Most states require seller's permits, which provide authorization to collect sales taxes on purchases within that jurisdiction.
In Texas, this type of license is called a "sales and use tax permit" and any individual or enterprise selling or leasing tangible personal property or services within the state must have one.
Do you need a Texas seller's permit?
The website of Texas's Comptroller explains who must obtain a Texas seller's permit. First, to determine whether you are “engaged in business," the state looks at whether your business:
- Maintains a physical place of business, such as a warehouse, distribution center, sales room, etc., within the state
- Uses a sales representative or agent who operates within the state or independent salespeople involved in direct sales of taxable items
- Receives rental or lease income from a property located within the state
- Promotes any event involving sales of taxable items
- Otherwise conducts business in the state through others
While the above list is not comprehensive, it covers the most common factors considered. “Taxable personal property" includes items such as furniture, toys, and art. Notably, Texas also requires a seller's permit for those who provide taxable services, such as data processing and insurance.
Even if you already had a seller's permit for another business or if your business under another owner had one, you must apply for a new seller's permit.
Texas seller's permits and digital goods
A seller's permit is required for digital goods in Texas as the state considers electronic items to be taxable.
Regarding online sales, Texas residents who “sell more than two taxable items in a 12-month period and ship or deliver those items to customers in Texas" must have Texas seller's permits.
The comptroller has more specific information regarding online sales on its website.
How to file for a seller's permit in Texas
You can apply for a Texas seller's permit online through the Texas Online Tax Registration Application or by filling out the Texas Application for Sales and Use Tax Permit (Form AP-201) and mailing it to the comptroller's office at the address listed on the form.
On the application, you must provide information about you or your business, such as name and address, as well as a tax identification number—either your Social Security number (SSN) or employer identification number (EIN). If a business doesn't yet have an EIN, the comptroller will issue a temporary one until you receive it and issue a new permit thereafter.
Texas doesn't charge a fee to acquire a seller's permit, but you may be required to put up a security bond, the amount of which the comptroller determines upon evaluating your application.
What to do after receiving your seller's permit
Once you receive your Texas seller's permit, the state expects you to display it conspicuously at your place of business and collect sales taxes on taxable sales. You must keep track of taxes collected and pay the appropriate amount of sales and use taxes to the state.