A seller’s permit, sometimes known as a sales tax permit, is a type of business license that lets you collect sales tax in the state where you do business.
Most states legally require you to have a seller’s permit when conducting business within their borders.
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A seller’s permit lets you legally collect sales tax, meeting mandatory obligations for businesses selling tangible goods and certain services.
With a seller’s permit, you can stop worrying about tax issues and put that energy into your passion.
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A seller’s permit is a business license granted to companies that sell qualifying goods or services that shows the business is registered with the state tax department and can legally collect sales taxes. It might sometimes be referred to as a sales tax permit, retail license, sales and use tax permit, or other name.
The cost of a seller’s permit depends on the state. For example, a California seller’s permit is technically free to get, but you may be required to put down a security deposit. You can double check your state’s department of revenue to learn how much a permit costs in your area.
The process of obtaining a seller’s permit is different in every state, although it typically involves reaching out to a state government agency, typically the department of revenue. Most states will allow you to file completed paperwork electronically.
The list of things you’ll need on hand to apply for a seller’s permit may vary slightly between states, but in general you’ll need:
Your Employer Identification Number (EIN)
Your business name or DBA (doing business as)
Your revenue distribution schedule
Your tax collection start date
The type of products or services you provide
The estimated amount of sales you’ll collect
Usually, online sellers will need a sales tax license for the state they have a physical presence in. Any out-of-state sales will fall under that umbrella. For example, if you sell custom coffee mugs from your home in Texas to a customer in Washington, you only need a tax permit for Texas.
There are some exceptions, especially when you start talking about establishing a place of business “nexus” in another state. In those situations, we recommend talking with a business tax attorney about your business’s unique tax situation.
No, a seller’s permit is not the same thing as a business license. Both are a type of permit, but are different from each other in key ways. A seller’s permit applies to sales taxes only, and a business license is required in certain states, cities, and counties to do business of any kind. Not every business that needs a business license will need a seller’s permit.
Learn more about business licenses.
Some states don’t collect state sales tax and so don’t require companies doing business there to get a seller’s permit. These include Alaska, Delaware, Montana, New Hampshire, and Oregon.
A temporary seller’s permit is a permit given to businesses that only sell for a portion of the year. As with all permits, every state varies.
A resale certificate is different from a seller’s permit. If you buy items as a business to then sell to your customers for resale, you may be able to give a resale certificate to the seller. If the sale qualifies and you give the seller the certificate, you won’t pay taxes on the items.
This is because states generally tax items when they’re sold to the final consumer. Note that some states require you to have a reseller permit, also known as a resale permit, before being able to use a resale certificate.
An LLC (limited liability company) is a business entity formed for liability and tax purposes. A business license lets you legally conduct business. State, local, and federal government agencies issue many different types of business licenses, and your business may need more than one.
Any type of business entity can get a seller’s permit or other business license.
Swyft’s Resource Center is the best place to be when you’re looking to understand the need for a seller’s permit or state sales tax ID. Build up your knowledge base with case studies, guides, and articles.