How-to-Obtain-a-Reseller-Certificate-Sales-Tax-License-in-the-USA

What is a Reseller Certificate and Sales Tax License?

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.

StateSales Tax RateTaxable GoodsTaxable Services
Alabama4%Tangible personal property (TPP), groceries (some localities)Lodging, amusements, certain rentals, utilities
Alaska0% (localities)No state sales tax, but local sales tax on TPPGenerally no state tax, but localities may impose taxes on services
Arizona5.6%TPP, vehicle purchasesTelecom services, certain personal services
Arkansas6.5%TPP, foodAuto repair, some utilities, hotel stays
California7.25%TPP, vehicle purchasesCertain repair services, some utilities, telecom
Colorado2.9%TPP, vehicle purchasesAmusement services, commercial utilities
Connecticut6.35%TPP, clothingUtilities, some services like computer and data processing
Delaware0%No sales taxNone
Florida6%TPP, hotel staysNon-residential cleaning, security services, and admissions
Georgia4%TPP, vehicles, groceries (localities may tax)Personal services, lodging, amusement admissions
Hawaii4% GETTPP, food, alcoholBroadly applies to services, including professional and personal
Idaho6%TPP, vehicle purchasesUtility services, some food services, lodging
Illinois6.25%TPP, vehicle purchasesAmusement and telecom, utilities
Indiana7%TPP, vehicle purchasesTelecommunications and utilities
Iowa6%TPP, vehicle purchasesJanitorial, repair services, landscaping
Kansas6.5%TPP, groceriesRepair services, admissions, telecom
Kentucky6%TPP, vehicle purchasesAmusement services, lodging, utilities
Louisiana4.45%TPP, groceriesLaundry, auto repair, lodging, telecom
Maine5.5%TPP, groceriesLodging, amusements, telecommunications
Maryland6%TPP, groceriesLodging, some telecommunications
Massachusetts6.25%TPP, alcohol, vehicle purchasesLodging, telecommunications, auto rentals
Michigan6%TPP, vehicle purchasesTelecommunications
Minnesota6.875%TPP, clothingPersonal and business services, certain repair services
Mississippi7%TPP, foodAuto repair, lodging, utilities
Missouri4.225%TPP, groceriesAdmissions, utilities
Montana0%No sales taxNone
Nebraska5.5%TPP, vehicle purchasesLodging, amusement services, some utilities
Nevada6.85%TPP, vehicle purchasesUtility services, admissions, food prep services
New Hampshire0%No sales taxNone
New Jersey6.625%TPP, clothingTelecom services, admissions, utility services
New Mexico5.125% GRTTPP, groceriesMost professional services, construction, telecommunications
New York4% (8.875% NYC)TPP, foodAdmissions, utilities, telecommunications, hotel occupancy
North Carolina4.75%TPP, vehicle purchasesLaundry, dry cleaning, repair services, admissions
North Dakota5%TPP, vehicle purchasesAdmissions, telecom, utilities
Ohio5.75%TPP, vehicle purchasesLodging, repair services, telecom
Oklahoma4.5%TPP, vehicle purchasesLodging, utilities, telecommunications
Oregon0%No state sales taxNone
Pennsylvania6%TPP, clothingLodging, telecom services
Rhode Island7%TPP, foodTelecom, certain admissions, lodging
South Carolina6%TPP, groceriesLodging, amusement services, utilities
South Dakota4.5%TPP, vehicle purchasesAuto repair, admissions, lodging
Tennessee7%TPP, foodAmusement services, lodging, utilities
Texas6.25%TPP, groceriesData processing, lodging, telecom
Utah4.85%TPP, foodLodging, telecom, utilities
Vermont6%TPP, vehicle purchasesLodging, telecom services
Virginia4.3%TPP, groceriesTelecommunications, admissions, utility services
Washington6.5%TPP, groceriesTelecom, lodging, repair services
West Virginia6%TPP, groceriesTelecom, lodging, amusement services
Wisconsin5%TPP, groceriesLodging, admissions, utilities
Wyoming4%TPP, vehicle purchasesAmusement 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:

  1. Alabama: Alabama Department of Revenue
  2. Alaska: Alaska Department of Revenue
  3. Arizona: Arizona Department of Revenue
  4. Arkansas: Arkansas Department of Finance and Administration
  5. California: California Department of Tax and Fee Administration
  6. Colorado: Colorado Department of Revenue
  7. Connecticut: Connecticut Department of Revenue Services
  8. Delaware: Delaware Division of Revenue
  9. Florida: Florida Department of Revenue
  10. Georgia: Georgia Department of Revenue
  11. Hawaii: Hawaii Department of Taxation
  12. Idaho: Idaho State Tax Commission
  13. Illinois: Illinois Department of Revenue
  14. Indiana: Indiana Department of Revenue
  15. Iowa: Iowa Department of Revenue
  16. Kansas: Kansas Department of Revenue
  17. Kentucky: Kentucky Department of Revenue
  18. Louisiana: Louisiana Department of Revenue
  19. Maine: Maine Revenue Services
  20. Maryland: Maryland Comptroller
  21. Massachusetts: Massachusetts Department of Revenue
  22. Michigan: Michigan Department of Treasury
  23. Minnesota: Minnesota Department of Revenue
  24. Mississippi: Mississippi Department of Revenue
  25. Missouri: Missouri Department of Revenue
  26. Montana: Montana Department of Revenue
  27. Nebraska: Nebraska Department of Revenue
  28. Nevada: Nevada Department of Taxation
  29. New Hampshire: New Hampshire Department of Revenue Administration
  30. New Jersey: New Jersey Division of Taxation
  31. New Mexico: New Mexico Taxation and Revenue Department
  32. New York: New York State Department of Taxation and Finance
  33. North Carolina: North Carolina Department of Revenue
  34. North Dakota: North Dakota Office of State Tax Commissioner
  35. Ohio: Ohio Department of Taxation
  36. Oklahoma: Oklahoma Tax Commission
  37. Oregon: Oregon Department of Revenue
  38. Pennsylvania: Pennsylvania Department of Revenue
  39. Rhode Island: Rhode Island Division of Taxation
  40. South Carolina: South Carolina Department of Revenue
  41. South Dakota: South Dakota Department of Revenue
  42. Tennessee: Tennessee Department of Revenue
  43. Texas: Texas Comptroller of Public Accounts
  44. Utah: Utah State Tax Commission
  45. Vermont: Vermont Department of Taxes
  46. Virginia: Virginia Department of Taxation
  47. Washington: Washington State Department of Revenue
  48. West Virginia: West Virginia State Tax Department
  49. Wisconsin: Wisconsin Department of Revenue
  50. 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.

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