The last 18 to 24 months have seen a big increase in retail start-ups at flea markets around the country, as low operating costs and an increasing flow of consumers has led to a surge in new vendors. Being a successful retailer in any venue requires hard work and a solid business plan, anchored by licenses to ensure compliance with municipal and federal regulations. Reseller licenses, for example, also impact the ability to deal with the best wholesale suppliers.
While a flea market organizer is often a good resource for finding out what the laws are for the state, the impetus for filling out the paperwork is on the vendor in most states. To help new vendors, this tutorial details the various procedures and benefits of procuring a reseller license for their flea market based retail business.
The process for applying for a reseller’s license varies tremendously from state to state, and can be titled different things—Use and Sales Tax License, Reseller Permit, Reseller Certificate, Certificate of Resale, etc. Regardless of what it is called, it is necessary to get a license, as it is important that the vendor be aware that they are required to collect sales tax on nearly all purchases in most states.
According to the Business Law Advisor blog at the U.S. Small Business Administration, “Each state and locality has their own tax laws. Some states require you to pay taxes on all your sales while others have certain floors that must be met first. For example, in Minnesota, vendors do not have to collect sales tax if they qualify for an Isolated and Occasional Sales Exemption. With this exemption, there are certain restrictions the number of days and amount of sales. If you do not qualify for the exemption, you will need to pay all state and local sales taxes.” The amount of sales tax is different from state to state, although five states—New Hampshire, Delaware, Oregon, Alaska and Montana–do not charge sales tax.
Where To Find Information for Your State
The easiest way to find out what your state requires for a reseller’s license is to check with the website of your state’s Department of Taxation, or enter “reseller’s license” into a search engine, including the state you plan on selling in—for example “reseller’s license Michigan” or “reseller’s license New York.” Remember that it is the state you will be selling in that is important for the license, not the state you reside in.
In some states, there are different charges and procedures for different counties and towns. There also many be a charge or additional paperwork for vendors selling outside of the county they reside in—Ohio, for example, charges $25 for a “Transient Vendor’s License” for vendors who sell in multiple counties. Each state’s website will go into the details for payments.
Reseller’s Licenses are sometimes free—as they are in California and Texas—but can cost money on a weekly, monthly, or yearly basis. The amount for the fee varies by location; it is $22 for selling in New Jersey and $120 in Rhode Island. Some states have multiple options for vendors who sell seasonally. For example, Tennessee charges $45 for an annual registration, $15 for quarterly, or $5 per month. The amount of times per year that a vendor must sell to require a permit also varies by state—in Rhode Island, any vendor who sells six times a year or more must have a permit; however, in California it is three, and in Connecticut it is only one.
How to Fill Out Paperwork
Luckily, in most states, the paperwork can be filled out online, and it is usually fairly simple—it includes information such as the name and address of the seller, what they will be selling and where (some examples can be seen here and here, for Colorado and Idaho, respectively).
It is possible that the license is permanent (Maryland is an example of a state with permanent licenses), but it also may need to be renewed on a yearly basis. Holders of vendors’ licenses are required to regularly file tax returns. In some states, such as Ohio, the permit must be cancelled if the vendor goes out of business or decides to no longer sell.
Reseller’s licenses should be prominently displayed in each booth or table. Always check your state’s government website for up-to-date information, as laws regarding reseller’s licenses change regularly, and the law two years ago could be drastically different from the law today.
On top of a state reseller’s license, each vendor must have a Federal Tax ID number, also known as an Employer Identification Number (EIN). Flea market vendors are attempting to make a profit; therefore they are viewed as a small business and are required to obtain an EIN. In addition, most wholesalers require a Federal Tax ID for all sales, to ascertain that the buyer is an authorized reseller.
Getting an EIN is a fairly simple process. Vendors can either submit paperwork online, download the form as a PDF and mail it in, or call the IRS’s Business Specialty Tax Line at (800) 829-4933, 7:00 a.m. to 10:00 p.m. local time, Monday through Friday. The EIN is issued immediately when completed online or over the phone, and can be used the very same day.
Helpful How-To’s From FleaMarketZone.com.