Author: Dona Basu

Texas Is A Fantastic Place For Entrepreneurs

Texas has always been a great place for people with big dreams. Very recently Texas has actually been recognized as the best place to start a business in all the United States. The state has been recognized for creating an amazing business environment for mostly the following reasons:

• Great Talent
• Thriving Metropolitan Areas
• Good Quality Universities
• Tax Benefits
• Innovation
• Friendly Towards Small Businesses

Getting A Tax Resale Certification Is One Of The Best Things You Can Do As An Entrepreneur

If you decide to start a business, a tax resale certificate can really save you money on taxes.

In short, a tax retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell, such as wood for a cabinet.

However, the process can be difficult and the rules are different for each state. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our second blog in this series so you can learn even more valuable information about tax resale certificates.

Texas Has Great Tax Benefits

The Business Tax Climate Index recognizes that Texas is a very appealing location for small businesses. This is because the state does not have an individual income tax or a corporate income tax.

Tax Resale Certificates Are A Great Way To Save Money In Texas

The state allows you to be exempt from sales tax if the taxable item is intended for resale. This means that you need to provide the seller with a resale certificate or pay a sales tax on the item. The certificate serves as a guarantee that you intend to resell the item, so sales tax will not be needed at the time of purchase.

What Information Do I Need For The Resale Certificate Registration Form?

You must provide the following information:

• The name and address of the purchaser
• The name and address of the seller
• The registration number of the purchaser
• An accurate description of property purchased for resale
• The reason for the exemption
• A statement that if the property is put to use in a taxable manner that the purchaser will remit the consumer use tax
• Date and Signature and Title of the authorized individual at the purchaser

Make Sure You Understand Your Responsibilities

You can only use the resale certificate in Texas if the goods you are purchasing are going to be resold. If there is any uncertainty about whether or not you are going to resell the items, then you should definitely not use the resale certificate for the tax exemption. This will make your business liable for the unpaid taxes on the original sale. The use of a resale certificate in this manner to evade taxes is illegal and can result in criminal charges ranging from misdemeanor to felony, based on the amount of taxes evaded.

How Do You Submit A Resale Certificate In Texas

A seller can not legally sell you any goods tax-free in Texas if you do not present them with a properly filled out resale certificate. The original, filled-out certificate should be furnished to the seller immediately when the purchase is being made. It is not required for you to send a copy of the form to the Comptroller’s office. However, if all of your purchases are for resale, your vendors are allowed to accept a blanket resale certificate, which will cover that all items purchased going forward are intended for resale.

Remember To Verify Any Tax Resale Certificate Presented To You

A customer can also present a tax resale certificate to you as a retailer and it is your discretion of whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.

• Make certain that the certificate is properly filled out and signed by the business owner
• You should be able to verify the certificate online by using the certificate
• You should also be able to verify online if the certificate has expired
• Be award of purchase that seem suspicious and do not relate to the customer’s business in a logical manner
• It is important that you keep the certificate on file for at least 5 years in case of a tax audit.

Make Sure You Understand The Specific Guidelines Of Your State

A tax resale certificate is a wonderful way a business can avoid unnecessary taxes. However, we understand that there are a lot of rules and regulations, which can be very confusing to any business owner.

That Is Why We Are Here To Help

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

Do Not Overlook Michigan

Michigan might not be the first state you think about to start a small business but it definitely should be at the top of your list. Michigan has a lot of great things to offer new entrepreneurs which include:

• Reasonable Cost Of Living
• Nurturing Business Friendly Communities
• A Good Compensation Model

Reasonable Cost Of Living

The real estate prices in Michigan are actually 400 percent less than the San Francisco and Silicon Valley areas. Michigan is actually one of the most affordable places to live in the United States. The region’s affordability does not mean a sacrifice in the quality of life. Michigan is able to boast of awarding-winning schools, outstanding health care, and vibrant downtowns.

Nurturing Business Friendly Communities

Small businesses make up at least 99.6 percent of all of Michigan’s businesses, and nearly half of residents who work in the private sector are employed by small business owners. Michigan has a business-friendly environment that has supported small business growth. This has led to opportunities abound in the automobile, manufacturing, and cybersecurity industries.

A Good Compensation Model

Michigan has a talented workforce that has a high level of college graduates in the 24-65 age range. Most of the small business owners are required to carry workers’ compensation insurance. Michigan workers’ compensation is a great tool to help shield small businesses when an employee gets injured at the workplace. Workers’ comp provides pay and medical benefits to employees who have a work-related injury.

What is A Tax Resale Certificate?

It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states actually call them exemption certificates or reseller’s permits.

Getting Started In Michigan

In Michigan a tax resale certificate is called aMichigan Sales and Use Tax Certificate of Exemption  Before a business starts to sell any type of taxable products or services,they must first get a Michigan Sales Tax License from the Michigan Department of Treasury. The Sales Tax License is sometimes referred to as a seller’s permit, sales tax number, or sales tax permit and is valid for up to 4 years.

