Authored by Malcolm Tatum in Small Business
Published on 12-03-2009
Becoming a wholesaler usually requires obtaining the proper credentials to conduct business is a must. Sometimes known as a resale certificate, a wholesale license is issued by either a state or local jurisdiction. The license authorizes to you to do business by purchasing merchandise and reselling it to the public. While the procedure to obtain a wholesale license varies from one jurisdiction to another, there are a few basics that tend to apply just about anywhere.
For people living in the United States, you will need to obtain a Federal Tax ID or an Employment Identification Number, known as an EIN. These numbers can be obtained from the Internal Revenue Service, and are provided without any type of fee involved. It is possible to begin the application process online, as well as submit paperwork to the local IRS office. Expect up to five weeks for the paperwork to be processed and the number to be issued.
Once you have the Tax ID or EIN, you can move forward with the process of obtaining a sales tax license. A state level tax agency or department usually issues this license; in most cases, the cost for the license is minimal. This document allows you to collected taxes on the items you sell, assuming the items are in fact taxable in the local jurisdiction. Keep in mind that in some cases, you will not be required to collect taxes, but the jurisdiction will still require you to maintain a valid sales tax license.
With these documents in hand, you can move forward with the process of obtaining your wholesale license. Generally, the state level department of revenue will be the agency where you need to apply. Along with meeting the basic requirements set in place by your state, be prepared to present proof that you have a valid Federal Tax ID or EIN, and a state level sales tax license. Fees will vary from one state to the next, and the exact process of submitting the application may be different. Many jurisdictions today allow the application to be made electronically, via a secure site. Others require that you present yourself at the local departmental office and submit the application in person.
Many people are sometimes confused by the fact that different jurisdictions have different names for a wholesale license. You may find that the document is referred to as a Certificate of Authority, resale permit, resale certificate, or a transaction privilege tax certificate. Your local tax agency can help you identify the name that is used in your area, as well as help you obtain the application you need for your license request.
Keep in mind that if you plan on operating under more than one company name, you may be required to have a separate wholesale license for each business. However, some jurisdictions will allow you to have two or more related businesses run under a parent company, while still doing business as subsidiaries. In order to determine what is permissible in your area, contact the local tax department for more details.
