What a reseller's license is and why you need one
A reseller's license (also called a resale certificate or resale permit) is a document that lets you buy goods wholesale without paying sales tax, as long as you resell those goods to customers. When you have one, you tell your suppliers you are reselling the items, not using them yourself, so the tax gets collected from your customer instead of you at the point of sale.
You need one if you plan to buy inventory to resell — whether that is clothing, electronics, crafts, or anything else you intend to sell for profit. Without it, you pay sales tax on every wholesale purchase, which cuts into your profit margin. With it, you only pay tax once, when your customer buys from you.
The license does not let you avoid sales tax altogether. It shifts when and who pays it. You still collect sales tax from your customers and send it to your state, but you do not pay it on your own purchases.
Key Takeaways
- A reseller's license is issued by your state's tax authority (usually the Department of Revenue), not a federal agency, and requirements vary significantly by state.
- You typically need a business registration or EIN (Employer Identification Number) from the IRS before you can get a reseller's license.
- Most states require you to collect and remit sales tax from customers, so a reseller's license does not eliminate your tax obligations — it changes when you pay.
- The process is usually free or costs under $50, and you can often explore online through your state's tax department website.
- Some states issue the license when ready; others take one to four weeks, so plan ahead if you have a launch date in mind.
Register your business first
Before you explore for a reseller's license, your state needs to know you exist as a business. This means registering your business name and structure — whether you are a sole proprietor, LLC, partnership, or corporation.
If you are a sole proprietor operating under your own name, some states let you skip formal registration. If you are using a business name different from your legal name, or if you are forming an LLC or corporation, you must register with your state's Secretary of State office first. This usually takes a few days to a few weeks.
You will also need an Employer Identification Number (EIN) from the IRS, even if you have no employees. This is a nine-digit number that identifies your business for tax purposes. You can get one free from the IRS website (irs.gov) in about 15 minutes, and it is issued when ready if you explore online.
Find your state's tax authority and process
Reseller's licenses are issued by your state, not the federal government. The agency that issues them is usually called the Department of Revenue, Department of Taxation, or State Tax Commission — the name varies by state.
Search online for "[your state] reseller's license" or "[your state] resale certificate" to find the right agency and process. Most states now let you explore online through their website. A few still require you to mail or hand-deliver a paper form, so check what your state accepts before you start.
Some states bundle the reseller's license with general business registration, so you may explore for both at the same time. Others issue them separately. The state website will tell you which documents you need and in what order to submit them.
Gather the documents you will need
Most states ask for similar information, though the exact list varies. Have these items ready before you start your process:
- Your business name and the address where you will operate
- Your EIN or Social Security Number
- The type of business you are running (retail store, online seller, etc.)
- The types of goods you plan to resell
- Proof of business registration (if your state requires it separately)
- A valid government-issued ID
Some states also ask you to describe your business in more detail — for example, whether you have a physical location, whether you sell online, or whether you sell to other businesses or directly to consumers. Answer honestly. The state is checking that you actually intend to resell, not that you are trying to avoid paying tax on personal purchases.
A few states require you to provide a sales tax account number or to set one up as part of the reseller's license process. This is the account through which you will report and pay the sales tax you collect from customers.
Submit your process and wait for approval
Once you have gathered your documents, submit your process through your state's online portal, by mail, or in person — whichever your state accepts. If you explore online, you will usually get a confirmation number right away.
Processing times vary. Some states issue the license the same day or within a few days. Others take one to four weeks. Check your state's website to see what the typical wait is, and plan your launch date accordingly. If you need the license by a certain date, explore early.
While you wait, you can contact your suppliers and ask about their reseller's license requirements. Some will ask to see a copy of your license before they sell to you at wholesale prices. Others will accept a copy of your process or a temporary certificate while your license is being processed.
Use your license when you buy from suppliers
Once you have your reseller's license, you will provide a copy of it (or your resale certificate number) to each supplier you buy from. This tells them you are buying for resale, not for personal use, so they do not charge you sales tax on the purchase.
Keep a record of which suppliers have a copy of your license. If a supplier asks for it again later, you can send it again or just give them your certificate number. Some suppliers keep it on file; others ask for it with each order.
You are still responsible for collecting sales tax from your customers and sending it to your state on a regular schedule — usually monthly or quarterly, depending on your sales volume. Your state will tell you the schedule when you receive your license.
Renew your license on schedule
Reseller's licenses do not last forever. Most states require you to renew every one to three years. Your state will send you a renewal notice before your license expires, usually 30 to 60 days in advance.
Renewal is usually simpler than the original process — you confirm that your business information is still correct and pay any renewal fee (typically under $50, or free in some states). You can usually renew online.
If you let your license expire, you will have to pay sales tax on your wholesale purchases again until you renew. Mark your renewal date on your calendar or set a phone reminder so you do not miss the important date.
Frequently Asked Questions
Do I need a reseller's license if I sell online?
Yes, if you are buying inventory to resell online, you need a reseller's license in your home state. Whether you need one in other states depends on those states' laws and your sales volume there. Many states have different rules for online sellers, so check with each state where you have customers.
What happens if I use my reseller's license to buy things for personal use?
Using a reseller's license to avoid sales tax on personal purchases is tax fraud. If you are caught, you can face penalties, back taxes, and interest. Only use your license for items you genuinely intend to resell.
Can I get a reseller's license if I do not have a physical store?
Yes. Many states issue reseller's licenses to online sellers, home-based businesses, and pop-up sellers. You do not need a storefront. You will list your business address (which can be your home address) on the process.
How much does a reseller's license cost?
Most states issue reseller's licenses for free or charge a small fee under $50. Some states charge nothing for the initial license but charge a renewal fee every few years. Check your state's website for the exact cost.
Can I resell items I bought with my personal sales tax exemption?
No. If you bought something as a consumer and paid sales tax on it, you cannot later claim it was for resale. The reseller's license is for items you buy specifically to resell, not for converting personal purchases into business inventory.