate form, and others accept the Multistate Tax Commission’s Uniform Sales and Use Tax Certificate, which is recognized in many jurisdictions.
Registering in More Than One State
If you sell only within your home state, one permit is all you need. Once your sales reach into other states, you may owe those states tax too. The legal connection that gives a state the right to require you to collect its sales tax is called nexus.
Physical Nexus
If you have a tangible presence in a state, you have nexus there. That includes a retail store, an office, a warehouse, employees working in the state, or inventory stored at a third-party fulfillment center. The last one catches many online sellers off guard. If you use a service like Fulfillment by Amazon and your inventory sits in warehouses across several states, you may have physical nexus in each of those states.
Economic Nexus
In 2018, the U.S. Supreme Court ruled in South Dakota v. Wayfair that states can require out-of-state sellers to collect sales tax without a physical presence, as long as the seller has sufficient economic activity in the state.1Supreme Court of the United States. South Dakota v. Wayfair, Inc. The threshold in that case was $100,000 in sales or 200 separate transactions in the state during a year. Nearly every state with a sales tax has since adopted its own economic nexus law. The most common threshold remains $100,000 in sales, though some states have dropped the transaction count test. Once you cross a state’s threshold, you register for a sales tax permit in that state and start collecting.
Tracking these thresholds matters. If you ship to customers in dozens of states, your volume in each one can creep up unnoticed. Reviewing your sales data quarterly against each state’s threshold is the practical minimum. Sales tax software can automate this if your volume justifies the cost.
Streamlined Multi-State Registration
If you need to register in several states at once, the Streamlined Sales Tax Registration System lets you file a single application covering all 23 full member states and one associate member state of the Streamlined Sales and Use Tax Agreement.2Streamlined Sales Tax Governing Board. Streamlined Sales Tax Registration through the system is free.3Streamlined Sales Tax Registration System. SSTRS Member states include Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming, with Tennessee as the associate member. For states outside the agreement, you register directly with each state’s tax agency.
What You Have to Do After You’re Licensed
Getting the permit is the easy part. Keeping it in good standing takes consistent attention.
Collecting and Remitting Tax
Charge the correct rate on every taxable sale. In states with local sales taxes on top of the state rate, the rate can vary by city, county, or special taxing district. Apply the rate based on the destination where the customer receives the goods, unless your state follows origin-based sourcing. Remit collected tax by filing a sales tax return on the schedule the state assigns you. Higher-volume sellers typically file monthly, mid-volume sellers quarterly, and lower-volume sellers annually.
Even in periods with zero taxable sales, you still file a return showing that. Skipping a zero-dollar return can trigger penalties from $5 to $100 or more depending on the state, and repeated failures to file can result in your permit being revoked. Many states assess penalties as a percentage of tax due or a flat minimum, whichever is greater, so even a zero-balance return can generate a penalty if filed late.
Record Keeping
Keep all sales records, purchase invoices, and resale certificates you have accepted from buyers. The IRS requires you to retain records supporting income and deductions for at least three years, and up to six years in certain situations.4Internal Revenue Service. How Long Should I Keep Records State sales tax retention rules generally fall in the same range, though some states go longer. Six years covers most situations.
Renewal and Updates
Some states issue permits that never expire as long as your business stays active and you keep filing. Others require renewal every few years. Either way, notify the state promptly if your business changes its address, ownership structure, or legal name. Missing those updates can cause problems during an audit or at renewal.
Vendor Discounts for On-Time Filing
Roughly half the states offer a small discount for filing and paying on time. It typically runs from about 0.5% to 5% of the tax collected, with a monthly or annual cap. It is not a fortune, but it adds up and gives you a concrete reason to stay on schedule.
What the Certificate Does Not Cover
Using a resale certificate to buy items for personal use is fraud, and states take it seriously. The immediate consequence is back taxes on every improper purchase, plus interest and penalties. Misuse can also result in fines and, in some states, criminal prosecution. State auditors are trained to compare what you purchased tax-free against what you actually sold, and discrepancies are easy to spot.
The same applies to supplies and equipment for your own operations. Office furniture, tools, and equipment you use in the business are not for resale, and you owe sales tax on those purchases like any other consumer. The resale exemption applies only to goods you resell to customers or incorporate into products you sell.