Work This Way
Question: I recently started a business doing home
repairs and building computers. Where do I go to get a resale
Park Forest, Illinois
Answer: There are two reasons you need a Certificate of Resale (in other states, this may be called a "seller's permit" or a "certificate of authority"). First, any homebased business selling taxable goods and services must pay sales taxes on what it sells. The definition of a taxable service varies from state to state. Depending on individual state rulings, both the parts and labor portions of your bill may be taxable.
Second, you can boost your profitability and cash flow by buying wholesale and not paying sales tax on parts by buying them from suppliers.
You can obtain a Certificate of Resale from the Illinois Department of Revenue, the state agency responsible for collecting sales tax. Get the form you need (NUC-1) by downloading it from the agency's Web site, www.revenue.state.il.us or calling (800) 356-6302. To read the state's entire manual covering the sales tax, visit www.revenue.state.il.us/taxinformation.
If you mail in your application, it can take six to eight weeks to process. But if you go directly to a district office location with your appli-cation, it will be processed within a few days.
Like Illinois, the 46 other states that collect sales tax are making forms and information available on the Net. Usually you can get to the site of the agency using the address www.state.[your state's abbreviation].us.
You'll be required to file a monthly report called an ST-1 Sales & Use Tax and pay the sales tax on what you sell, which you can collect from your customers. If the amount you owe is below a certain threshold (in Illinois, it's $200), you only have to file reports on a quarterly basis.
Small-business experts Paul and Sarah Edwards recently released their second edition of The Best Home Businesses For The 21st Century (Putnam Publishing Group). If you have a question regarding a start-up business issue, contact them at email@example.com or send it in care of Entrepreneur.