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 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
- 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.