Why Do Business in North Carolina?
You might be surprised to learn that North Carolina has a thriving business community that includes over 900,000 small businesses. These businesses actually employ 44% of the private labor market in the state. The cities often have business-friendly regulations and a low cost of living as one of the many perks of doing business in North Carolina.
The cost of groceries, housing, homes, utilities, and transportation are way below many other places in the United States. Entrepreneurs are also happy with this southern state’s very manageable tax code.
A Tax Resale Certificate Is A Great Way To Save On Taxes
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. Overall, these certificates can provide great savings on sales tax.
First, You Must Get A North Carolina Tax Permit
Your business can register for a North Carolina Tax Permit online or by regular mail.
You will need the following information:
- Your Social Security Number (SSN) or Federal Employer Identification Number (FEIN), and North Carolina Secretary of State Number (SOS), if applicable
- Your business name, address, phone number
- Partner or Responsible Person, if applicable (name, title, SSN, address)
- Details about your business (begin date, type of business, etc.)
What Businesses Need To Get A Tax Permit?
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.
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.
Remember To Verify Any Tax Resale Certificate Presented To You
A vendor can refuse any 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.
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.