Is The Tax Resale Certificate The Same As A Sale’s Tax License?

It is important not to confuse a tax resale certificate with a sales tax license. A sales tax license allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. 

Does A Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states. 

Remember To Verify Any Tax Resale Certificate Presented To You

A customer can also present a tax resale certificate to you as a retailer and it is your discretion of whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.

• Make certain that the certificate is properly filled out and signed by the business owner
• You should be able to verify the certificate online by using the certificate
• You should also be able to verify online if the certificate has expired
• Be award of purchase that seem suspicious and do not relate to the customer’s business in a logical manner
• It is important that you keep the certificate on file for at least 5 years in case of a tax audit.

Make Sure You Understand The Specific Guidelines Of Your State

A tax resale certificate is a wonderful way a business can avoid unnecessary taxes. However, we understand that there are a lot of rules and regulations, which can be very confusing to any business owner.

That Is Why We Are Here To Help

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

We Give You The Assistance You Need

At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

We provide a tax resale certificate for the top states that include:

• California
• Texas
• Massachusetts
• New York
• New Jersey
• Illinois
• Florida

We know that there is a lot of confusion in the world right now. Luckily, these tax credits will help ease some of the burdens. A tax resale certificate is a fantastic way to make sure your business is in great shape to take advantage of consumer demand once the dust settles. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. 

Tax Resale Certificates

A tax resale certificate allows you to not pay sales tax on items that you simply decide to resell. This will also apply to supplies that are getting to be utilized in products that you simply will resell, like wood for a cupboard.

It is critical that you simply understand that tax resale certificates also can only be used on items that will be resold. Office supplies, like new computers for your employees, wouldn’t fall into the category of retail. It can be considered fraud to not pay sales tax on these things.

If this is confusing for you, just consider tax resale certificates as state tax exemption certificates. Some states actually call them exemption certificates or reseller’s permits.

In New Jersey, Make Sure that Your Purchases Qualify For Sales Tax Exemptions

Again, only purchases that will be resold exactly as they are or will make up materials for products your business makes or repairs qualify for sales tax exemptions in New Jersey.

The following will not qualify:

• Office supplies
• Tools and equipment used by your business
• Materials and services used for capital improvements to your business
• Anything for your personal use
• For example, if you make clothes for your store, you don’t have to pay sales tax on purchases of fabric, but you do have to pay it on the needles you use to sew the garment.

Make Sure You Have the Proper New Jersey Forms

If you are an out of state seller, you will need to present Form ST-3NR to sellers in order to obtain the sales tax exemption. If you are an in-state seller then you need to present Form St-3.

Both these forms will require you to have a tax identification number from the state. This identification number indicates that you have received a permit to collect sales tax from the state of New Jersey. However, if you are not registered in New Jersey to collect sales tax then you can substitute the tax identification number with a number from another state or your federal employer identification number.

The New Jersey Division of Taxation regulates that a business has to keep the certificate on file for 4 years from the date of the transaction so that it can be inspected if necessary.

.Does A New Jersey Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states. 

What If A Customer Presents Me With A Tax Resale Certificate? 

A customer can also present a tax resale certificate to you as a retailer and it is your discretion of whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.

Do Big Box Stores Usually Accept Tax Resale Certificates?

A retailer should also be aware that many Big Box Stores such as Walmart or Target refuse to honor tax resale certificates to prevent retail arbitrage. Retail arbitrage is buying a rare item from a store and reselling it for a markup.

What Information Do I Need For The Tax Certificate Registration Form?

You must provide the following information:

• The name and address of the purchaser
• The name and address of the seller
• The registration number of the purchaser
• An accurate description of property purchased for resale
• The reason for the exemption
• A statement that if the property is put to use in a taxable manner that the purchaser will remit the consumer use tax
• Date and Signature and Title of the authorized individual at the purchaser

What Is A Consumer Use Tax?

A consumer has to pay taxes from purchases made from local retailers. This is often called a sales tax and is charged in 45 states. This money is usually collected on behalf of the state by the seller.

Consumer use tax is when the retailer does not charge the appropriate tax and therefore the sales tax is paid directly by the consumer to the state. This usually happens when something is purchased online or from a catalog. In these instances, the vendor does not have a set location in the state, so the sales tax can not be collected from the vendor.

Make Sure You Understand The Specific Guidelines Of Your State

A tax resale certificate is a wonderful way a business can avoid unnecessary taxes. However, we understand that there are a lot of rules and regulations, which can be very confusing to any business owner.

That Is Why We Are Here To Help

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. Unfortunately, the rules of Tax Resale Certificates can vary greatly by the state which can be very confusing

At Tax Resale Certificate,  we make the process as easy as possible. We know that a hard-working entrepreneur has a million jobs and it is smart to take advantage of our expertise.  Just Our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

What is A Tax Resale Certificate?

