Does My Business Need a Seller's Permit?

If you plan on selling products or services through your business, most states require you to have a seller's permit.

The process for acquiring a seller's permit varies, but generally you obtain one from the government agency that regulates businesses in your state.

The main reason governments require seller's permits is to enable them to collect sales tax on transactions. Failure to secure a seller's permit could result in penalties and fines as well as back taxes on previous sales.

Although state and local laws vary, what follows is some general information regarding seller's permits.

What is a seller's permit?

A seller's permit gives a business the authorization to sell products and services within the jurisdiction granting the license. Many states require seller's permits, as do some local authorities, including counties and cities.

You may also see a seller's permit called a "sales tax permit" or "sales tax license."

Do I need a seller's permit?

Whether you need a seller's permit depends on the laws that govern your business. Look to local as well as state regulations to determine whether your business needs one.

If you sell tangible goods to the public, whether wholesale or retail, you likely need a seller's permit to do so. Some states also require service providers (e.g., attorneys, architects, consultants) to obtain seller's permits.

If your selling activities are temporary - for seasonal or holiday businesses, for example - you may be required to have a temporary seller's permit.

If you only deal in resales, you may or may not need a seller's permit, depending on applicable laws. Some states, however, require a resale certificate to cover these types of sales.

Do I need a seller's permit to sell online?

This question is particularly common these days since so many businesses conduct online transactions.

Usually, unless you are selling products or services in a regulated industry such as health care, you don't need a seller's permit to conduct business online. But that may not be the case in your state and/or in your industry.

This is one reason it is so crucial to check applicable laws to determine whether you need an online seller's permit.

How do I get a seller's permit?

The process of obtaining a seller's permit is relatively simple, although it may vary in your jurisdiction. Generally, however, you simply fill out an application and submit it to the proper authority.

You can usually find the form by visiting the website of your local agency that regulates businesses. The types of information required on such applications generally include your business's name and address, Social Security number (SSN) or employer identification number (EIN), estimated monthly sales, and supplier names.

In most jurisdictions, you can either mail the completed form or deliver it in person. You may also be able to submit it electronically. There is usually no fee to request a seller's permit.

What do I do with my seller's permit?

You should post the physical document in a conspicuous location at your place of business so members of the public can see it.

You now have a permit number and are ready to collect sales tax whenever a buyer makes a purchase from your business.

This sales tax is paid to the state quarterly and submitted along with the appropriate state tax forms.