In the USA, companies that buy items to resell must have a reseller’s certificate and a sales tax license. These documents are essential, as they allow the business to purchase goods without paying sales tax upfront and then collect sales tax from customers during resale. Here’s a closer look at why these are important and how they benefit your business.
What is a Reseller Certificate?
A reseller’s certificate, or resale certificate, enables companies to buy products without tax from US suppliers. The businesses which have obtained a reseller certificate do not incur sales tax on purchases made at wholesale prices, which assists in keeping profit margins by cutting back on upfront payments.
Reseller Certificates for Non-US Residents
Non-U.S. residents can obtain reseller certificates by forming an LLC in the U.S., which allows them to buy products tax-free for resale purposes. This process enables international business owners to operate smoothly in the U.S. market by complying with sales tax rules in the states where they do business. By registering in relevant sales tax jurisdictions, non-residents can streamline operations and avoid unnecessary tax costs. It also builds credibility with suppliers.
What is a Sales Tax License?
A sales tax license permits businesses to collect sales tax from customers. It is issued by a state’s DOR (Department of Revenue) and is necessary for businesses selling taxable goods or services. With a sales tax license, you can legally collect sales tax from your customers and remit it to the state.
Why You Should Obtain a Sales Tax License?
- Tax Exemption on Wholesale Purchases: You can buy items tax-free if you’re purchasing goods for resale purposes. Which reduces your initial cost burden.
- Legal Compliance: Collecting and remitting sales tax ensures your business complies with U.S. tax laws. Non-compliance can result in fines and penalties.
- Improved Profit Margins: By reducing the tax on purchases, businesses can enhance their profit margins.
- Efficient Business Operations: Having the proper documents streamlines business transactions, enabling smoother relations with suppliers and customers alike. It also increases the credibility of your business.
Sales Tax Rates by State
Below is a table listing general sales tax rates by state and a summary of taxable goods and services.
| State | Sales Tax Rate | Taxable Goods | Taxable Services |
| Alabama | 4% | Tangible personal property (TPP), groceries (some localities) | Lodging, amusements, certain rentals, utilities |
| Alaska | 0% (localities) | No state sales tax, but local sales tax on TPP | Generally no state tax, but localities may impose taxes on services |
| Arizona | 5.6% | TPP, vehicle purchases | Telecom services, certain personal services |
| Arkansas | 6.5% | TPP, food | Auto repair, some utilities, hotel stays |
| California | 7.25% | TPP, vehicle purchases | Certain repair services, some utilities, telecom |
| Colorado | 2.9% | TPP, vehicle purchases | Amusement services, commercial utilities |
| Connecticut | 6.35% | TPP, clothing | Utilities, some services like computer and data processing |
| Delaware | 0% | No sales tax | None |
| Florida | 6% | TPP, hotel stays | Non-residential cleaning, security services, and admissions |
| Georgia | 4% | TPP, vehicles, groceries (localities may tax) | Personal services, lodging, amusement admissions |
| Hawaii | 4% GET | TPP, food, alcohol | Broadly applies to services, including professional and personal |
| Idaho | 6% | TPP, vehicle purchases | Utility services, some food services, lodging |
| Illinois | 6.25% | TPP, vehicle purchases | Amusement and telecom, utilities |
| Indiana | 7% | TPP, vehicle purchases | Telecommunications and utilities |
| Iowa | 6% | TPP, vehicle purchases | Janitorial, repair services, landscaping |
| Kansas | 6.5% | TPP, groceries | Repair services, admissions, telecom |
| Kentucky | 6% | TPP, vehicle purchases | Amusement services, lodging, utilities |
| Louisiana | 4.45% | TPP, groceries | Laundry, auto repair, lodging, telecom |
| Maine | 5.5% | TPP, groceries | Lodging, amusements, telecommunications |
| Maryland | 6% | TPP, groceries | Lodging, some telecommunications |
| Massachusetts | 6.25% | TPP, alcohol, vehicle purchases | Lodging, telecommunications, auto rentals |
| Michigan | 6% | TPP, vehicle purchases | Telecommunications |
| Minnesota | 6.875% | TPP, clothing | Personal and business services, certain repair services |
| Mississippi | 7% | TPP, food | Auto repair, lodging, utilities |
| Missouri | 4.225% | TPP, groceries | Admissions, utilities |
| Montana | 0% | No sales tax | None |
| Nebraska | 5.5% | TPP, vehicle purchases | Lodging, amusement services, some utilities |
| Nevada | 6.85% | TPP, vehicle purchases | Utility services, admissions, food prep services |
| New Hampshire | 0% | No sales tax | None |
