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Why is it important to have a resale license in the surplus and salvage business?

Nina Kaufman answered July 24, 2008
URL: http://www.entrepreneur.com/answer/221554
Generally, any time you sell goods to someone else you have the obligation to charge sales tax, and to remit the amount collected to the state sales tax authorities. Failure to do so can land you in serious hot water.

However, that's not always the case if you are selling goods to someone who will be "reselling" the goods to a third party. For example, if you're a shoe manufacturer, you may be selling your shoes to outlets, which in turn will be selling them to customers. As long as you can verify that the outlet company has a resale number, the obligation to collect sales tax from the customer then falls on the outlet.

Sales taxes can get very tricky, so make sure you consult with an accountant who knows this area well.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.