How to Obtain Your Sales Tax License to Buy and Sell Products OnlineWhere 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.
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How to Obtain Your Sales Tax License to Buy and Sell Products Online
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A sales tax license, (also known as a dealers’ license, resellers’ license, sales tax certificate, or sales tax id), is also required by most drop-ship 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. |
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.)
(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.)
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.
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.
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In order for you to get signed up with distributors you’re going to have to have your sales tax license in hand.
Most drop-ship 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.
Drop-ship 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 drop-ship 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 drop-ship 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.
Most drop-ship 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.
Drop-ship 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 drop-ship 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 drop-ship 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.
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.
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.