Pennsylvania Is A Great Place For Business
Pennsylvania is a place where the entrepreneurial spirit is alive and well. This is one of the reasons that the state can boast of several hundred thousand small businesses. Pennsylvania also did well bouncing back from the Great Recession with a fairly low unemployment rate. The state is a leader in many key industries that include aviation, technology, energy, life sciences, and film.
However, there are some challenges. Pennsylvania has one of the highest corporate income tax in the nation. This is one of the reasons that it is important to apply for a tax resale certificate in order to not pay unnecessary sales tax.
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 Pennsylvania
In order to obtain a resale certificate in Pennsylvania, one must apply for a Pennsylvania Seller’s permit. This state imposes a sales tax on “the retail sale, consumption, rental or use of tangible personal property” in the state; digital goods are included within this definition. Pennsylvania will also tax business services, particularly those that include building, repairing, and/or maintaining a taxable item.
The following are examples of items exempted from sales tax in Pennsylvania:
- Gum And Candy
- None Ready To Eat Food
- Sales Only For Resale
Pennsylvania Resale Certificate
After you have obtained your Pennsylvania Seller’s Permit then you can apply for a Pennsylvania Exemption Certificate or REV-1220 in order to be not charged sales tax for items that are intended to be resold.
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
- Hold as an investment for appreciation in value and for sale in the future.
If you are an out-of-state seller, you may use your state’s reseller’s permit number to buy items from Pennsylvania retailers tax-free.
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 hands.
We provide a tax resale certificate for the top states that include:
- New York
- New Jersey
Let us handle the hassle so you can go about the important work of leading your retail business to great success.