It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states actually call them exemption certificates or reseller’s permits.

As a savvy business retailer, it is important that you are aware of how to utilize tax resale certificates to your best advantage. In short, a retail certificate allows you not to pay sales tax on items that you plan to resell. This can also apply to supplies that are going to be used in products that you will resell such as wood for a cabinet. This is a significant saving and can save your business a ton of money if utilized properly. Our article Everything You Need to Know About Tax Resale Certificates will give you an in-depth rundown about how these types of certificates can help your business.

Unfortunately, the rules of Tax Resale Certificates can vary greatly by the state which can be very confusing. Our site makes the process as easy as possible. Just take advantage of these user-friendly options to help take the headache of applying for a tax resale certificate off your plate.

Getting Started In Connecticut

First, your business must get a Connecticut Sales Tax Permit from the Connecticut Department of Revenue Services. This sales tax permit can also be called a seller’s permit, sales tax number, or sales tax license. After registering, a sales tax number will be provided by the Department of Revenue Services. This number will be listed on the Resale Certificate.

The Documents Can Become Confusing In Connecticut

Sometimes it is hard to keep track of the different documents. You must make sure to understand that the Sales Tax Permit and the Resale Certificate are completely separate documents. 

A Retail Certificate will allow you to exempt purchases from sales tax as long as you intend to resell the item. The Sales Tax Permit allows a business to sell and collect sales tax from taxable products and services in the state.

How Do I Know If I Need To Pay Sales Tax In A Given State?

In order to establish whether or not a state can impose a sales tax upon your business there first needs to be nexus. Nexus relating to state sales tax is established by a connection between the state and your business. How this connection is defined has been subject to fairly recent changes that reflect changes the way business is conducted in modern times.

Traditionally, nexus has been established by the business actually having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts actually eliminated physical presence as the major requirement for creating nexus. It still should be noted that physical presence is considered an important requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

Nexus

Nexus is defined as having a presence or a significant connection to a state. Your sales tax obligations can change significantly depending on the state. Most of the time, however, a mere economic connection to a state is enough to create nexus.

State connections include:

• Having offices in the state
• Warehouses and distributors located in the state  
• Employees
• Affiliates located in the state
• Making a certain amount of money or transactions in a state 
• Doing physical business in a state for some time 

Connecticut Is A Great Place For Businesses

There are many reasons why businesses flock to Connecticut. The state is known for having an excellent education system. This results in a very talented and skilled labor force. Connecticut is also known for its high standards of living which makes it a great place to establish a family and find careers with bright futures. The last decade ended with Connecticut showing that business profitability at an all-time high. More companies in the state were expanding and almost 90 percent said they were doing well.

Make Sure You Understand The Specific Guidelines Of Your State

A tax resale certificate is a wonderful way a business can avoid unnecessary taxes. However, we understand that there are a lot of rules and regulations, which can be very confusing to any business owner. More importantly, if you misunderstand or wrongly fill out incorrect forms you could be subject to heavy penalties as well as miss out on some very important reselling tax advantages.

That Is Why We Are Here To Help

Unfortunately, the rules of Tax Resale Certificates can vary greatly by the state which can be very confusing. On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. We understand that as a busy entrepreneur, you have a million things to worry about with each passing day. You do not want to miss out on the savings that come with a resale certificate

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else. Our site makes the process as easy as possible. Just take advantage of these user-friendly options to help take the headache of applying for a tax resale certificate off your plate.

Tax Resale Certificates

A tax resale certificate allows you to not pay sales tax on items that you simply decide to resell. This will also apply to supplies that are getting to be utilized in products that you simply will resell, like wood for a cupboard.

It is critical that you simply understand that tax resale certificates also can only be used on items that will be resold. Office supplies, like new computers for your employees, wouldn’t fall into the category of retail. It can be considered fraud to not pay sales tax on these things.

If this is confusing for you, just consider tax resale certificates as state tax exemption certificates. Some states actually call them exemption certificates or reseller’s permits.

New York

Like most states, NY permits resellers to get items tax-free if the products are to be resold. Such items must then be documented on a replacement York resale certificate. In order for your business to participate, you’ll need to register as a seller and acquire a Sales Tax Certificate of Authority, which provides you permission to gather sales tax. You can then apply for the NY resale certificate, also called a nuisance tax exemption certificate.

Obtaining a Certificate of Authority

In New York, if you have a connection to the state (see more on this below) and sell taxable services or tangible property—even from a home-based business or temporarily, such as at craft fairs—the state requires that you register with the state Department of Taxation and Finance using the Business Person and Responsible Contact Questionnaire (Form DTF-17.1) to obtain a Sales Tax Certificate of Authority before opening up shop.

Tangible property includes physical items, such as artwork, flowers, clothing, and motor vehicles. Many services that involve repairing or maintaining the tangible personal property and real property, such as car repair, dog grooming, and snow plowing, are also subject to sales tax.

