Running a Retail Biz in Your Home
Question: I want to start a retail business out of my house. Do I need a resale license? And what about a federal ID number and a business license?
Answer: A resale license or permit, which may have a different name depending on your state, enables you to buy products for resale without paying sales tax on them until you resell them to a purchaser, from whom you collect the tax. Some suppliers may sell to you only if you have a resale number, which indicates to them that you're a legitimate merchant. To find the name of the tax agency in your state responsible for sales taxes, go to your state's website or see www.govengine.com and Lexisone. From your state's tax agency site, you can get the forms you'll need for reporting your sales.
If you're selling on the web, such as on eBay, you're obligated to collect and pay tax on sales to buyers from your state. However, you're not required to collect tax on sales made to out-of-state buyers.
You only need to get a federal employer's tax ID number if you have employees, are a partnership or are incorporated. Do this with Form SS-4, which you can get at www.irs.gov.
Usually, you get your business license from a county office, but check with your state's agency or office that assists small businesses. See www.irs.gov/businesses/small and click on "State Links."
Authors and career coaches Paul and Sarah Edwards' newest book is The Best Home Businesses for People 50+. Send them your questions atwww.workingfromhome.com or in care of Entrepreneur.