| New Jersey | 6.625% | TPP, clothing | Telecom services, admissions, utility services |
| New Mexico | 5.125% GRT | TPP, groceries | Most professional services, construction, telecommunications |
| New York | 4% (8.875% NYC) | TPP, food | Admissions, utilities, telecommunications, hotel occupancy |
| North Carolina | 4.75% | TPP, vehicle purchases | Laundry, dry cleaning, repair services, admissions |
| North Dakota | 5% | TPP, vehicle purchases | Admissions, telecom, utilities |
| Ohio | 5.75% | TPP, vehicle purchases | Lodging, repair services, telecom |
| Oklahoma | 4.5% | TPP, vehicle purchases | Lodging, utilities, telecommunications |
| Oregon | 0% | No state sales tax | None |
| Pennsylvania | 6% | TPP, clothing | Lodging, telecom services |
| Rhode Island | 7% | TPP, food | Telecom, certain admissions, lodging |
| South Carolina | 6% | TPP, groceries | Lodging, amusement services, utilities |
| South Dakota | 4.5% | TPP, vehicle purchases | Auto repair, admissions, lodging |
| Tennessee | 7% | TPP, food | Amusement services, lodging, utilities |
| Texas | 6.25% | TPP, groceries | Data processing, lodging, telecom |
| Utah | 4.85% | TPP, food | Lodging, telecom, utilities |
| Vermont | 6% | TPP, vehicle purchases | Lodging, telecom services |
| Virginia | 4.3% | TPP, groceries | Telecommunications, admissions, utility services |
| Washington | 6.5% | TPP, groceries | Telecom, lodging, repair services |
| West Virginia | 6% | TPP, groceries | Telecom, lodging, amusement services |
| Wisconsin | 5% | TPP, groceries | Lodging, admissions, utilities |
| Wyoming | 4% | TPP, vehicle purchases | Amusement services, lodging, telecom |
This table covers the general sales tax rates and types of goods and services subject to tax in each state. Some services, such as professional and personal services, are exempt in most states, but specific services (e.g., telecommunications, lodging, and admissions) are often taxable.
For specific exemptions or additional taxes, check each state’s Department of Revenue. Here is a list of each U.S. state’s Department of Revenue website:
- Alabama: Alabama Department of Revenue
- Alaska: Alaska Department of Revenue
- Arizona: Arizona Department of Revenue
- Arkansas: Arkansas Department of Finance and Administration
- California: California Department of Tax and Fee Administration
- Colorado: Colorado Department of Revenue
- Connecticut: Connecticut Department of Revenue Services
- Delaware: Delaware Division of Revenue
- Florida: Florida Department of Revenue
- Georgia: Georgia Department of Revenue
- Hawaii: Hawaii Department of Taxation
- Idaho: Idaho State Tax Commission
- Illinois: Illinois Department of Revenue
- Indiana: Indiana Department of Revenue
- Iowa: Iowa Department of Revenue
- Kansas: Kansas Department of Revenue
- Kentucky: Kentucky Department of Revenue
- Louisiana: Louisiana Department of Revenue
- Maine: Maine Revenue Services
- Maryland: Maryland Comptroller
- Massachusetts: Massachusetts Department of Revenue
- Michigan: Michigan Department of Treasury
- Minnesota: Minnesota Department of Revenue
- Mississippi: Mississippi Department of Revenue
- Missouri: Missouri Department of Revenue
- Montana: Montana Department of Revenue
- Nebraska: Nebraska Department of Revenue
- Nevada: Nevada Department of Taxation
- New Hampshire: New Hampshire Department of Revenue Administration
- New Jersey: New Jersey Division of Taxation
- New Mexico: New Mexico Taxation and Revenue Department
- New York: New York State Department of Taxation and Finance
- North Carolina: North Carolina Department of Revenue
- North Dakota: North Dakota Office of State Tax Commissioner
- Ohio: Ohio Department of Taxation
- Oklahoma: Oklahoma Tax Commission
- Oregon: Oregon Department of Revenue
- Pennsylvania: Pennsylvania Department of Revenue
- Rhode Island: Rhode Island Division of Taxation
- South Carolina: South Carolina Department of Revenue
- South Dakota: South Dakota Department of Revenue
- Tennessee: Tennessee Department of Revenue
- Texas: Texas Comptroller of Public Accounts
- Utah: Utah State Tax Commission
- Vermont: Vermont Department of Taxes
- Virginia: Virginia Department of Taxation
- Washington: Washington State Department of Revenue
- West Virginia: West Virginia State Tax Department
- Wisconsin: Wisconsin Department of Revenue
- Wyoming: Wyoming Department of Revenue
How Rocket Wave Can Help You?
If you’re looking to obtain a reseller certificate or sales tax license, Rocket Wave offers comprehensive assistance including U.S. business registration and required compliances.
Our expert team will guide you through a list of simple queries to determine whether your business is eligible to become a reseller. Then, we’ll prepare and file your application with the state DOR to obtain your sales tax ID and reseller permit. Get started now with Rocket Wave.
