If you run an Ecommerce or CPG business in Ohio, securing an Ohio Resale Certificate is a smart move to protect your margins and streamline operations.
This certificate allows you to purchase inventory and raw materials tax-free, helping you lower upfront costs, stay competitive in pricing, and remain compliant with Ohio sales tax laws.
Understanding Resale Certificates in Ohio
What is an Ohio Resale Certificate?
In Ohio, a Sales and Use Tax Blanket Exemption Certificate is a document issued by the Ohio Department of Taxation that allows businesses to:
- Purchase goods without paying sales tax, provided these goods are intended for resale to their customers in the normal course of their business.
- Make tax-exempt purchases of inventory and materials that will become part of the products they sell by presenting a valid resale certificate to their suppliers.
The purpose is to prevent double taxation once at the wholesale level and again at the point of retail sale.
However, an Ohio resale certificate is not a blanket exemption from all sales tax obligations. Businesses are still required to collect and remit sales tax on taxable sales to end consumers.
Why do you need a Resale Certificate in Ohio?
Obtaining a resale certificate in Ohio offers several significant advantages for businesses that purchase goods for resale.
Here are some key benefits:
- Avoid Paying Sales Tax on Inventory: The most direct benefit is that you can purchase inventory and materials for resale without paying Ohio‘s sales tax upfront.
- Maintain Competitive Pricing: By not paying sales tax on the cost of goods, businesses have more flexibility in setting competitive prices for products in the Ohio market. This can be a crucial advantage, especially in price-sensitive industries.
- Legal Compliance: Possessing and using a valid resale certificate for eligible purchases ensures businesses comply with Ohio’s sales tax laws and regulations to avoid penalties.
In Ohio, the specific form required for a resale certificate is the Ohio Sales and Use Tax Blanket Exemption Certificate (Form STEC B).
When filling out Form STEC B, a purchaser must include the vendor’s license number to identify that it is registered with the Ohio Department of Taxation and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
An Ohio Sales Tax Permit authorizes your business to collect and remit sales tax on taxable sales to customers. An Ohio Resale Certificate (STEC B), on the other hand, allows you to purchase goods tax-free from suppliers if those goods are intended for resale. To use a resale certificate, you must have an active sales tax permit.
Who Can Use a Resale Certificate in Ohio?
Businesses that purchase goods for resale can use an Ohio Resale Certificate. To do so, the business must actively sell taxable tangible products and hold a valid Ohio Sales Tax Permit.
How to Get a Resale Certificate in Ohio: A Step-by-Step Guide
Getting a resale certificate in Ohio is simple, but you’ll need to meet a few key requirements first. Here’s how to do it:
1. Make Sure You’re Eligible: Your business must sell taxable goods or services and be registered with the Ohio Department of Taxation. Only businesses with a valid Ohio Sales Tax Permit can use a resale certificate.
2. Get an Ohio Sales Tax Permit: If you don’t already have one, apply for an Ohio Sales Tax Permit through the Ohio Business Gateway website. This permit is required before you can issue or use a resale certificate.
Need help? Read our blog: How to Get a Seller’s Permit in Ohio
3. Gather Your Business Information: You’ll need basic business details to complete the resale certificate, including:
- Your business legal name and any trade names.
- Your business address and contact information.
- Your Ohio license number (if already obtained)
- Your business type (e.g., sole proprietorship, LLC, corporation).
- Your reason for exemption
- Your authorized signature and date
4. Complete Form STEC B: Download and fill out the Ohio Sales and Use Tax Blanket Exemption Certificate (Form STEC B) from the Ohio Department of Taxation website. You’ll also present this form to your suppliers when making tax-exempt purchases.
5. Submission: No submission required in Ohio. You don’t submit the resale certificate to the state. Instead, give the completed form directly to your suppliers when buying items for resale.
6. Pay Any Applicable Fees: There’s no cost to use Form STEC B, but you’ll need a valid Ohio Sales Tax Permit, which costs $25 to register. To see if there’s a cost for the permit, check out our guide on Sales Tax Permit fees.
7. Understand Renewal Requirements: Your Ohio resale certificate remains valid only while your Sales Tax Permit is active. To maintain your ability to make tax-exempt purchases for resale, you must renew your Ohio Sales Tax Permit as the state requires.
How to Use a Resale Certificate in Ohio
To properly utilize your resale certificate in Ohio when making tax-exempt purchases for resale, you’ll need to present a valid copy of your Ohio Sales and Use Tax Resale Certificate to your supplier at the time of purchase.
Ohio generally does accept resale certificates issued by other states. However, there might be specific conditions:
- Good Faith Acceptance: Vendors in Ohio will typically accept an out-of-state resale certificate in good faith, provided it contains all the necessary information (buyer’s name, address, seller’s permit number from the issuing state, reason for exemption, etc.)
