Reseller Licenses – Do I need one?
Being in the internet marketing business for a number of years, I’ve spent some time in the buying and selling of goods. How does this work? Simple, you first need to find the products to sell (the lower the cost, the better!), sell the products on your website or auction, and then deliver the products.
All three parts have their problems associated with them. Today, we talk about the first problem and that is product souring!
Where do you find products to sell?
Over the years, I tried all kinds of services and sites to help me find wholesale products. Worldwide Brands and Doba have been two of the most successful ones for me. There are other places to look, too, like Alibaba and Thomas Register online. These two are quite large, but a bit less reliable. You could always do some Google searching, but the results usually get cluttered with “middlemen” (companies claiming to sell you items wholesale, but really they are just reselling you THEIR wholesale products at a marked up price.)
I’m not totally against middlemen vendors for some ventures (something for another post), but realize that not only do they mark up the price, but legally they should be charging you sales tax on those products, assuming they sell from a state that collects sales tax.
The Reseller (or Resale) License
Companies that ask you for your resale license are usually true wholesalers. They might also be authorized distributors, but typically this is the bottom of the barrel (unless you are planning on buying massive quantities). If they don’t ask for a reseller license, then technically, they should be charging you sales tax and usually they are marking up the price.
Wholesale directories like Worldwide Brands typically require you to have a license before you can communicate with many of their vendors. This is a good sign that you have reached some good suppliers (plus, Worldwide Brands does an excellent job researching and validating the vendors in their directory as legitimate).
OK, So How do I Get a Reseller License?
The good news that it is pretty darn simple and it typically costs no money to get this resale license. The bad news is that every state has different laws and processes on getting these licenses.
Remember, the major point of getting a reseller license is for sales tax purposes! Having a license (aka, a Sales Tax ID) exempts you from paying tax when you buy the wholesale products BUT now you are responsible for collecting sales tax when you sell your product.
In my example, I got my license in a day. I had to go to the San Diego county tax office, fill out a few forms, then viola! In California, the State Tax IDs are issued by the counties. Also remember that some states don’t collect sales tax and you need to look into their guidelines and responsibilities to obtaining a license.
One more thing about your license: it is based on where you do business NOT where you are incorporated.
So where can you figure out how to get your license? Simple: There is a pretty good website that will direct you to resources to obtaining a reseller license for all states at:
Check that out first! Again, I am no expert at this, but I do know that when I did it is was rather simple and once I had my State Tax ID, communicating with real wholesale companies became really easy!
Good luck! cheers…matt
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