Reseller permit vs business license
Written by the filing team at FastBusinessFiling. Reviewed .
A reseller permit — also called a seller's permit or sales tax registration — is your registration with a state revenue department to collect sales tax from customers and to buy inventory for resale without paying tax on it. A business license is separate permission to operate at all, usually issued by a city or county and often tied to your address or trade. Most sellers of physical goods need both, from two different agencies, and getting one does not get you the other. The registration is free in most states; the licence usually is not. Five jurisdictions — Alaska, Delaware, Montana, New Hampshire and Oregon — have no statewide sales tax and therefore issue no reseller permit at all, though some Alaskan municipalities levy a local one.
The short version
- Different agencies, different purposes: revenue department versus city or county.
- The reseller permit is free in most states. The business licence rarely is.
- A resale certificate is the document you give a supplier. It quotes the permit number.
- Washington and a few others combine registrations into one application. Most do not.
- No statewide sales tax means no state permit, though Alaska's municipalities can still want one.
What a reseller permit does
It puts you on the state's books as somebody who collects sales tax. Two things follow. You are now required to charge tax on taxable sales and remit it on a schedule the state sets, and you can buy goods you intend to resell without paying sales tax on them.
That second part is why wholesalers ask for the number before they will open a trade account. Without it you are a retail customer paying tax on your own inventory.
What a business license does
It is permission to operate, and it is usually local. Cities and counties license businesses to know who is trading within their boundaries, to collect a local fee, and in some trades to check that you are qualified.
The rules are unhelpfully local. A home-based online seller may need nothing at all in one town and a general business licence in the next one over. The city or county website is the source, and there is no national answer.
The resale certificate, which is a third thing
The certificate is the piece of paper you hand a supplier so they do not charge you tax. It quotes your permit number and asserts that the goods are for resale.
It is not something a state issues to you like a licence. Most states publish a form you fill in yourself, and some accept a multistate certificate. Suppliers keep it on file as their evidence for not collecting tax, which is why they chase you for it.
What each one costs
Sales tax registration is free in most states — the state makes its money on the tax, not the paperwork. A minority charge a modest fee, and a few want a security deposit from new registrants instead.
Business licences vary from a small annual fee to something substantial in regulated trades. Because they are local, we do not file them and we will not quote them; your city clerk will.
When you need which
Selling taxable goods anywhere means the permit, in each state where you have nexus. Operating a business at all often means the local licence, whether or not you sell anything taxable.
A consultant selling only services may need the licence and no permit. An online seller of physical goods usually needs both. Whether services are taxable depends on the state, which is one more thing that has no national answer.
Common questions
No. A sole proprietor can register under their own name and social security number. The two solve different problems: the permit lets you collect tax legally, the LLC separates the business's liabilities from your personal assets.
In practice yes; the names differ by state for the same registration. What differs meaningfully is the resale certificate, which is the document you give suppliers rather than the registration itself.
Nothing in most states. A handful charge a small fee and a few require a deposit. Our by-state table lists what each one charges, with the date it was checked.
You register where you have nexus, which physical presence creates and which economic thresholds on remote sales can also create. Where you have crossed one is a question for your accountant. Most sellers start with their home state.
You still owe the tax you should have collected, and the state will want it from you rather than from your customers, usually with penalties and interest. It is one of the cheaper compliance items to get right and one of the more expensive to get wrong.
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FastBusinessFiling is a document filing service operated by Fast Filing Group LLC. We are not a law firm or an accounting firm, and nothing here is legal or tax advice. Rules and fees change; where this page states a figure, it carries the date it was checked. For advice about your own situation, talk to a licensed attorney or CPA.