Why Register For A Tax Resale Certificate In Ohio?

Ohio Is A Great Place To Start A Business Because Of Community Support

In Ohio, small businesses can find plenty of help and support among their local communities. A reliable and professional business can easily retain and attract customers after it is established.

Overall, the people in the state want to help local businesses stay strong and thrive. They actually will seek out local businesses rather than automatically go with one that is located out of state.

There Is Great Innovation In Ohio

The small business community in Ohio has plenty of networking opportunities. Entrepreneurs can look to find plenty of support among their peers. In addition, Ohio is home to an impressive network of colleges and universities. This means that one can find many business incubators and accelerator programs throughout the state. Educational hubs are a great place to find useful resources and mentorship advice.

A Burgeoning Tech Industry

Ohio has seen an amazing surge in the tech industry. This includes everything from tiny startups to the giants of the aerospace industry. The affordability of the area is making the state very attractive to some high-level players. These large companies, in turn, help small businesses by giving them lucrative contracts. They also pay well and this will allow the community to have much more in disposable income.

The state is also going back to its roots by using technology innovations to reinvent the manufacturing industry. This will be manufacturing that is ready for the challenges of the 21st century. 

Tax Advantages

That tax structure for businesses in Ohio is very manageable. Ohio does not have any type of corporate income tax. The top marginal rate for individuals is 4.997% on income over $208,500. This means that businesses pay very little to the state after they pay their federal taxes.  However, Ohio’s sales-and-use taxes can be on the high end. Most counties in this midwestern state charge a 5.75% sales tax, and in at least one county, the rate is as high as 8%. That is why a Tax Resale Certificate is a great way for businesses to save money.

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.

Vendor’s License

An Ohio vendor’s license is required to pay sales tax on taxable transactions in the State of Ohio. There are different types of vendor licenses.

Type of LicenseCost of LicenseDescriptionType of Application 
Vendor$25 A person or business with a fixed place of business in Ohio from which taxable sales are made. Vendors must have one license for each fixed place of business. License is issued by the County Auditor.ST-1 (PDF)
Transient Vendor$25A retailer who transports stock of goods to temporary places of business in order to make sales. The license is issued by the Department of Taxation and valid throughout the state.ST1-T (PDF)
Out-of-State SellerNo feeA person or business located outside of Ohio who makes retail sales of property or services for storage, use, or consumption in Ohio. The license is issued by the Department of Taxation.UT 1000 (PDF)
 Direct Pay Permit HolderNo feeManufacturers or other consumers who purchase tangible personal property for which the taxable status cannot be determined at the time of purchase. These consumers are authorized to make sales and use tax payments directly to the state. The license is issued by the Department of Taxation.ST 900 (PDF)
Consumer’s Use Tax AccountNo feePurchasers who have not paid the tax to a vendor or seller (in most cases for out-of-state transactions) make payments directly to the state. The license is issued by the Department of Taxation.

You need to make sure you have the proper vendor’s license before you can apply for an Ohio Resale Certificate.

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.

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.

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.