The requirement to register as a vendor in New York also applies if you have “some additional connection with the state,” which includes maintaining a place of business, soliciting business in the state through employees or agents, or regularly delivering products to customers in the state using your own vehicle, even if you are an out-of-state vendor. Moreover, if you sell through catalogs but have such a connection with the state, operate a hotel, or receive amusement charges, you must also register your business in New York.

If you are an out-of-state vendor without ties that require you to register with the state, you do not need a Certificate of Authority to use a resale certificate. Instead, you may use a Resale Certificate (Form ST-120), but you must supply your registration number from the state in which you have registered your business to collect sales tax.

For more information about who must register as a vendor in New York, see the state’s Tax Bulletin (ST-175).

New York Resale Certificate (Form ST-120)

Once your business is registered with the state and features a Certificate of Authority, you’ll use a Resale Certificate to get items without paying sales tax, as long as you intend to resell them and collect sales tax from buyers.

Within 90 days of purchase, you want to provide the vendor with a resale tax certificate. You can use a “blanket certificate” if you make any purchases from the same seller. New York has several different kinds of exemption certificates, so you must be sure you’re using the correct one for the transaction type. All exemption certificates require specific information, including both the purchaser’s and seller’s names and addresses, date, and purchaser’s signature. Note that the state also accepts electronic nuisance tax exemption certificates.

There are no fees associated with obtaining a Certificate of Authority or using a resale certificate.

New York takes operating without a Certificate of Authority seriously: violations could result in a penalty of up to $10,000.

Expiration of a New York Resale Certificate

While a resale certificate itself doesn’t expire, a Certificate of Authority is valid for a maximum of three years and is “renewable at the discretion of the Department of Taxation and Finance.”

Determining whether you need to collect sales tax in New York and how to do it properly can be complicated, particularly as a reseller, so you may wish to consult an attorney or online service provider to help you through the process.

Remember To Verify Any Tax Resale Certificate Presented To You

In the first part of our series, we mentioned that a vendor can refuse a tax resale certificate. This is because the vendor will be the one liable to the state government should anything be remiss. That is why you should always take the following steps to assure that anything presented to you is valid.

• Make certain that the certificate is properly filled out and signed by the business owner
• You should be able to verify the certificate online by using the certificate
• You should also be able to verify online if the certificate has expired
• Be award of purchase that seem suspicious and do not relate to the customer’s business in a logical manner
• It is important that you keep the certificate on file for at least 5 years in case of a tax audit.

Make Sure You Understand The Specific Guidelines Of Your State

A tax resale certificate is a wonderful way a business can avoid unnecessary taxes. However, we understand that there are a lot of rules and regulations, which can be very confusing to any business owner.

That Is Why We Are Here To Help

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

Tax Resale Certificates

A tax resale certificate allows you to not pay sales tax on items that you simply decide to resell. This will also apply to supplies that are getting to be utilized in products that you simply will resell, like wood for a cupboard.

It is critical that you simply understand that tax resale certificates also can only be used on items that will be resold. Office supplies, like new computers for your employees, wouldn’t fall into the category of retail. It can be considered fraud to not pay sales tax on these things.

If this is confusing for you, just consider tax resale certificates as state tax exemption certificates. Some states actually call them exemption certificates or reseller’s permits.

Georgia

A tax resale certificate is called a Georgia Sales Tax Certificate of Exemption. It is critical that you understand that tax resale certificates can also be used on items that will be resold. Here is a list of common items that are not eligible for the resale exemption:

• Goods you or your employees purchase for private use.
• Goods your business gives away for free of charge or as gifts.
• Goods your business uses to conduct business, like office supplies, equipment, etc.
• Goods your business rents to be used and not for re-leasing.

How Do I Know If I Need To Pay Sales Tax Georgia?

In order to establish whether or not a state can impose a sales tax upon your business there first needs to be nexus. Nexus relating to state sales tax is established by a connection between the state and your business. How this connection is defined has been subject to fairly recent changes that reflect changes the way business is conducted in modern times.

Traditionally, nexus has been established by the business actually having a physical presence in the state. However, due to the explosion of e-commerce, physical presence within a state is no longer a requirement for sales tax nexus. In the case of South Dakota v. Wayfair, the courts actually eliminated physical presence as the major requirement for creating nexus. It still should be noted that physical presence is considered an important requirement to allow a state to collect sales tax and is still one of the first considerations for sales tax.

What Are The Different Methods In Which The States Establish Sales Tax Nexus?

The definition of sales nexus can vary greatly from state to state. Here is a list of the different ways in which states can determine sales tax nexus:

• Click-Through Nexus legislation
• Affiliate Nexus legislation
• Marketplace Nexus legislation
• Notice and Reporting Requirements
• Economic Nexus 

Click-Through Nexus legislation- This usually requires a remote seller to meet a minimum sales requirement in the state resulting from an in-state referral agent who is a resident of the state. The agent must be making commission payments to the referral agent for any sales that are the result of the click-through referrals from the agent’s website. 

