How to Get a Resale License Step by Step

Understanding What a Resale License Is

A resale license, also called a resale permit or reseller's permit, is an official document that allows a business to purchase goods without paying sales tax. The business then resells those goods to customers, who pay sales tax on the final purchase. This license exists so that sales tax is collected only once—when the end customer buys the product—rather than multiple times as it moves through the supply chain.

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The resale license is issued by your state's department of revenue or taxation. Each state manages these licenses differently, but the core concept remains the same across the country. When you hold a resale license, you present it to your wholesale suppliers, and they sell to you tax-free. You keep a record of the license number for your records and the supplier's records.

Without a resale license, you would pay sales tax on every wholesale purchase. Then when you resell those items, your customers would pay sales tax again. This creates what's called "tax stacking," where the same product gets taxed multiple times. The resale license prevents this inefficiency.

Resale licenses are used by many types of businesses: retail stores, restaurants, hair salons, event planners, florists, and online sellers. Even if your business is small or part-time, you may need one if you purchase items for resale. The requirements and rules vary by state, so understanding your specific state's rules is important before you begin the process.

Practical takeaway: A resale license allows tax-free purchasing of goods you'll resell, and it prevents customers from being taxed twice on the same product.

Determining If Your Business Needs a Resale License

Not every business needs a resale license. The key question is whether you are purchasing items for the purpose of reselling them to others. If you buy products and resell them—whether in a physical store, online, or through any other channel—you likely need one. If you provide a service without selling tangible goods, you typically would not.

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For example, a clothing boutique needs a resale license because it buys clothing and resells it. A photography business does not need one because it provides a service, though it may need one if it sells prints or merchandise. A catering company might need one because it buys ingredients and food items to resell as prepared meals. A dog grooming salon would not need one because it provides a service, though it might need one if it sells shampoos or treats.

Some businesses operate in a gray area. An artist who buys supplies to create handmade items may or may not need a resale license depending on state rules—some states consider the final product a service outcome, while others treat it differently. The best approach is to contact your state's revenue department directly with a description of your business model.

There are also situations where you might think you need a resale license but actually don't. Some states do not tax services, so a service-based business would not use one. Additionally, if you are a manufacturer creating products from raw materials (rather than reselling finished goods), you may have different tax obligations.

Business structure matters too. Sole proprietors, partnerships, corporations, and LLCs all may obtain resale licenses, though the information required on the paperwork may vary slightly. The business type does not determine whether you need a license—the nature of your transactions does.

Practical takeaway: You need a resale license if you buy finished goods and resell them; you typically do not need one if you only provide services.

Steps to Obtain Your Resale License

The process for obtaining a resale license involves several steps, and most states now allow you to handle this through the same process where you register for a sales tax permit or business tax registration. In fact, many states issue the resale license as part of your general sales tax registration.

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First, register your business with your state. This usually means obtaining an Employer Identification Number (EIN) from the federal government through the IRS, even if you have no employees. You can obtain an EIN through the IRS website at irs.gov, and it is issued immediately online at no cost. You will need your Social Security number (if a sole proprietor) or the business formation documents (if an LLC or corporation).

Next, contact your state's department of revenue or taxation and request information about registering for a sales tax permit or resale license. Most states have online registration portals where you can complete the process from your computer. Some states still require mailed or in-person applications. You will need to provide information such as your business name, business address, type of business, and EIN.

The application typically asks you to describe your business activities. Be honest and specific about whether you will be buying for resale. Some applications ask you to estimate monthly or annual sales, which helps the state track tax obligations. You may also need to provide information about the owner or owners.

Processing times vary widely. Some states issue licenses within days; others take several weeks. Many states send the license by mail or allow you to view it online through your account. Some require a fee (usually $0 to $100), and some do not charge anything. Check your state's website for specific fees and processing times.

Keep detailed records of your application, including the date you sent it, confirmation numbers, and any correspondence from the state. You will need your license number to present to suppliers and to file sales tax returns.

Practical takeaway: Register for an EIN first, then contact your state's revenue department to apply for a sales tax permit or resale license through their official registration portal.

What Information You Will Need to Provide

When you register for a resale license, you will be asked to supply several pieces of information. Having these items ready before you start the process will make the registration faster. The specific requirements differ by state, but most states ask for similar core information.

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You will need your Social Security number (if you are a sole proprietor), your federal Employer Identification Number (EIN), and your legal business name and any trade names or "doing business as" names. You will also need your business address—the physical location where you operate or where your business records are kept. A mailing address is sometimes different from your business address, and you should have both ready.

Most states ask you to describe your business in detail. Write out what your business does, what types of products or services you provide, and confirm that you purchase items for resale. This is important because the state uses this information to verify that a resale license is appropriate for your business type.

You will need the names and Social Security numbers (or EINs) of all owners, partners, or members if you are not a sole proprietor. If your business is a corporation, you may need incorporation documents. If it is an LLC, you may need the articles of organization.

Some states ask about the types of goods you will resell. For example, if you sell taxable items in your state, you list those. Some states exempt certain items from sales tax (like groceries in many states), and the state needs to know whether your business deals in taxable or non-taxable items.

You will also be asked to provide estimated sales figures—how much revenue you expect monthly or annually. This helps the state project tax collections and decide how often you must file tax returns. Even if you are starting out and don't know exact figures, provide your best estimate.

If you are renting a commercial space, some states want to verify your lease or proof of occupancy. Have these documents available in case you are asked to provide them.

Practical takeaway: Gather your EIN, business details, owner information, and estimated sales figures before you start the registration process.

Using Your Resale License With Suppliers

Once you have received your resale license, you can use it to make tax-free purchases from wholesale suppliers. Understanding how to present and use your license correctly is essential for maintaining good relationships with your suppliers and keeping accurate tax records.

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When you first contact a wholesale supplier or distributor, you will typically be asked for your resale license number. Provide it proactively. Some suppliers have a form called a "resale certificate" or "reseller's permit form" that you complete and sign. This form certifies that you hold a valid resale license and that you are buying items for resale. The supplier keeps this form on