If you sell or lease taxable, tangible property, most states require you to hold a seller’s permit to operate legally. Without one, you may receive fines or even be forced to close your business.
If you’re opening a new retail store, you might wonder if this requirement applies to you. The short answer is: it depends. While most jurisdictions demand a permit, there are a few states that do not. You’ll need to know whether it’s required where you operate in order to plan your budget.
In this guide, you’ll learn whether you need a seller’s permit and how to apply for one with a step-by-step guide.
What is a seller’s permit?
A seller’s permit is a state-issued certificate that authorizes your business to collect sales tax. It’s a unique identifier, often referred to as a sales tax ID, that lets you collect sales tax on items you sell in-store or online and requires you to periodically send it to the government, along with state tax forms.
A seller’s permit effectively makes you an intermediary between the government and your customers. They have different names from state to state, including:
- Sales tax permit
- Sales tax license
- Vendor’s license
- Use tax permit
- Wholesale license
- Retail license
- Certificate of Authority
- Business tax account
Seller’s permit vs. business license
A business license allows you to legally operate a business within a certain city or county. A seller’s permit, however, allows you to collect sales tax from customers on taxable goods or services. Most retail businesses need both to stay compliant.
Seller’s permit vs. resale license
If you’re a reseller, some states might require a resale license, also known as a resale certificate. This certificate lets you buy products tax-free if you intend to resell them. The main difference is that you use a seller’s permit when selling to customers and a resale license when buying from suppliers.
A seller’s permit is a must-have, but a resale certificate is optional. The resale certificate lets you buy things without paying sales tax, since you’ll be reselling them and collecting tax from your customers.
| Seller’s permit | Resale certificate | |
|---|---|---|
| Purpose | Authorizes the collection of sales tax from customers. | Allows tax-free purchase of inventory from suppliers. |
| Who needs it? | Any business selling taxable goods or services. | Retailers and wholesalers who intend to resell items. |
| Is it required? | Yes, in most states. | No, but it saves sellers money. |
Say you own a clothing boutique. You use a resale certificate to buy 50 dresses from a wholesale supplier without paying sales tax. When a customer walks through the door and buys one of those dresses, that seller’s permit lets you collect sales tax on the item, which you remit to the state.
Do I need a seller’s permit?
You typically need a seller’s permit if you:
- Operate a business in a state with a state sales tax
- Sell goods or services subject to sales tax
- Have a significant physical presence in the state
- Meet economic nexus thresholds in states where you sell products remotely
When you don’t need a seller’s permit
There are also certain occasions when can sell goods without obtaining a seller’s permit:
- If you sell non-taxable items like certain groceries or professional services.
- For casual sales, such as a one-time garage sale or frequent personal sales.
- If you sell on marketplaces like Facebook Marketplace or Etsy, the platform may be responsible for collecting and remitting sales tax.
- If you sell digital goods like software, ebooks, or digital downloads in states that don’t tax them.
Note: Tax laws vary by location. Always double-check with your local tax authority to confirm your specific obligations.
States that require seller’s permits
For many states, economic nexus kicks in at 200 transactions yearly or $100,000 in annual sales, though it varies. If you hit these numbers, you’re generally required to collect and pay sales tax there, even if you don’t have a physical presence in that state. Track these state-specific thresholds and obtain permits as needed.
Five states don’t require a sales tax permit at all:
*While Alaska and Montana do not have a state sales tax, some local municipalities do have local sales taxes and may require local permits. Check with your local authority to see if you need a sales tax permit.
Here’s a detailed list of each state’s sales tax requirements, but it’s always smart to double-check with your state’s Department of Revenue or a similar agency. Talking to local businesses in your industry, the consumer affairs office, or a certified public accountant (CPA) is a good idea, too.
Tip: It can become difficult to manage sales tax if you sell in different states, each with its own rates. Shopify Tax takes the stress out of compliance. Get notified when you exceed the threshold for each state, charge the appropriate sales tax at checkout, and submit tax returns directly from your Shopify admin.
“We no longer need to manually update sales tax information, saving us countless hours and reducing the risk of errors,” says Ailee Fei, founder of Daily Charme. “It’s been a game-changer for our small business.”
Types of businesses that require seller’s permits
Most businesses in the US need a seller’s permit to sell taxable goods or services, depending on their business type and state regulations.
