A Sales Tax Permit is also one of the important items in the formation of your online business and getting legal. This is issued by the state where you reside and allows you to collect taxes on the sale of merchandise within your state.
It’s what most wholesalers will require in order to set up an account. Obviously, that’s going to be a critical step in the process so you won’t be able to skip this one. In fact, if a wholesaler doesn’t ask for your sales tax permit number, that’s a big ol’ red flag.
Legitimate wholesalers don’t want to be held liable for paying tax on their inventory. That’s your job. Having your sales tax permit is a bit of CYA for the wholesaler. If they don’t ask for it, you may be dealing with a middleman who is charging you a premium to access the wholesaler’s inventory. Steer clear of any wholesaler or manufacturer who suggests they don’t need the sales tax permit.
Nothing special about obtaining a sales tax permit provided you’ve filed the certificate for your business structure. Sole proprietorships will need their social security number. Partnerships, LLCs and Corporations will need their federal EIN (Employee Identification Number).
You will also need the following handy depending on in what state you’re filing:
A North American Industry Classification System (NAICS) number:
Don’t let this throw you for a loop; you just need to determine what NAICS number applies to your business type.
It’s a Census Bureau thing. You can look up a NAICS number at http://www.census.gov by doing a keyword search. For example, the keyword “bicycle” gave me 16 different potential classifications including everything from bike part manufacturers to bicycle courier.
Each business classification has a six digit number associated to it. Drill down to the right definition for your business and jot down the number.
If you’re a partnership, LLC or corporation then you’ll need the social security numbers for each partner or corporate officer.
Depending on the state, you may be able to scan and email, fax or complete the process online.
If you’ve heeded my advice and selected a general name for your business, you will likely need to file a DBA (doing business as) to legally operating your website. This is a very simple process that most states allow you to file online. We operate our business as an LLC that consists of multiple e-commerce sites. We file a DBA for each website. In some states, such as Texas, a DBA is referred to as an Assumed Name Certificate. It might also be referred to as a “fictitious business name” or a “trade name.” It’s all the same thing.
Regardless of your state’s terminology, I recommend you file the appropriate form required by your state of residence.