What is a Reseller Permit and Sales Tax License?

In the USA, companies that buy items to resell must have a reseller’s permit/resale 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 Permit?

A reseller’s permit, or resale certificate, enables companies to buy products without tax from US suppliers. The businesses that have obtained a reseller permit do not incur sales tax on purchases made at wholesale prices, which assists in keeping profit margins by cutting back on upfront payments.

Reseller Permit for Non-US Residents

Non-U.S. residents can obtain reseller permit 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.