⚡ Get All Content for 20% Off ⚡

Benefits of a Resale License A closer look at why you may need it-and how to obtain one

By Pete Silver

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

At a recent marketing seminar I led for owners of homebasedbusinesses, a woman who wants to start making jewelry told me shediscovered some suppliers offer discounts to people with wholesaleor resale licenses. As a small-business owner, she wanted to knowhow to get one.

There's a lot of confusion about this subject, and a lotdepends on the state or county where you do business. States havedifferent names for the same permits or licenses: ResalePermit/License, Sellers Permit, Certificate of Authority, Use andSales Tax License/Permit Sales and Use Tax, Application toCollect/Report Tax, Transaction Privilege (Sales) Tax, ResaleCertificate-all adding up to much the same thing.

Beyond the wholesale vs. retail concerns, the other aspect ofthese names is focused on the sales tax angle. The states, countiesor other governing bodies want to be sure that anyone sellinganything taxable is first licensed to collect the tax and thenrenders the tax afterward.

Generally, manufacturers who sell wholesale want to be suretheir customers are not buying for their own consumption, thuscutting out the wholesaler's true customers. So when they askfor a wholesale or resale license, it allows them to be sure theyare dealing with a business that will truly resell their goods,either "as is" or as part of a product they'remaking. Often when I visit a trade show, similar rules apply-theywant to be sure the general public isn't allowed in so thevendors can focus on the needs of the businesses that visit.

Since the rest of my seminar attendee's questions were morelegally oriented, I contacted my friend Cynthia McKay, founder ofLe Gourmet GiftBaskets Inc. in Castle Rock, Colorado. A former attorney, shebegan Le Gourmet in 1992 and has now set up 510 domestic andinternational franchises. She helps her franchisees get all theirpaperwork in order so they can focus on the most important work:getting and satisfying customers!

"When a new business registers for a license, they completepaperwork with their state or local entity," says McKay."It is then they are given a license to commence with theirbusiness. Generally, on that license is a resale number thatpermits the business to buy wholesale."

"The purpose of the resale number allows you to buywholesale [for the purpose of reselling only-no personal usepermitted] and pay no tax," McKay continues. "The itemsare then resold, and tax is paid by the consumer at the time ofpurchase. Taxes only need be paid one time. If your homebasedbusiness is a corporation, you can also use a federal tax ID topurchase for resale or wholesale."

To begin, McKay recommends starting with your local phonedirectory. "When you register your business with your localstate and city entities, check the blue government pages in yourphone book for homebased or small-business registration," shesays. "If you're going to incorporate or make an LLC, you,your accountant or lawyer will contact your secretary of state andthe Department of Revenue. This puts the entrepreneur/owner in aposition to register to pay taxes [most likely] quarterly, andyou'll be issued your business license, which will have yourtax number or resale number on the paperwork."

McKay also points out: "Some local governments do notrequire such a license, and because these regulations vary widely,it's best to check your local sources first."

My experience in working with entrepreneurs is that anoften-overlooked resource is the local Chamber of Commerce. Itoften has free lists of local resources and can save entrepreneurscountless hours of hunting around for the right contacts and phonenumbers. For more ways your local Chamber of Commerce can help you,visit www.chamberbenefits.biz, a site I created to give moreresources.

Pete Silver is a homebased entrepreneur who's launchedseveral successful businesses from his home over the past 20 years.He's also a creative marketing specialist and author whotravels widely as a speaker and seminar leader. To find out moreabout Pete or his coaching service, log on to www.MarketYourBusiness.com.


The opinions expressed in this column arethose of the author, not of Entrepreneur.com. All answers areintended to be general in nature, without regard to specificgeographical areas or circumstances, and should only be relied uponafter consulting an appropriate expert, such as an attorney oraccountant.

Pete Silver is a homebased entrepreneur who's launched several successful businesses from his home over the past 20 years. He's also a creative marketing specialist and author who travels widely as a speaker and seminar leader. To find out more about Pete or his coaching service, log on to www.MarketYourBusiness.com.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Business Ideas

55 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.