First Look – September 2012
Welcome to First Look, a sneak peek at empowering business information and insights, for PROVENDOR members only.
How to Choose a Wholesale Supplier
This month’s PROVENDOR mediacast discusses what every vendor needs to know when choosing a wholesale supplier for his or her business. Find out the essential questions that can make or break a business relationship.
How To Get Your Reseller’s License
Being a successful flea market vendor requires a solid business plan, anchored by licenses to ensure compliance with municipal and federal regulations. A reseller’s license generally is required when you intend to sell products to consumers at a flea market. While a flea market manager is often a good resource for finding out what the laws are for the state, the impetus for filling out the paperwork is usually on the vendor. Reseller’s licenses should be prominently displayed in at your booth or table. To assist vendors, this tutorial details the various procedures for procuring a reseller’s license.
The process for applying for a reseller’s license, also known as a Use and Sales Tax License, Reseller’s Permit, Reseller’s Certificate and Certificate of Resale, varies from state to state. Regardless of what it is called, it is necessary to get a license, as vendors 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 its 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 on 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, and a few states– Alaska, Delaware, Montana, New Hampshire and Oregon—do not have a sales tax. Tax laws, however, can change rapidly and dramatically. 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.
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 in which you reside.
In some states, there are different charges and procedures for different counties and towns. There also may 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 require weekly, monthly or yearly fees. Some states have multiple options for vendors who sell seasonally. In most states, the paperwork can be filled out online. It is usually fairly simple and requests information such as the name and address of the seller, what they will be selling and where. Here are examples of paperwork for licenses in Colorado and Idaho. It is possible that the license is permanent, 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, the permit must be cancelled if the vendor goes out of business or decides to no longer sell.
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.