Affiliate Nexus legislation– A remote retailer holds a substantial interest or is owned by a retailer that is located within the state and sells a similar type of product under a similar business name. Instate retailers can also be used to promote or market the product to in-state customers. Affiliate nexus does not require common ownership and may not include services such as sales and delivery.

Marketplace Nexus legislation– This definition applies to marketplace facilitators who operate a business in the state and provides e-commerce infrastructure, customer service, payment processing, and marketing services to individual sellers. The facilitator is the one that is required to register with the state and collect the sales tax rather than the individual sellers.

Notice and Reporting Requirements– This legislation requires that a retailer does not collect the state sales tax themselves but notify their buyers that they must report state use tax on all their purchases. The retailer might be required to send the purchaser a statement of all their purchases.

Economic Nexus- An out-of-state retailer generally is required to collect and remit sales tax once the retailer meets a set level of sales transactions or gross receipts activity (a threshold) within the state. No physical presence is required.

To find out more about state sales tax please visit the sales tax institute.

Remember To Verify Any Tax Resale Certificate Presented To You

In the first part of our series, we mentioned that a vendor can refuse a tax resale certificate. This is because the vendor will be the one liable to the state government should anything be remiss. That is why you should always take the following steps to assure that anything presented to you is valid.

• Goods you or your employees purchase for private use.
• Goods your business gives away for free of charge or as gifts.
• Goods your business uses to conduct business, like office supplies, equipment, etc.
• Goods your business rents to be used and not for re-leasing.

Tax Resale Certificate Is Here To Help

Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. This way you can completely focus on the great opportunities presented by your amazing business.

Illinois Is Booming

There are more than 1.2 million small businesses operating in the state of Illinois. These businesses employ 2.5 million people, which is 45.1% of the state’s workforce and nearly 20% of the whole population. Small businesses account for 99.6% of the state’s private enterprise, making them an important part of Illinois’s economy.

Great Universities And Research

There are more federal research dollars flowing into the universities here than any other region in the U.S. So if you just look at the federal funding–and this is just for Illinois, Michigan, Wisconsin, those three alone receive over $2 billion a year in U.S. federal funding. And it depends on the year, but they’re number three, four and five within the U.S. in research funding.

What is A Tax Resale Certificate?

It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail.  It would be considered fraud not to pay sales tax on these items.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states actually call them exemption certificates or reseller’s permits.

Is The Tax Resale Certificate The Same As A Seller’s Permit?

Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. 

Does A Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate in some states. 

What If A Customer Presents Me With A Tax Resale Certificate? 

A customer can also present a tax resale certificate to you as a retailer and it is your discretion of whether or not you want to exempt them from the required sales tax. It is always a good idea to check on the certificate because you will be held responsible, if the certificate is expired or fraudulent, for the unpaid state sales tax. Verification is key in making sure that the correct due diligence has been completed to authenticate the tax resale certificate.

 The Various State Tax Laws Can Be Confusing

Each state has its own unique tax laws related to retail sales tax that are constantly changing. There are many different definitions of what is nexus and what manner of tax resale certificates are acceptable. Some states accept resale documentation from other states, while many do not.

Third-party fulfillment companies make this even more difficult to comprehend.  A large company like Amazon can have one shipment travel through a dozen states, which can often trigger nexus.

Illinois

Before you’ll use a resale certificate, you want to register your business with the state. This process varies depending on what type of company you have. For more detailed information on how to register your business in Illinois, see the Department of Revenue’s instructions. Note that you simply could also be liable for filling out other tax forms also.

After registering your business, you will receive an Illinois Certificate of Registration, which allows you to conduct business responsible for remitting sales taxes to the state. You must then display the certificate prominently in your home or business. Certificates of Registration are renewed automatically so long as you are up-to-date on filing and payment obligations.

The instructions for a way to use for a resale certificate in Illinois are fairly straightforward since you do not even need to send anything to the state. You are in charge of keeping track of your purchases, as described in more detail below.

How to Use a Resale Certificate

Once your business is registered as a reseller with the Illinois Department of Revenue, you want to keep track of your tax-exempt purchases on a resale certificate. Certificate of Resale (Form CRT-61) provides an easy way for you to do this, although you may use your own form so long as it contains all of the required information. No matter which format you employ, you want to provide the retailer with a replica.

On the form, you must include the name and business addresses of both the seller and purchaser. You must also include your retailer account ID number and/or your reseller number.

What could be tricky is making sure your purchases actually qualify as exempt from sales, so be sure to read the Department of Revenue’s definitions regarding sales and use taxes carefully.

Expiration of Illinois Resale Certificates

The Illinois Department of Revenue notes that resale certificates documenting tax-exempt purchases must be updated a minimum of once every three years.

If you’d like to have some peace of mind that you’re complying with all applicable tax rules, you might consider working with an attorney or legal document preparation service, which can guide you through the process.