Here are businesses that often require a seller’s permit:
Food service establishments
If you run a restaurant or café that prepares made-to-order food, you’ll likely require a permit to handle sales tax for those items.
Retail businesses
If you’re buying wholesale goods or making products to sell online, in-store, or elsewhere to customers, you’ll have to get a permit if your state taxes those items.
Service-based businesses
Some states require service-based businesses like equipment repair shops, hair salons, and product-leasing companies to get a permit and deal with sales tax. Check with your state and local tax authorities to confirm if your business falls under taxable services.
Ecommerce businesses
If you sell products online, you might need a permit. Rules vary by state—some treat you like a physical store, and others have permits specific for online businesses. You should collect online sales tax not just in your home state but in any state where your sales hit a certain amount (a.k.a. the above mentioned “economic nexus.”) It applies to all models like direct to consumer (DTC), dropshipping, print on demand and digital products in certain states.
Marketplace sellers
If you sell on platforms like Amazon, you may have to get a seller’s permit. It depends on what state you are selling from and the products you sell.
Temporary stores
If you’re opening a retail store for a limited amount of time (such as a pop-up shop or craft fair), you might need a temporary seller’s permit from the state. These permits cover a specific date range and have more simplified requirements compared to a permanent permit.
How to get a seller’s permit in 6 steps
- Check your state’s seller’s permit requirements
- Register your business
- Complete the seller’s permit application
- Submit the application and pay the fee
- Wait for approval
- Receive your seller’s permit or resale certificate
1. Check your state’s seller’s permit requirements
Do you sell goods or services subject to sales tax? If so, then you need a seller’s permit. This applies whether your business is a limited liability company (LLC), corporation, or sole proprietorship.
If you own an online business, you are required to pay taxes in every state where you conduct business, not just where your business is based. Confirm the regulations for your location with your state’s Department of Revenue or equivalent tax authority website.
2. Register your business
Registering your business creates a legal entity recognized by the state. Start by picking a unique business name available in your jurisdiction. Then, decide on a business structure, such as a sole proprietorship, LLC, or corporation.
Next, get an employer identification number (EIN) from the IRS website. Check if you need any other licenses, permits, or tax registrations from federal, state, or local agencies.
Once you’ve done all this, you’re on your way to running your business legally. Remember, registering your business creates a legal entity, while getting a business license ensures you have the proper permissions to operate legally.
3. Complete the seller’s permit application
After your business is registered, you can apply for a seller’s permit. You can usually find this application form on your state’s Department of Revenue website or the agency that handles taxes.
When filling out the application, you’ll have to give details about your business, including:
Identity verification
- Your Social Security number (SSN) or your business’s employer identification number (EIN)
- A legal form of identification (like a driver’s license)
Business information
- Your business name and contact details
- Type of business
- Your North American Industry Classification System (NAICS) code
- Names and addresses of all your vendors
Financial details
- Expected monthly sales and taxable portion of those sales
- Bank account information
- Your accountant’s name and address
4. Submit the application and pay the fee
Once you’ve completed the application, you can submit it online, via mail, or in person. Submitting online is usually the fastest process.
Before you hit submit, double-check the requirements and instructions on your state’s tax authority website to avoid delays.
Some states charge a fee for the permit, while others do not. A few states (like Nevada) may require a security deposit, especially if you have a history of non-compliance with tax laws or if your business is considered high risk.
5. Wait for approval
After you submit your application, you’ll need to wait for the state to approve it.
Online applications are the fastest. States like Michigan can provide permit verification or numbers within 10 to 15 minutes. In other states, such as Idaho, online processing typically takes 10 to15 business days.
If you choose to submit your application by mail, expect a wait of two to four weeks for your physical permit to arrive.
6. Receive your seller’s permit or resale certificate
Once approved, you’ll receive your seller’s permit. Keep it safe—you might need it to file taxes or buy items to resell.
Note: Some states give permits that last for the entire life of the business, provided the business remains compliant with all ongoing tax filing requirements. Others might be good only for a year or two. If yours expires, you’ll need to apply again or renew it.
If any of the following apply, you’ll also need to update your permit or apply for the new one:
- A change in business ownership or partners
- Moving to a new business location
- Changing your business legal structure
- A change in the business name
Cost to get a seller’s permit
A seller’s permit can cost you anywhere from nothing to $100, depending on your state.
