How to Get a Seller’s Permit: A Comprehensive Guide for 2024Table of ContentsIntroductionWhat is a Seller’s Permit?When Do You Need a Seller’s Permit?Steps to Obtain a Seller’s PermitTypes of Businesses That Often Require a Seller’s PermitDo You Need More Than One Seller’s Permit?Cost of Obtaining a Seller’s PermitTools to Aid in Complying with Sales Tax RegulationsFAQ SectionConclusionIntroductionStarting a new business is an exciting endeavor that requires careful planning and preparation. One critical aspect that many entrepreneurs overlook is understanding the legalities surrounding sales tax, which often includes obtaining a seller's permit. This document is essential for most businesses that sell tangible goods or services subject to sales tax. If you're gearing up to launch your business, you're probably wondering if you need a seller's permit and how to get one. In this guide, we’ll walk you through all the steps you'll need to follow to acquire a seller's permit, ensuring your business operates lawfully and efficiently.By the time you finish reading, you’ll understand what a seller's permit is, when and where it’s needed, how to obtain it, and how to maintain compliance with state tax laws. Let’s dive in.What is a Seller’s Permit?A seller’s permit is a state-issued document that allows a business to collect sales tax on goods and services. It serves as a unique identifier for the business, enabling it to act as an intermediary between customers and the state government by collecting and remitting sales taxes. Without this permit, a business cannot legally collect sales taxes, putting it at risk of severe penalties.Most U.S. states mandate businesses selling tangible personal property to obtain a seller’s permit. However, some states also require permits for certain types of services. A seller’s permit may be known by different names depending on the state, such as a resale license, sales tax permit, or vendor’s license.When Do You Need a Seller’s Permit?Typically, you'll need a seller’s permit if you plan on selling taxable goods or services. This requirement applies whether your business operates as a limited liability company (LLC), corporation, or sole proprietorship. Here are a few scenarios when you definitely need a seller’s permit:Selling Tangible Goods: Almost all tangible goods are subject to sales tax. This includes both online and in-person sales.Service-Based Businesses: Some states tax services such as consulting, legal advice, and repair services.Digital Products: Certain digital products may be taxed in specific states.Economic Nexus: If your business reaches a certain level of sales or transactions in a state other than where it’s based, you may be required to collect sales tax in that state.States That Do Not Require a Seller’s PermitCurrently, there are five states that do not require a seller’s permit as they do not collect sales tax:New HampshireOregonMontanaAlaska (Note: Some municipalities in Alaska may require local permits)DelawareAlways check with local tax authorities or a certified public accountant (CPA) in your state to confirm your requirements.Steps to Obtain a Seller’s Permit1. Determine If You Need a Seller’s PermitFirst, confirm whether the goods or services you plan to sell are subject to sales tax. If they are, you will need a seller’s permit. Remember, if you’re selling online, you may need to collect taxes in multiple states based on where your business conducts transactions.2. Register Your BusinessBefore applying for a seller’s permit, you must register your business as a legal entity. This process involves the following steps:Choose a Business Name: Ensure that your business name is unique and available in your jurisdiction.Select a Business Structure: Decide between sole proprietorship, LLC, corporation, etc.Obtain an Employer Identification Number (EIN): This can be done via the IRS website.Check for Additional Licenses: Determine if other federal, state, or local permits are required.3. Complete the Seller’s Permit Application FormAfter registering your business, you can apply for the seller's permit. The application form is typically available on your state’s Department of Revenue website or the equivalent tax-handling agency.4. Provide Required InformationYou will need to provide various details about your business, including:Business name and legal structureEINBusiness address and contact informationType of products or services soldEstimated monthly sales and the taxable portion of those sales5. Submit the ApplicationYou can often submit your application online for faster processing. Alternatively, you may mail or deliver it in person, depending on your state’s guidelines.6. Pay the Applicable FeeSome states charge a fee for obtaining a seller’s permit, while others do not. Fees vary widely and, in some cases, may include a security deposit.7. Wait for ApprovalApproval times can vary from a day to several weeks, depending on your state and method of application submission.8. Receive and Safeguard Your PermitOnce approved, you’ll receive your seller’s permit, which you should keep in a safe place. Some states provide permits that last for the lifetime of the business, while others require periodic renewal.9. Display Your PermitIf you have a physical location, displaying your seller's permit prominently is often mandated by law.10. File Regular Sales Tax ReturnsWith a seller’s permit, you are required to collect sales tax and remit it to your state’s tax agency. Keeping thorough records and filing regular tax returns is essential to staying compliant.Types of Businesses That Often Require a Seller’s PermitDifferent types of businesses typically need a seller’s permit based on their operations and the state’s tax laws:Food Service EstablishmentsRestaurants, cafes, and food trucks preparing made-to-order meals often need a permit due to food and beverage sales being taxable.Retail BusinessesStores that sell wholesale goods or products online, in-store, or through other channels will require a seller’s permit to handle sales tax.Service-Based BusinessesThose offering taxable services (e.g., equipment repair, hair salons) may need a seller’s permit, depending on the state.Ecommerce BusinessesOnline retailers might be required to get a permit, especially if they reach certain thresholds in sales or transactions, triggering economic nexus rules.Do You Need More Than One Seller’s Permit?You might need multiple seller’s permits if:Operating in Multiple States: Different states require separate permits for business activities within their jurisdiction.Multiple Locations: If your business has several physical locations within one state, you may need permits for each.Different Business Types: Engaging in different types of taxable business activities can necessitate additional permits.Cost of Obtaining a Seller’s PermitThe cost ranges from zero to $100, with some states offering free applications, especially if submitted online. For example, Florida charges $5 for mail applications but is free online. At the higher end, Connecticut charges a one-time fee of $100.Tools to Aid in Complying with Sales Tax RegulationsTo streamline and manage your sales tax compliance, consider using tax software. Shopify, for instance, offers Shopify Tax to help you keep track of your sales tax obligations across different states, ensuring accurate collection and timely submissions.FAQ SectionWhat is the purpose of a seller’s permit?A seller’s permit authorizes your business to collect sales tax from customers and remit it to the state, ensuring compliance with local tax laws.How long does it take to get a seller’s permit?The timeframe varies by state and application method, ranging from one day for online applications to several weeks for mail submissions.What do I need to get a seller’s permit?Typically, you need a valid ID, EIN, business address, sales estimates, and your NAICS code. Specific requirements may vary by state.ConclusionObtaining a seller's permit is a crucial step for many businesses, enabling them to operate legally and efficiently collect sales tax. By following the detailed steps outlined in this guide, you can navigate the process smoothly and focus on growing your business. Remember, compliance is not just about getting the permit but also maintaining accurate records, filing taxes on time, and staying updated on state laws.Make your sales tax management stress-free with Shopify Tax and other helpful tools. Start your business journey on the right foot, secure that seller’s permit, and focus on what truly matters—growing your business.