Do Not Get Frustrated.

We understand that this is a whirlwind of information that can be very frustrating. There are great differences between states and you do not have the time to sort this out and properly run your business. That is why TaxResaleCertificate should do all the hard work for you. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence. Make sure you check out our other blogs in this series so you can learn even more valuable information about tax resale certificates.

A California Resale Certificate Is One Of The Best Things You Can For Your Business

The average business in California will one day need to either accept or give a tax resale certificate. The process can often be confusing for even the savviest small business owners. That is why we at Tax Resale Certificate want to make sure that you understand this often confusing process.

What is A California Tax Resale Certificate?

It is critical that you understand that tax resale certificates can also be used on items that will be resold. Office supplies, such as new computers for your employees, would not fall under the category of retail. It would be considered fraud not to pay sales tax on these items. In California, the State Board of Equalization, known as the BOE or the SBE, imposes sales tax on the sale at retail of tangible personal property.

If this is confusing for you, just think of tax resale certificates as state tax exemption certificates.  Some states actually call them exemption certificates or reseller’s permits. Purchasers who are engaged within the business of selling tangible personal estate may issue resale certificates when purchasing items they’re going to sell within the regular course of their business operations. When a seller accepts a legitimate resale certificate that is presented in good faith and during the proper time period, the seller does not owe tax on that sale. CDTFA-230, General Resale Certificate, is often issued by purchasers when purchasing goods they’re going to resell within the regular course of their business operations.

Generally, resale certificates are used:

• When purchasing finished items that are for resale.
• When buying materials which will become a physical part of an item that will be held for resale.
• When purchasing items which will be solely for demonstration or display while holding them for sale in the regular course of business operations.

Purchasers can not use a resale certificate when buying a product they will:

• Use rather than sell*,
• Use in their business before they sell it,
• Use for a personal purpose, or
• Hold as an investment for appreciation in value and for sale in the future.

Is The California Resale Certificate The Same As A Seller’s Permit?

Even though tax resale certificates are called reseller’s permits in some states, it is important not to confuse them with seller’s permits. A seller’s permit allows a retailer to charge tax on items that they are going to sell to a customer. A tax resale certificate allows you to buy items that are intended for resale without paying a sales tax on those items. Before a business starts selling products or providing taxable services, they must first get a California Seller’s Permit from the California Department of Tax & Fee Administration. The Seller’s Permit is sometimes referred to as a sales tax permit, sales tax number, or sales tax license.

Guidelines For California Resale Certificates

California as a state actually requires business owners to provide their own tax resale certificates. This can be printed in any type of formats such as a memorandum or a form letter. However, the following must be included in order for it to be accepted:

• The name and address of the purchaser.

• The purchaser’s seller’s permit number. If you aren’t required to carry a seller’s permit number, you’ll state that on the resale certificate and explain why. For instance, you’ll purchase products in California, buy sell them in other states where you don’t have nexus. Or you may purchase products that would require sales tax if sold individually but don’t call for it due to the way you use them. For example, you’ll purchase twine to use on your canned foods items, which you sell tax-free.

• A description of the product you are purchasing.

• A statement that the product is for resale or that it will be resold. The California Board of Equalization will only accept a statement containing these exact words. It will not accept statements that contain the words “nontaxable” or “exempt” instead.

• The date of the certificate, plus the signature of the purchaser or someone who can legally act in their place. The BOE will accept digital signatures as long as it’s unique to the person using it, it can be verified, it’s under the control of the person using it, it conforms to the Secretary of State regulations, and it’s “linked to data in such a manner that if the data are changed, the digital signature is invalidated.” In addition, the California Secretary of State provides a list of approved digital signature certification authorities.

• If you make multiple purchases from the same vendor, you can request that they keep your resale certificate on file rather than asking for a new one every time.

Does A Vendor Have To Accept My Tax Resale Certificate?

It is extremely important to a retailer’s bottom line that they do not pay sales taxes on goods if there is a possibility that the tax can be exempted on a state level. However, it is also crucial to understand that a wholesaler is not required to accept your tax resale certificate. If the vendor doesn’t accept the certificate, the buyer will have to pay the sales tax on the merchandise being purchased.  In most cases, they will be able to get credit for the sales taxes paid later on in their sales tax filing. 

If the seller is out-of-state, California is one of a few states that don’t recognize out-of-state resale certificates. In order to get tax-free from vendors in other states, the customer will need to register for a nuisance tax permit within the seller’s state.

That Is Why We Are Here To Help

It is understandable that all this information can be very daunting. Not correctly understanding sales tax and the benefits of a tax resale certificate can lead to a great deal of trouble. A retailer could lose out on extremely beneficial sales tax exemptions status. A savvy business owner will understand that having a tax resale certificate will save them a good deal of money but leave the actual headache of registration to someone else.

