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Where sales tax is
applicable, then sales tax must be collected on
the sales of consumer products. And a sales tax license is nothing more than a
certificate which allows you to collect sales
tax for sales made within your home state and
then mail those funds in to the IRS,
quarterly.
A sales tax license, (also known as a dealers’
license, resellers’ license, sales tax
certificate, or sales tax id), is also required
by most distributors in order to get signed up
with them as a reseller for their products.
You can obtain your sales tax license by
calling 411 and asking them for the phone number
of your local IRS office.
Then you can contact your local IRS office and
request a sales tax license application or you
can download the application from your states’
government website. |
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You can also visit your local IRS branch in
person and fill out the sales tax application
there.
There are no tests, exams or credit checks
involved when applying for your sales tax
license. All you have to do is fill out the form
using your business name on the application and
mail it in to the IRS/State Revenue Department.
(NOTE: When filling out the
sales tax application form, be sure to enter in
“Mail Order” when asked what type of business
you’re running.)
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Cost for obtaining
your sales tax license
In many states, you can obtain your sales tax
license for less than $15. In Florida for
example, you can obtain your sales tax license
for as little as $8. And in some states
including California, Massachusetts and others,
it’s free.
The following states do not issue sales tax
license simply because these states do not have
a sales tax:
-New Hampshire
-Oregon
-Alaska
-Delaware
-Hawaii
-Montana
If you reside within any of these states, then
you’ll need to provide proof of business
registration in order to get signed up with
distributors.
But for businesses who sell products within
states which do impose a sales tax, then it’s
important to obtain your sales tax license
first, before contacting distributors.
In order for you to get signed up with
distributors you’re going to have to have your
sales tax license in hand.
Most distributors will want to see your sales
tax license first, before they can discuss
product pricing and inventory over the phone.
And your sales tax license will be the most
important document the distributors will want to
see.
Furthermore, it’s very important that your sales
tax license has your business name on it and not
your personal name. |
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Distributors tend to see resellers who have a
sales tax license in their own name as people
who are trying to buy products at wholesale for
themselves, rather than buying them for resale.
For example, when it comes to computer product
distributors, most of them will reject your
application if they see your sales tax license
is in your personal name rather than your
business name.
They want to see a sales tax license with a
business name on it in order to prove that you
are indeed a business and not just an individual
looking to buy products at wholesale for your
own person use. Therefore, be sure to obtain
your sales tax license in your business name and
not in your personal name.
Once you have obtained your sales tax license in
the mail, then you can proceed to contact
distributors, request dealer applications, and
get signed up with them. And once you’re signed
up with distributors, then you can begin to do
business with them.
Your sales tax license will allow you to sell
products to the public at retail and then
purchase those products from distributors at
wholesale.
You’ll be required to collect sales tax from
your customers for sales made within your home
state. Yet you do not collect sales tax for
sales made outside your state.
The IRS will send you quarterly statements
requesting payment for all sales tax collected
during that period of time. You’ll then be
required to send those sales tax funds to the
IRS at that time.
Simply write out a check to the IRS for the
exact amount of sales tax collected and then
send it in on time.
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Collecting sales tax online
All ecommerce shopping carts offer the option of
adding sales tax to sales made within your home
state in order to collect sales tax online. And
once your customer is ready to check out from
your website and complete their order, your
shopping cart will automatically calculate and
add the sales tax amount to the order and charge
the customers’ credit card for the complete
amount of the order with sales tax included.
Then it's your responsibility to separate those
sales tax funds from the sale itself and set
those funds aside until it’s time to send them
in to IRS.
Obtaining your sales tax license is simple. And
collecting and turning in sales tax can be just
as easy. |
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