Get Tax Exempt As An ECommerce Seller: Domestic Tax Exemption Tips
You just launched your eCommerce store – congratulations! What’s next? Many states require retailers and service providers to charge sales tax on products and services sold to end consumers. However, some businesses are not required to pay sales tax on select items because they are reselling these products to end consumers.
Sales Tax Exemption
A company that manufactures products may not have to pay sales tax on materials used to create these products. Retail businesses generally do not have to pay sales tax when buying wholesale goods that will be resold to an end user because consumers are already obligated to pay sales tax when making the purchase. If you qualify for a resale certificate, you do not have to pay sales tax when you purchase qualifying goods from a vendor you intend to resell. However, you are still responsible for collecting sales tax from customers. This is one of many reasons it is important to become tax exempt as an ecommerce seller.
Getting a Resale Form
- A resale form requires an owner of a business to affirm that the business is making a purchase of goods for resale.
- You can find resale forms on state revenue department websites.
- Submit your form to wholesale and retail businesses from which the company plans to make purchases.
- Note that some wholesalers and suppliers may also require additional documentation to support the validity of the resale form such as a business license as well as a state taxpayer number.
- Businesses that purchase from suppliers in different states must complete a state-specific resale form for each supplier.
- Enroll in Amazon’s tax exemption program.
The most important aspect of your eCommerce business is the financial one. Figure out your break-even point, both in unit sales and duration (in months), set up your store, and hit the ground running by buying your products under by getting tax exempt on Amazon.
