Seller’s permit: Definition and how to get one

If you run a company where you are required to collect and remit sales tax to your state or local government, you’ll need a seller’s permit. This guide explains exactly who needs one, how to get one and the benefits of having a seller’s permit.

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What is a seller’s permit?

A seller’s permit, sometimes called a sales tax permit, allows you, as a business owner, to buy goods at wholesale prices and resell them with the intent to make a profit. A seller’s permit often goes by other names, such as:

• Sales permit.
• Wholesale license.
• Resale certificate.
• Certificate of authority.
• Vendor permit.
• Tax permit.

The name may differ depending on the state where you do business. A licensed CPA (certified public accountant), attorney or a business formation company such as LegalZoom or Swyft Filings can guide you in finding out if you need the seller’s permit in your state.

Do I need a seller’s permit?

If you sell goods at a profit in many states, you need a seller’s permit. Paul Miller, a CPA in New York and founder of Miller & Company, LLP, said that, in general, if you collect and remit sales tax on purchases, you need a seller’s permit.

As a business owner, you’ll also need to have knowledge of your state’s tax laws, as well as laws in other states where you might do business. “You have to be aware of what’s taxable and what’s not taxable. For example, if you walk into a store and you buy prepared food, like a sandwich that’s ready-made and wrapped, it’s not taxable. But if they prepare food for you, that is a taxable event,” he said.

Types of businesses that require a seller’s permit

Food service establishments, as Miller said, are one type of business that may require a seller’s permit for food made-to-order. In general, if you buy goods at wholesale or manufacture goods and sell them, you need a seller’s permit if your state collects sales tax.

The type of business doesn’t matter, Miller said. Whether you run a limited liability company (LLC), S corp, C corp or even a sole proprietorship, if you sell or lease taxable goods (or services that are taxable), you’ll need a seller’s permit if your state requires one.

States that require a seller’s permit

Many states require seller’s permits, although the license often goes by another name. Refer to our chart below to determine the name of the license or permit you’ll need to sell goods for profit in your state and the associated fee.

If you’re still unclear if your business needs a seller’s permit or another type of business license, it’s best to speak with a CPA.

STATE	TYPE OF LICENSE	FEE
Alabama	Sales tax ID	$0
Alaska	N/A	N/A
Arizona	Transaction privilege tax license	$12
Arkansas	Sales tax permit	$50
California	Seller’s permit	$0
Colorado	Sales tax license	$50 deposit plus $16 fee
Connecticut	Sales and use tax permit	$100
Delaware	None	N/A
Florida	Sales tax license	$5
Georgia	Sales tax permit	$0
Hawaii	Sales tax permit	$20
Idaho	Seller’s permit	$0
Illinois	Sales tax permit	$0
Indiana	Seller’s permit (registered retail merchant certificate)	$25
Iowa	Sales and use tax permit	$0
Kansas	Seller’s permit	$0
Kentucky	Seller’s permit	$0
Louisiana	Sales tax permit	$0
Maine	Sales tax registration	$0
Maryland	Sales and use tax license	$0
Massachusetts	Sales and use tax permit	$0
Michigan	Sales tax license	$0
Minnesota	Sales and use tax account	$0
Mississippi	Sales tax permit	$0
Missouri	Sales tax license	$0
Montana	None	N/A
Nebraska	Sales tax permit	$0
Nevada	Sales tax permit (certificate of authority)	$15
New Hampshire	None	N/A
New Jersey	Sales tax permit (certificate of authority)	$0
New Mexico	Sales tax permit	$0
New York	Sales tax permit (certificate of authority)	$0
North Carolina	Certificate of registration	$0
North Dakota	Sales tax permit	$0
Ohio	Vendor’s license	$25
Oklahoma	Sales tax permit	$20
Oregon	None	N/A
Pennsylvania	Sales tax license	$0
Rhode Island	Retail sales permit	$10
South Carolina	Retail sales tax license	$50
South Dakota	Sales tax permit	$0
Tennessee	Sales tax registration	$0
Texas	Sales and use tax permit	$0 (security bond required)
Utah	Sales tax license	$0
Vermont	Sales and use tax license	$0
Virginia	Sales tax certificate of registration	$0
Washington	Business license and tax account	$19
Washington D.C.	Sales and use tax permit	$0
West Virginia	Sales tax permit	$30
Wisconsin	Seller’s permit	$20
Wyoming	Seller’s permit	$60

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How to get a seller’s permit

You can often get a seller’s permit or sales tax certificate by visiting the state’s department of revenue website. You’ll want to be prepared with the following information:

• Your business’s employer identification number (EIN).
• The business’s name and contact information.
• Type of business entity you have (an S corp or LLC, for example).
• Your North American industry classification system (NAICS) code.
• A responsible party’s contact information.
• Business bank account name, account number and routing number.

In addition, the above chart shares whether or not you’ll need to pay a fee for your sales tax permit in your state.

Economic nexus rules for online sellers

If you frequently sell online, you may need seller’s permits for all the states where you do business.

In many states, an economic nexus applies. That means you do not need to remit sales tax in that state until you reach a threshold for sales, typically based on transactions or total sales revenue. In most states, the economic nexus sits at 200 transactions or $100,000 in sales for that state.

Because of economic nexus rules, smaller businesses may not need seller’s permits for every state. If you do, you’ll need to visit the state’s department of revenue website and apply for a permit. As you can see from our table, fees vary dramatically across states.

Seller’s permit vs. resale certificate: What’s the difference?

A resale certificate is not the same as a seller’s permit, sales tax permit or any of the other certificates required to sell merchandise in various states. A seller’s permit gives you the authority to collect sales tax on transactions in your state. In contrast, a resale certificate allows you to make purchases for your business without paying sales tax.

Both have benefits for business owners. In states where it’s required, having a seller’s permit can help keep you out of trouble with the IRS. You could face hefty fines for operating without one. On the other hand, a resale certificate is optional and allows you to forego paying sales tax on items purchased for resale.

Only use a resale certificate on items meant for resale, Miller said. You’ll be exempt from paying sales tax on your purchase. But you still have to collect tax when you resell it, and that’s where your seller’s permit comes in.

Miller explained that, in the state of New York, under-reporting sales tax is the number one red flag that can lead to an audit on your business. “The government is vigilant about sales tax because it’s very black and white about collecting money,” he said.

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