Out of 45 states that collect sales tax, only a few charge a fee for a seller’s permit. These fees range from $5 to $100:
- Florida charges the lowest fee, at $5, if you apply by mail (it’s free to apply online), and it doesn’t ask for a security deposit.
- Connecticut charges the highest, with a one-time $100 fee.
- In Ohio, in-state sellers pay an application fee, while out-of-state sellers get the permit free.
Some states require security deposits or bonds for new businesses or those in high-risk industries. Local registration fees at the city or country level may also apply, and some jurisdictions require recurring renewal fees to keep your permit active.
Responsibilities for a seller’s permit
When you hold a seller’s permit, you must meet these requirements:
- File regular tax returns. With a seller’s permit, you’re expected to collect sales tax from customers and submit regular tax returns to your state’s tax agency. Remember, you’re still required to file even if you didn’t collect any state sales tax during the filing period. If you don’t, you might face penalties.
- Keep accurate records. Keep accurate records and pay taxes on time to avoid penalties.
- Display the seller’s permit in-store. If you have a physical store, some states require you to display your sales tax permit number so customers and inspectors can see it.
- Stay compliant across state lines. If you sell to customers in other states, watch your sales totals. Should you sell enough to hit economic nexus limits, you’ll need to get permits in those states, too.
- Update your permit when business details change. Tell the state if you move, change your business name, or if ownership changes.
Tip: Shopify unifies order data from anywhere you sell, so you can easily keep tabs on how much money you’ve made in each state (both online and offline). Then, use accounting app integrations to import your data and keep on top of taxes.
Do I need more than one seller’s permit?
In some cases, it’s possible that you might need more than one seller’s permit. You might need multiple seller’s permits if you:
- Run your business in several states or jurisdictions with different sales tax regulations
- Sell products online to buyers in multiple locations (destination principle)
- Participate in trade shows or temporary sales in different states
- Have multiple legal entities, like separate ones for your online and physical stores
- Manage wholesale and retail operations (you might need different permits because of different tax rules)
- Are in states with special tax districts (these require separate permits in addition to the state permits)
At first, dealing with sales tax might seem easy. But it can get complicated as your business grows and you sell in more states. Spending hours on each state’s filing is not a great use of your time as a business owner.
Tax software like Shopify Tax can help you by automating tracking, collecting, reporting, and filing your taxes across the US.
Apply for a seller’s permit for your retail business
Now that you know how to get a seller’s permit, you’re ready to start your business on the right foot. You can complete the application yourself or hire a professional if you’d prefer extra guidance.
Once your permit is approved and your business begins to grow, tax software can help you stay on top of all your state and local tax requirements. This allows you to spend less time managing compliance and more time focusing on what matters most: building and growing your business.
Seller’s permit FAQ
What is a seller permit in the US?
A seller’s permit in the US is a state-issued license that allows a business to collect sales tax from your customers on taxable goods and services. It also helps your state’s tax authority track businesses and make sure they’re collecting and paying the right amount of sales tax.
Is a seller permit the same as an EIN?
A seller’s permit and an EIN are two different things. A seller’s permit allows a business to collect sales tax, while an EIN is used by the IRS to identify a business for tax purposes.
Do you need a seller’s permit to sell online?
Not always, but if you sell taxable items to customers in a state where you are engaged in business, you usually have to register for a seller’s permit.
You are considered “engaged in business” if you have a physical presence in the state, such as a warehouse, or meet a certain sales threshold. For example, Californiarequires a permit for anyone selling tangible personal property if they have physical presence or annual sales over $500,000.
Does selling on Amazon or Etsy require a seller’s permit?
Selling through a marketplace doesn’t always mean you are finished with permit paperwork. Marketplace facilitators often collect and remit sales tax for you, but many states still require you to have your own permit.
In Washington, for example, the Department of Revenue requires you to register for both business and occupation tax and sales tax if you meet the $100,000 sales limit, even if the marketplace collects the tax on those sales.
How do I get a reseller certificate in the USA?
To get a reseller certificate in the US, you need to apply through your state’s tax department (usually the Department of Revenue or Taxation). You’ll typically need a seller’s permit or sales tax license first, and then you can use that to issue or obtain a resale certificate when buying goods tax-free for resale.
