How To Get a Seller’s Permit

If you’re starting a new business, you might wonder if you need a seller’s permit. The answer is: it depends. 

Most states in the US require a seller’s permit if you’re selling tangible personal property, which is subject to sales tax. However, there are a few states that don’t require sellers to obtain a permit.

Ahead, you’ll learn whether you need a seller’s permit and how to apply for one. 

What is a seller’s permit?

A seller’s permit is a unique identifier a state government assigns to your business. It lets you collect sales tax on the items you sell in-store or online, which you are required to periodically send to the government, along with state tax forms.

A seller’s permit effectively makes you an intermediary between the government and your customers. Seller’s permits are state-specific and have different names from state to state, including:

• Sales tax license
• Vendor’s license
• Use tax permit
• Retail license
• Certificate of authority
• Business tax account
• Sales permit
• Wholesale license

When do you need to get a seller’s permit?

You typically need a seller’s permit if you:

• Operate a business in a state with a state sales tax.
• Sell goods or services subject to sales tax.
• Have a significant physical presence (nexus) in the state.

Which states require a seller’s permit?

Five states don’t require a sales tax permit at all:

• Alaska
• Delaware
• Montana
• New Hampshire
• Oregon

While Alaska and Montana do not have a state sales tax, some local municipalities do have local sales taxes and may require local permits. Check with your local authority to see if you need a sales tax permit. 

Some states require you to collect tax on services like consulting and legal advice. Always check with your state’s tax agency. And don’t forget: You might need to collect local sales taxes on top of state tax.

Here’s a detailed list of each state’s requirements, but it’s always smart to double-check with your state’s Department of Revenue or a similar agency. Talking to local businesses in your industry, the consumer affairs office, or a certified public accountant (CPA) is a good idea, too.

How to get a seller’s permit

Wondering how to get a seller’s permit in your state? Here’s a step-by-step guide:

1. Determine if you need a seller’s permit

Do you sell goods or services subject to sales tax? If so, then you need a seller’s permit. This applies whether your business is a limited liability company (LLC), corporation, or sole proprietorship. 

If you own an online business, you are required to pay taxes in every state where you conduct business, not just where your business is based. So, make sure you understand each state’s tax laws.

2. Register your business

Registering your business creates a legal entity recognized by the state. Start by picking a unique business name available in your jurisdiction. Then, decide on a business structure, such as a sole proprietorship, LLC, or corporation. 

Next, get an employer identification number (EIN) from the IRS website. Check if you need any other licenses, permits, or tax registrations from federal, state, or local agencies. 

Once you’ve done all this, you’re on your way to running your business legally. Remember, registering your business creates a legal entity, while getting a business license ensures you have the proper permissions to operate legally.

3. Complete the seller’s permit application form

After your business is registered, you can apply for a seller’s permit. You can usually find this form on your state’s Department of Revenue website or the agency that handles taxes.

4. Provide required information

When filling out the application, you’ll have to give details about your business, including:

• Your Social Security number (SSN) or business’s employer identification number (EIN)
• A legal form of identification (like a driver’s license)
• Your business name and contact details
• Type of business
• Your North American Industry Classification System (NAICS) code
• Expected monthly sales and taxable portion of those sales
• Bank account information
• Your accountant’s name and address
• Names and addresses of all your vendors

5. Submit the application

Once you’ve completed the application, you can submit it online, via mail, or in person. Submitting online is usually the fastest way.

6. Pay the applicable fee

Some states charge a fee for the permit, while others do not. A few states (like Nevada) may require a security deposit, especially if you have a history of non-compliance with tax laws or if your business is considered high-risk.

7. Wait for application approval

After you submit your application, you’ll need to wait for the state to approve it. This can take anywhere from a day to several weeks, depending on the state and how you submitted it.

8. Receive your seller’s permit or resale certificate

Once approved, you’ll receive your seller’s permit. Keep it safe—you might require it to file taxes or buy items to resell. Some states give permits that last for the entire life of the business, while others might be good only for a year or two. If it expires, you’ll need to apply again or renew it.

