There are a lot of important steps to starting an online boutique in 2023. It’s easy to get excited about buying inventory or designing a website. But none of that happens without making sure you’re a legal business first. And a key step in that process is having the right wholesale license to run your online business.
Depending on the state you live in, it might be known as a resale certificate or reseller’s permit. So in this blog post, we’ll cover what is, why you need it and how to get the reseller permit for an online boutique, or in this case for your online boutique. So keep reading to learn how to get your license in order to start your online boutique.
What Is a Reseller’s Permit?
A reseller’s permit can be referred to as a resale certificate, sales tax license or simply a seller’s permit. It’s a document that allows business owners to purchase products directly from wholesale vendors or manufacturers without having to pay sales tax on those items.
Some states require a reseller permit for online business in order to start your online boutique, while others may not. So it’s important to visit your state’s finance and taxation website in order to know whether it applies to you.
Having a sales tax license or reseller permit for online boutique allows you to pay wholesale prices for products and then sell them to your customers at a markup for profit.
Want to learn more about pricing your products the right way? Make sure to read and save this post.
When you do sell to shoppers that also live in your state, you’re required to charge sales tax on the items they purchase from you. And then you’ll remit (give back) the tax you’ve charged to your state government. So, in essence, you’re collecting taxes for your state.
Depending on how popular your online boutique gets, you may also have to charge sales tax to customers in other states. That’s called a nexus. And it means that when you make over a certain amount of revenue from shoppers in a state where you haven’t formed your business, then that state will require you to collect and remit sales tax from their state residents too.
(It can get a tiny bit complicated. This guide can help.)
Why You Need a Reseller’s Permit to Start Your Online Boutique
Now that’s pretty simple.
If your state requires it, then you’re legally mandated to have one. No one wants to get in trouble with their state government for (1) not charging sales tax when they were supposed to or (2) charging sales tax and not remitting it when they should.
It’s not worth the headache or the consequences.
So if your state requires that you have a reseller’s permit or resale certificate in order to start your online boutique, then you need one.
The second big reason is that some wholesale vendors or manufacturers won’t even consider selling to you without a permit. Depending on a vendor, they may have an application process before allowing you to view or purchase their merchandise.
If you can’t buy inventory, then you’ll have nothing to sell to your customers.
And a business that doesn’t sell anything isn’t a business at all.
Does your state require you to have a reseller’s certificate? Find out here.
What Should You Have Before Applying For Your Sales Tax License
Before applying for your reseller permit for online boutique or sales tax license, you’ll need to have a legal business entity. That means having a business name and legal structure. This could be a sole proprietorship, LLC, partnership or corporation.
What business structure should you choose for your online boutique? Read this post to weigh the pros and cons.
Once you have your business entity, then you’ll be able to get your federal employer identification number or EIN. It’s essentially a social security number for your business and will be used to apply for your license and other tax purposes.
With both of those, you can apply for a business bank account. That’s what you’ll use to remit or pay back the sales tax you collect.
How to Get Your Reseller’s Permit For Your Online Boutique Business
The process of getting your business license will vary from state to state, but there are some general steps that are usually required.
The first step is to fill out an application. You can find the application on your state’s taxation or revenue website.
Once you’ve filled out the application, you’ll need to submit it along with any required documentation. That documentation will also vary by state. But it might include things like a copy of your identification, your business formation documents, or other things deemed necessary by your state.
(Speaking of which, you should definitely use this to create your LLC if you haven’t already.)
Once you’ve submitted your application, the state will review it and issue your license via mail. That’s assuming everything is in order.
When you receive your sales tax license or reseller permit for online business (which usually takes a few weeks), you can start buying inventory for your shop and we can help you decide on how much inventory should I start with online boutique.
That’s it! It’s pretty straight forward. Just make sure you get it done.
And if you want more insight about reseller permit for online boutique and what it takes to launch and grow your online boutique, sign up for the FREE Boutique Launch Formula™ training below.