On the other hand, misunderstanding and not paying the correct sales tax to a state government could very much hurt a business’s standing and reputation. At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

One of your first important decisions when starting a business is deciding what type of business entity best suits your needs. The business entity you choose can have serious consequences regarding liability and taxation. This article will help you better understand your options.

What is a business entity?

A business entity is a corporation created by one or more natural persons to hold on a trade or business.

The following are types of business entities:

• Sole proprietorship: Unincorporated business with one owner or jointly owned jointly owned by a marriage

• General partnership: Unincorporated business with two or more owners

• Limited partnership: Registered business composed of active, general partners and passive, limited partners

• Limited liability company: Registered business with limited liability for all members

• Professional limited liability company: LLC structure for professionals, like doctors and accountants

• C-corporation: Incorporated business composed of shareholders, directors, and officers

• S-corporation: An Incorporated business that is taxed as a pass-through entity

• Professional corporation: Corporate structure for professionals, such as doctors and accountants

• B-corporation: For-profit corporation that is certified for meeting social and environmental standards

• Nonprofit: Corporations: Formed primarily to benefit the public interest rather than earn a profit.

What is personal liability?

Personal liability means that your personal assets are exposed if one of your co-owners or employees commits an unlawful action that injures someone, such as writing a defamatory article or post. If there is a judgment against your company, it can be satisfied by reaching into your bank account, home, or automobile simply because of your status as an owner of the business.

Sole Proprietorship

If your business is going to be fairly small a sole proprietorship might be the right business entity for your needs. You, as the owner, will be in control of all business decisions and profits. You will also only be taxed one time on all business profits.

The greatest disadvantage of a sole proprietorship is that there is an unlimited liability. This means that you will be held personally responsible for all the business debts and losses.

This is great for the type of person who truly enjoys independence and wants to make their own rules without answering to others. You are your business and are okay with there being no formal division.

Partnership

A partnership is similar to a sole proprietorship except that there is more than one individual that owns the business. The liability of the partners for the debts of the business is unlimited. Each partner is ‘jointly and severally’ responsible for the partnership’s debts; that’s , each partner is responsible for their share of the partnership debts also as being liable for all the debts of the business. This means that you can be held responsible for your partner’s neglectful actions.

If you are someone who enjoys working with a team and does not want to shoulder all the responsibility for the business yourself, a partnership might work for you. If you have the right blend of personalities you can complement each other quite well and be stronger than any of the partners could ever be on their own.

Limited Partnership

A limited partnership contains two distinct types of partners:

• General Partners
• Limited Partners

The general partners run the day to day activities of the business. The general partners are also personally liable for a business’s debts and liabilities.

The limited partners do not have much to do with the way a business is run. They have limited liability concerning a business’s debts and they usually pay fewer taxes regarding the profit. The limited partners can be looked upon as silent investors.

If you want to retain primary authority in your business but definitely could use some other sources of cash than a limited partnership would be a great compromise.

C-Corporation

A C-corporation (c-corp) is when the business is considered separate from its owners and operators.  A c-corp consists of shareholders (the owners), a board of directors, and officers who have control over the corporation. One person can fulfill all these functions.

The great advantage of a c-corp is that the owner/owners are not personally liable for the debts and liabilities of the company. The disadvantage is that there is double taxation on profits. First, the corporation is taxed as a separate entity and then you are again taxed on the profits in your own personal taxes.

This is a great model for those who really want to start a business that is quite large in scope and size. However, you will be answerable to your shareholders for good and bad outcomes of your business decisions.

S-Corporation

If your corporation has fewer than 100 shareholders who are all individuals, not corporations; have only one class of stock, and be owned by U.S. citizens or resident aliens you could turn your business into an S-Corporation (s-corp).

An s corp is not subject to double taxation as a c corp is. That means that an s corp’s revenue is not taxed at the corporate level. It is only taxed when paying out as salaries or dividends to shareholders. An s-corp is often a better choice than a c-corp for most small businesses. 

It should also be noted that corporations have a lot of regulations regarding paperwork and documentation. This is not an entity for you if you want to be footloose and fancy-free.

Limited Liability Company (LLC)

Limited Liability Companies are extremely popular among many business owners because they often combine the best both worlds when it comes to liability and taxation.

These hybrids clear their owners of personal liability for the business’s debts or liabilities.

They also allow you to actually choose whether you want your LLC to be taxed as a partnership or as a corporation.

At the end of the day, you are the one who should decide what business entity best suits your needs. Make sure you consider important factors like taxation and liability. You should also go to your secretary of state’s website to find out what it takes to formally register your business.

If you are a retail business you should also be aware that resale certificates are also a great way to save on taxation. A retail certificate allows you not to pay sales tax on items that you plan to resell. Please read our article, Everything You Need to Know About Tax Resale Certificates to find out more. Then let the experts at our site guide you through this confusing process so your business can be as profitable as possible.

Tax Deductions For The Self-Employed Part 2

Welcome back as we continue our series on tax deductions that the self-employed can not afford to miss.