If you’re a reseller, some states might require a resale certificate. This certificate lets you buy products tax-free if you intend to resell them.

Note: A seller’s permit is a must-have, but a resale certificate is optional. The resale certificate lets you buy things without paying sales tax, since you’ll be reselling them and collecting tax from your customers.

9. Display the permit at your place of business

If you have a physical store, some states require you to display your sales tax permit where customers and inspectors can see it.

10. File regular sales tax returns

With a seller’s permit, you’re expected to collect sales tax from customers and submit regular tax returns to your state’s tax agency. Keep accurate records and pay taxes on time to avoid penalties.

Remember, you’re still required to file even if you didn’t collect any state sales tax during a filing period. If you don’t, you might face penalties. At first, dealing with sales tax might seem easy. But it can get complicated as your business grows and you sell in more states. Imagine spending hours on each state’s filing—not a great use of your time.

The solution? Use tax software to automate tracking, collecting, reporting, and filing your taxes across the US.

Types of businesses that need a seller’s permit

Most businesses in the US need a seller’s permit to sell taxable goods or services, depending on their business type and state regulations. Here are certain businesses that often require a selling permit:

Food service establishments

If you run a restaurant or café that prepares made-to-order food, you’ll likely require a permit to handle sales tax for those items.

Retail businesses

If you’re buying wholesale goods or making products to sell online, in-store, or elsewhere to customers, you’ll have to get a permit if your state taxes those items. 

Service-based businesses

Some states require service-based businesses like equipment repair shops, hair salons, and product-leasing companies to get a permit and deal with sales tax. Check with your state and local tax authorities to confirm if your businessfalls under taxable services.

Ecommerce businesses

If you sell products online, you might need a permit. Rules vary by state—some treat you like a physical store, others have permits specific for online businesses. You ought to collect taxes not just in your home state but in any state where your sales hit a certain amount. This is called “economic nexus.”

For most states, economic nexus kicks in at 200 transactions yearly or $100,000 in annual sales. If you hit these numbers, you’re required to collect and pay sales tax there, even if you don’t have a physical presence in that state. Track these state-specific thresholds and get permits as needed. Smaller businesses may not require permits for every state if they don’t meet the thresholds.

If you’re a Shopify Plus merchant, you can use Avalara to figure out economic nexus and file tax returns without too much hassle.

Do you need more than one seller’s permit?

In some cases, it’s possible that you might need more than one seller’s permit. You might need multiple seller’s permits if you:

• Run your business in several states or jurisdictions with different sales tax regulations 
• Sell products online to buyers in multiple locations (destination principle)
• Participate in trade shows or temporary sales in different states. You require additional seller permits for those locations
• Have multiple legal entities, like separate ones for your online and physical stores 
• Manage wholesale and retail operations (you might need different permits because of different tax rules)
• Are in states with special tax districts (these require separate permits in addition to the state permits)

This may sound like a lot. That’s why Shopify Tax is here to help with your tax filing. Check out the video below to see how Shopify Tax can make your life easier:

How much does it cost to get a seller’s permit?

The cost can vary between zero to $100, depending on your state. 

Out of 45 states that collect sales tax, only 15 charge a fee for a seller’s permit. These fees range from $5 to $100. Florida charges the lowest fee, at $5, if you apply by mail (it’s free to apply online), and it doesn’t ask for a security deposit. Connecticut charges the highest, with a one-time $100 fee. In Ohio, in-state sellers pay an application fee, while out-of-state sellers get the permit free. 

Apply for a seller’s permit for your retail business

Now that you know how to get a seller’s permit, you can start your business on a smooth note. You can handle the application yourself or hire a professional to help you out.

Once you get your permit and start scaling your business, tax software is the best way to efficiently pay all your state and local taxes on time while you focus on more important things, like growing your business.