- Reciprocity: The acceptance might be based on reciprocal agreements with the state that issued the certificate, and Ohio also participates in the Streamlined Sales Tax Agreement (SSTA), which facilitates acceptance of a uniform certificate.
If you are an out-of-state business purchasing from a vendor in Ohio and plan to use your home state’s resale certificate, provide it at the time of purchase, often by completing an Ohio exemption form (STEC B or STEC U) with your out-of-state registration information.
It’s always a good idea to confirm the vendor’s policy on accepting out-of-state certificates beforehand.
For more information regarding sales tax exemption laws in Ohio, you may visit the state website.
Multi-Jurisdictional Resale Certificates
A multi-jurisdictional resale certificate is a standardized form to simplify tax-exempt purchases for businesses that operate and make purchases for resale across state lines.
Unlike a standard resale certificate issued by a single state, a multi-jurisdictional certificate aims to be recognized and accepted by multiple states as valid proof that the goods being purchased are intended for resale and are therefore exempt from sales tax at the time of purchase.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
There are two primary types of multi-jurisdictional resale certificates that a business operating in or selling to vendors in Ohio might encounter:
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This is a widely recognized form accepted by a significant number of states (though not all). Ohio accepts this form, provided it is properly completed. For Ohio-based buyers, it should include their Ohio Sales Tax Permit number. Out-of-state purchasers should also include their home state’s registration number where indicated. You can find this form on the Multistate Tax Commission (MTC) website.
- Streamlined Sales Tax (SST) Certificate of Exemption: The state of Ohio became an associate member of Streamlined Sales Tax on October 1, 2005, and a full member on January 1, 2014. It may also be used to notify vendors or sellers of direct payment authority, of a claim of multiple points of use, or, under Section 5739.033(D) of the Ohio Revised Code, of a direct mail claim by a purchaser of direct mail. You can find more information about the SST and its member states on the Streamlined Sales Tax Governing Board website.
Businesses need to verify whether Ohio accepts these multi-jurisdictional certificates and if there are any specific requirements or limitations on their use within the state. This is to avoid any audit issues.
Responsibilities When Using or Accepting a Resale Certificate in Ohio
Buyer Responsibilities
When you use an Ohio resale certificate, you must ensure it applies only to purchases of goods or services you intend to resell. However, using it for personal or operational items (like office supplies or equipment) is illegal and may lead to penalties.
- Ohio-based buyers: Provide a fully completed Form STEC B to your suppliers for qualifying purchases.
- Out-of-state buyers: While Ohio prefers its resale certificate, Ohio vendors will accept a valid certificate from your home state under specific conditions, as long as you properly document the tax-exempt purchase and follow state regulations.</span>
Seller Responsibilities
As a seller in Ohio, accepting a resale certificate comes with the responsibility of verifying and retaining proper documentation for tax-exempt sales. You must:
- Accept the certificate in good faith
- Ensure it includes all required information: buyer’s name, address, sales tax permit number (or equivalent), reason for exemption, and signature.
- Reject the certificate if the items aren’t for resale (e.g., personal or business use)
<strong>Keep records for at least 4 years: Use a properly completed resale certificate as your official proof for not collecting sales tax. You must retain it in your records for at least four years in case of a sales tax audit by the Ohio Tax Commissioner.
Frequently Asked Questions About the Ohio Resale Certificate
Are There Penalties for Misusing a Resale Certificate in this State?
Yes. Improper use of a resale certificate, such as using it for personal or non-resale purchases, can result in serious penalties. Always use Form STEC B correctly and only for qualified resale purchases to avoid issues.
Does an Ohio Resale Certificate Expire?
The resale certificate (Form STEC B) has no expiration date. However, it is only valid while your Ohio Sales Tax Permit remains active. If your permit is revoked or inactive, your resale certificate becomes invalid.
How Do I Verify a Resale Certificate in Ohio?
If you’re a seller in Ohio, here’s how to validate a buyer’s resale certificate:
- Request a completed Form STEC B from the buyer.
- Visit the Ohio Department of Revenue to verify the validity of the resale certificate.
- Scroll down to “Key Sales & Use Tax Resources” & read the “Instructions for Active Vendors License List.”
- Download the spreadsheet, “List of active vendors.”
- Find the business you seek using the information provided to you on the purchaser’s Form STEC B.
How TaxHero Can Help
Managing sales tax compliance and resale certificates in Ohio doesn’t have to be complicated. TaxHero simplifies the process, from keeping your Ohio Sales Tax Permit active to ensuring you use resale certificates correctly.
Save time. Avoid penalties. Stay compliant.
Schedule a Demo to see how TaxHero can streamline your Ohio resale certificate process today!