Benefits of a Resale License

Entrepreneur:

States have different names for the same permits or licenses: Resale Permit/License, Sellers Permit, Certificate of Authority, Use and Sales Tax License/Permit Sales and Use Tax, Application to Collect/Report Tax, Transaction Privilege (Sales) Tax, Resale Certificate—all adding up to much the same thing.

Beyond the wholesale vs. retail concerns, the other aspect of these names is focused on the sales tax angle. The states, counties or other governing bodies want to be sure that anyone selling anything taxable is first licensed to collect the tax and then renders the tax afterward.

Generally, manufacturers who sell wholesale want to be sure their customers are not buying for their own consumption, thus cutting out the wholesaler’s true customers. So when they ask for a wholesale or resale license, it allows them to be sure they are dealing with a business that will truly resell their goods, either “as is” or as part of a product they’re making. Often when I visit a trade show, similar rules apply—they want to be sure the general public isn’t allowed in so the vendors can focus on the needs of the businesses that visit.