Home Office Expenses

Using part of your home for business allows you to deduct expenses for the business use of your home. This can be applied to all types of homes including business owners who rent.

If you use your home exclusively and regularly for conducting business you can deduct the following:

• Mortgage Interest
• Insurance

In order to qualify for the home office deduction, you must show that your home is used regularly and exclusively for conducting business and is the principal place of business.

There are two methods for calculating the house office deduction. In the standard method, you use Form 8829 to itemize the various expenses involved in using and maintaining your home office. This includes rent or mortgage interest payments, utilities, homeowners insurance premiums, and property taxes. In the simplified method, you determine the square footage of your home office (up to 300 square feet) and multiply by five dollars.

The simplified method is more straightforward but you should see which one gives you a larger deduction amount.

Office Expenses

We should point out that office expenses are not the same as home office expenses. Office expenses should include things such as maintenance, cleaning, and repair. This is mostly if you use a dedicated office for your business and not a home office.

Interest

We have already mentioned being able to deduct mortgage payment interest. If you’ve got a mortgage on a property that’s primarily used for your business (that is, not your primary home), you’ll write off the interest thereon mortgage. You’ll need to get a Form 1098 from the lender to report the interest paid therein year.

The second category includes all other sorts of interest. Examples are business credit cards, lines of credit, or interest on equipment loans.

Professional Services

A self-employed person can deduct fees paid to licensed professionals like attorneys and accountants, as long as some of the services are done in furtherance of your business. Just make sure you separate the business and personal fees.

Licenses And Certifications

You can deduct any expenses associated with business licenses, certifications, and regulatory fees related directly to your business. This can include incorporation fees and small business licenses for your state.

Rent Or Leasing Payments

If you rent office space, cars, or any physical equipment for your business, all those expenses are deductible.

If you leased your car for a term of 30 days or more, though, you’ll need to reduce the deduction by an “inclusion amount.” For more information, refer to the “Leasing a Car” section in chapter 4 of Pub. 463.

Repairs and maintenance

This category includes incidental repairs and maintenance made to machines and other property. For example, you can deduct costs for painting your office or fixing your broken computer.

Educational Expenses

Any expenses that are work-related education expenses can be deducted.

To be deductible, your expenses must be for education that:

(1) Maintains or improves your job skills or

(2) The law requires you to keep your status or occupation. 

However, albeit the education meets either of those tests, the education cannot be a part of a program that will qualify you for a replacement trade or business or that you got to meet the minimal educational requirements of your trade or business.

Expenses that you can deduct include:

• Tuition, books, supplies, lab fees, and similar items
• Certain transportation and travel costs, and
• Other educational expenses, like the value of research and typing

Supplies

Incidental office supplies such as paper, pens, and clips can be deducted from your taxes. However, if the supplies are consumable, such as plastic needed to produce a product, you are limited to only deducting the amount that you use for the tax year, not the total amount that you purchased.

Employee Retention Tax Credit

This credit was designed to help companies retain employees while facing pandemic hardships. Businesses will be eligible for this credit if operations were fully or partially suspended due to the coronavirus shutdown. You can also be eligible if gross receipts for your company went down more than 50 percent compared to the same time period in the previous year.

Businesses that are eligible can get a refundable 50% tax credit on wages with a maximum of $10,000 per employee. The credit can be obtained on wages paid or incurred from March 13, 2020, through December 31, 2020.

Employers will need to report total qualified wages and related health insurance expenses on their quarterly tax returns on Form 941. This needs to be done in the second quarter of 2020. The Employee Retentions tax credit can be taken against the employer’s share of Social Security taxes.

Family And Sick Leave

Employers will be 100 percent reimbursed for providing sick and paid family leave to employees for reasons related to the Coronavirus, by a tax credit. This will be paid every quarter. Employers will also be able to hold on to their portion of payroll taxes to be deposited and use this money to pay for the sick and family leave. There will be no penalty for businesses that do not deposit payroll taxes because they were anticipating a tax credit.

Let Us Handle The Hassle Of A Tax Resale Certificate

During these tough times, it is nice if someone takes a frustrating but beneficial task off your plate. That is why, here at Tax Resale Certificate, we handle all the headaches of registering for a tax resale certificate for you.

At Tax Resale Certificate,  we make the process as easy as possible. Just take advantage of our user-friendly interface to help take the headache of applying for a tax resale certificate off your plate. 

We provide a tax resale certificate for the top states that include:

• California
• Texas
• Massachusetts
• New York
• New Jersey
• Illinois
• Florida

We know that there is a lot of confusion in the world right now. Luckily, these tax credits will help ease some of the burdens. A tax resale certificate is a fantastic way to make sure your business is in great shape to take advantage of consumer demand once the dust settles. We can make sure that you get all the advantages of a tax resale certificate without having to deal with the hassle of government red tape. Let us handle the hard stuff so you can proceed to run your business with confidence.