How To Get a Seller’s Permit in 2024: Your Ultimate GuideTable of ContentsIntroductionWhat is a Seller’s Permit?When Do You Need a Seller’s Permit?Which States Require a Seller’s Permit?Steps to Get a Seller’s PermitTypes of Businesses That Need a Seller’s PermitDo You Need More Than One Seller’s Permit?ConclusionSeller’s Permit FAQIntroductionStarting a new business is both exciting and challenging. One significant aspect of getting your business up and running is understanding the legal prerequisites, such as obtaining a seller’s permit. This permit is essential for collecting and remitting sales tax, and without it, your business might face severe legal consequences. But don’t worry; this comprehensive guide will walk you through everything you need to know about obtaining a seller’s permit in 2024.By the end of this article, you'll be equipped with all the necessary information to determine if you need a seller’s permit, understand how to apply for one, and learn the various nuances involved. Whether you run a brick-and-mortar store, an online shop, or offer services, knowing about seller’s permits will help you stay compliant and avoid potential pitfalls.What is a Seller’s Permit?A seller’s permit, often known as a sales tax permit, is a document issued by the state that allows businesses to collect sales tax from customers on taxable goods and services. This collected tax is then remitted to the state periodically. Essentially, the seller’s permit makes your business an intermediary between your customers and the state’s tax collection agency.Seller’s permits are specific to each state and may have different names, such as a resale certificate or vendor’s license. These permits are especially crucial for businesses that sell tangible personal property or provide taxable services.When Do You Need a Seller’s Permit?Typically, you need a seller’s permit if:You sell taxable goods and services in your state.You buy wholesale goods to resell.You provide services that are taxable in your state.A seller’s permit is mandatory if your business meets any of these criteria. However, specific requirements can vary based on state regulations. It's always best to check with your state’s Department of Revenue or a similar agency to determine exact requirements.Which States Require a Seller’s Permit?The majority of states in the US require businesses selling taxable goods and services to obtain a seller’s permit. However, there are five states that do not have a sales tax requirement: New Hampshire, Delaware, Montana, Oregon, and Alaska. Note that Alaska does not have a state-level tax, but local municipalities may impose a sales tax.Furthermore, some states also require service-based businesses to collect sales tax. It's essential to consult state-specific resources to ensure you understand all local and state tax obligations.Steps to Get a Seller’s Permit1. Determine If You Need a Seller’s PermitIdentify whether your business activities require a seller’s permit. This will depend on whether you sell taxable goods or services. The permit is necessary regardless of your business structure, whether it’s a sole proprietorship, LLC, or corporation.2. Register Your BusinessRegister your business with the state to create a legal entity. This involves picking a unique business name, deciding on a business structure, and obtaining an Employer Identification Number (EIN) from the IRS. Ensure you also procure any other necessary licenses or permits from federal, state, or local agencies.3. Complete the Seller’s Permit Application FormOnce your business is registered, you can apply for a seller’s permit. The application form is typically available on your state’s Department of Revenue website. Download it, fill in the necessary details, and prepare to submit it.4. Provide Required InformationThe application will ask for specific details about your business, including:Business name and addressPersonal identification detailsNAICS codeBank account informationEstimated sales figures5. Submit the ApplicationYou can usually submit the application online, by mail, or in person. Online submission is often the fastest method.6. Pay the Applicable FeeSome states charge a fee for issuing a seller’s permit, while others do not. Fees can range from nothing to $100. For instance, Florida charges $5 if you apply by mail but offers free online applications. Check your state’s requirements for the exact fee.7. Wait for Application ApprovalProcessing the application can take from one day to several weeks, depending on the state and submission method. Some states expedite online applications.8. Receive Your Seller’s Permit or Resale CertificateAfter approval, you will receive your seller’s permit. Keep this document safe, as you will need it for tax filings and possibly for making tax-free purchases if you are a reseller.9. Display the Permit if RequiredIf you have a physical store, some states require you to display the permit prominently for customers and inspectors.10. File Regular Sales Tax ReturnsWith a seller’s permit, you’re obligated to collect sales tax and submit regular returns to your state’s tax agency. Keep meticulous records of all transactions and ensure timely tax filings to avoid penalties.Types of Businesses That Need a Seller’s PermitFood Service EstablishmentsRestaurants, cafes, and other food service providers usually need a seller’s permit for handling sales tax on food items.Retail BusinessesWhether you’re selling online or in-store, if you buy wholesale goods or manufacture products for sale, you will need a seller’s permit.Service-Based BusinessesSome states require certain service-based businesses, such as equipment repair shops and hair salons, to obtain a seller’s permit.Ecommerce BusinessesOnline sellers often need a seller’s permit. Depending on your sales volume in different states, you may have tax obligations beyond your home state, necessitating permits in multiple states.Do You Need More Than One Seller’s Permit?If your business operates in multiple locations or you make sales in various states, you might need multiple seller’s permits. Economic nexus laws often trigger tax obligations if you meet certain sales thresholds in different states. This includes a minimum number of transactions or a specific sales dollar amount.Cost of a Seller’s PermitThe cost of obtaining a seller’s permit varies widely. Out of 45 states that levy sales tax, only 15 charge for the permit. Fees range from $5 to $100, with states like Connecticut charging the highest. Some states don’t require any fees.ConclusionObtaining a seller’s permit is an essential step in setting up your business legally and ensuring compliance with sales tax regulations. By following the steps outlined in this guide, you can smoothly navigate the application process and maintain good standing with state tax authorities. Employing tax software like Shopify Tax can further streamline your tax obligations as your business grows.Seller’s Permit FAQWhat is the purpose of a seller’s permit?A seller’s permit allows businesses to collect sales tax from customers on taxable goods and services and remit this tax to the state, ensuring compliance with state tax regulations.How long does it take to get a seller’s permit?The processing time for a seller’s permit varies. It can take as little as one day for online applications or up to a few weeks for mail-in applications.What do I need to get a seller’s permit?To apply for a seller’s permit, you typically need personal identification, your business's NAICS code, bank account information, and estimated sales figures. Requirements can vary by state.With your seller’s permit in hand, you can confidently move forward with your business endeavors, knowing you are compliant with sales tax regulations. Happy selling!