How to Get a Seller’s Permit: Your Step-by-Step GuideTable of ContentsIntroductionWhat is a Seller’s Permit?When Do You Need a Seller’s Permit?How to Obtain a Seller’s Permit: Step-by-Step GuideTypes of Businesses that Need a Seller’s PermitDo You Need More Than One Seller’s Permit?Costs Associated with Getting a Seller’s PermitLeveraging Shopify for Your Tax NeedsFAQConclusionIntroductionEver wondered if you need a seller’s permit to start your new business? The answer isn't always straightforward. For the majority of US states, a seller’s permit is essential if you're selling tangible personal property, either in-store or online. However, the requirements vary across states. In this comprehensive guide, we'll walk you through everything you need to know about obtaining a seller’s permit, why it's important, and how it can affect your business.You’ll learn the specifics of whether your business needs a seller’s permit and how to apply for one effectively. Whether you are selling locally, online, or planning to expand your business, this guide provides invaluable insights to make the application process smooth and hassle-free.By the end of this article, you'll understand the complexities of sales tax, the steps to obtain a seller’s permit, and how Shopify can help streamline your tax obligations.What is a Seller’s Permit?A seller’s permit is a unique identifier assigned by a state government, authorizing your business to collect sales tax on taxable goods and services. This permit is essentially a bridge between your business and the state tax authority, ensuring your compliance with tax laws. The collected sales tax must be periodically remitted to the state along with the appropriate tax forms.Different Names for Seller’s PermitsSince seller’s permits are state-specific, they have various names, including:Sales Tax PermitResale LicenseSales and Use Tax PermitReseller’s PermitImportance of a Seller’s PermitA seller’s permit ensures that your business operates legally and helps the state track and record sales tax collections. Failing to obtain one when required can result in penalties, fines, and even the suspension of business activities.When Do You Need a Seller’s Permit?The necessity of a seller’s permit largely depends on your business activities and the state you operate in. You typically need a seller’s permit if you:Sell tangible personal property subject to sales tax.Operate an online store selling taxable goods.Provide taxable services such as equipment repair, hairdressing, or consulting.States Without Seller’s Permit RequirementInterestingly, there are five states that do not require a seller’s permit:DelawareMontanaNew HampshireOregonAlaska (some local municipalities may require permits)In addition, some states may require sales tax permits for certain services. For absolute certainty, it's crucial to check with your state’s tax agency.How to Obtain a Seller’s Permit: Step-by-Step Guide1. Determine if You Need a Seller’s PermitAssess if the products or services you offer are subject to sales tax. This is applicable whether your business is a sole proprietorship, LLC, or corporation. It's also vital to understand the tax laws in each state where you conduct business, as online businesses must pay taxes in every state where they have substantial sales.2. Register Your BusinessCreate a legal entity recognized by the state by:Choosing a unique business name available in your jurisdiction.Deciding on a business structure (sole proprietorship, LLC, corporation).Acquiring an Employer Identification Number (EIN) from the IRS.Obtaining necessary licenses, permits, or tax registrations from federal, state, or local agencies.3. Complete the Seller’s Permit ApplicationFind the application form on your state’s Department of Revenue website or the agency responsible for taxes. Provide details about your business, such as:Business name and addressContact informationEINBusiness type and structureDescription of the goods or services soldEstimated monthly sales4. Submit the ApplicationThe fastest method is usually online submission, but you can also send it via mail or deliver it in person. Ensure all required fields are filled accurately to avoid delays.5. Pay the Applicable FeeDepending on the state, there might be a fee to obtain your seller’s permit. Some states might even require a security deposit, especially if your business is considered high-risk.6. Wait for ApprovalApproval times can range from a day to several weeks. Once approved, you'll receive your seller’s permit, which you should keep safe as you'll need it for filing taxes and purchasing items for resale.7. Display the PermitIf you have a physical store, some states require you to display the seller’s permit where it can be seen by customers and inspectors.8. File Regular Sales Tax ReturnsWith the permit, you're expected to collect sales tax and submit regular tax returns to the state tax agency. Accurate records are vital to avoid penalties and to ensure timely payment.Types of Businesses that Need a Seller’s PermitFood Service EstablishmentsRestaurants and cafes preparing made-to-order food typically need a permit to manage sales tax for those items.Retail BusinessesWhether buying wholesale goods or producing items for sale online or in-store, a permit is necessary if your state taxes those items.Service-Based BusinessesSome states require permits for service-oriented businesses such as equipment repair shops or hair salons.Ecommerce BusinessesSelling online might also necessitate a seller’s permit, with rules varying by state. Many states require you to collect sales tax if you have an “economic nexus” in that state, usually defined by reaching a certain number of transactions or sales revenue.Do You Need More Than One Seller’s Permit?There may be instances where multiple seller’s permits are required. For example, if you sell in multiple states or have several business locations. Managing these permits can become complex, which is where tax software and professional advice can be beneficial.Costs Associated with Getting a Seller’s PermitThe cost varies by state, ranging between free and $100. Most states that collect sales tax do not charge a fee for obtaining a permit. However, some states like Connecticut charge a one-time fee of $100.Leveraging Shopify for Your Tax NeedsShopify offers tools to help manage your tax obligations efficiently. Shopify Tax, in particular, allows you to monitor your sales tax requirements within your Shopify admin, ensuring accurate collection at checkout and automatic application of rate changes.FAQWhat is the Purpose of a Seller’s Permit?A seller’s permit allows your business to collect sales tax from customers and helps state tax authorities track and ensure proper tax payments.How Long Does It Take to Get a Seller’s Permit?Approval times vary by state. Some permits can be issued within a day of application, while others may take several weeks.What Do I Need to Get a Seller’s Permit?Applying for a seller’s permit requires valid ID, NAICS code, bank information, and expected monthly sales figures. Requirements can vary, so check with your state’s tax agency.ConclusionAcquiring a seller’s permit is a crucial step for most businesses. It ensures you're compliant with state laws and helps you avoid penalties. Whether you handle it yourself or seek professional help, obtaining the permit is necessary for collecting sales tax and operating your business legally. Tools like Shopify Tax can streamline this process, allowing you to focus on growing your business.