Running a business can already be exhausting, but the legal obligation of getting your seller’s permit is another obstacle you must tackle. With different fees and requirements in each state, it’s easy to get lost in the process while trying to apply for one.
The price of a seller’s permit varies across states. Most states offer it for free, while others charge a registration fee between $5 to $100.
Now, as fickle as sales tax rules can be, these fees are also subject to change at any time. So before you jump into an application form or process, let us help you prepare by giving you the detailed breakdown of each state’s seller’s permit costs.
Key Takeaways
- A seller’s permit may also be referred to as a “sales tax permit” in most states. It also goes by other alternative names, such as sales tax license or vendor’s license.
- The process of renewing your seller’s permit varies depending on a state’s ruling. Some states only charge a one-time registration fee, while others may impose a renewal fee.
- Your business registration with the Secretary of State’s office is not the same as registering for a sales tax permit. Generally, registering for a seller’s permit is handled by a state’s taxing department, often the Department of Revenue.
- A seller’s permit validity depends on a state’s discretion. Some states may revoke an inactive sales tax account and require you to register again and pay the fee again.
- Paying for your seller’s permit is not always the last step of your registration. You must still wait for your application’s approval until you receive your permit.
Sellers Permit in Different States
Before we dive into each state’s varying costs for permits, let’s clarify the distinction between a “sales tax permit” and a “seller’s permit.” As briefly mentioned above, a seller’s permit also goes by different names in other states. Thus, regardless of their distinct names, both documents function the same way and serve the same purpose. To guide you further, here’s a list of alternative terms that some states use when referring to a seller’s permit:- Sales Tax Permit
- Sales Tax License
- Business License
- Retailers License
- Vendors License
- Certificate of Authority
- Transaction Privilege Tax License
How much does a Seller’s Permit Cost in Each State?
Here is a table stating how much a seller’s permit costs in each state:
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States Without Seller’s Permit Fees
To help you scan through the state-by-state guide above, here’s a compilation of states that do not charge any fees when applying for a sales tax permit:- Alabama
- California
- Florida (online registration only)
- Georgia
- Idaho
- Illinois
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Nebraska
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio (out-of-state sellers only)
- Pennsylvania
- South Dakota
- Tennessee (out-of-state sellers only)
- Texas
- Utah
- Vermont
- Virginia
- Alaska
- Delaware
- Montana
- New Hampshire
- Oregon
Seller’s Permit vs Business Registration
For sole proprietors, partnerships, and LLCs whose business is already registered at the Secretary of State’s office, you may wonder why you still need to go through another application for a sales tax permit in most states. Generally, a state’s taxing authorities, mainly the revenue department, handle the registration for sales tax collection. That’s why there is a separate process when applying for a permit. To summarize, your business registration is done to operate legally as a business entity in a state. Meanwhile, your seller’s permit application is required for the sake of authorizing your business to collect sales tax from your customers.Hidden Costs of Getting a Seller’s Permit
While many states offer free registration and permits, it does not always come without hidden fees. For instance, states like California, Missouri, and Texas are moving towards a higher security deposit requirement for businesses with higher sales tax liabilities as well. Another example is in Nevada, where a seller’s permit only costs $15. However, the registration costs for legalizing your standard business operations in Nevada are between $200 to $500, depending on your business type. NOTE: In some states, like Washington, additional fees from local permits may also apply.Why do you need a Seller’s Permit?
Other than legally authorizing your business to collect sales tax in the state, you also need a seller’s permit to take advantage of these 3 benefits:- Tax-Free Inventory Purchases (Resale Exemption) – Many states allow a sales tax exemption on qualified resale purchases. If you are buying goods to resell them later on, you don’t have to pay sales tax if you provide a valid resale certificate. Resale certificates typically require an active sales tax permit number. By having a seller’s permit, verifying yourself as a legitimate reseller is easier. With this, you can claim your sales tax exemption for qualified resale purchases.
- Safety Measure for Audits – By showing state authorities that you willingly comply with their regulations by being a registered seller, you actively prevent the risk of triggering an unwanted sales tax audit.
>>>> But for clarification, a sales tax audit could still occur at any time. However, having a seller’s permit can still act as a safety measure by proving you are a legitimate and authorized merchant or business in the state. - Better Credibility – By having your document on display if you have a physical store, most customers will understand that you are authorized to collect sales tax. In addition to that, being a registered seller also adds credibility to your business’s reputation.
How to Apply for a Seller’s Permit
The application process for a seller’s permit is different in every state. Typically, registration is done online, through a state’s specified website. You may find the link to each state’s online application page in the table in the upper section of this blog. But to ensure you don’t leave empty-handed, we prepared a summary of each state’s standard online application process.- Step 1: Verify your nexus – First, you must know where you have a sales tax nexus. If you need help tracking your nexus, you can take advantage of our free nexus analysis through our demo.
- Step 2: Prepare the standard required documents
- Your basic business information, including your SSN or FEIN and NAICs
- Your business’s estimated monthly sales and yearly tax liability in the state
- Your business’s co-owners, partners, or officers’ names, addresses, and IDs
- Step 3: Go to the state’s designated registration website – Once you know where you have a nexus, you can use our table in the upper section of this blog for guidance. or free through the state’s designated website.
- Step 4: Begin the registration process – Look for the “Register Your Business” or any similar option.
- Step 5: Fill in the required fields – Follow through the prompts to complete the process and fully set up your account.
Receiving your seller’s permit
During your registration process, most state websites should prompt you to choose your preferred mailing address. Generally, you should receive a physical copy of your sales tax permit within 7 to 14 business days. However, some states take longer to approve your application. Therefore, receiving your permit may take more time. Meanwhile, other states will also immediately send you a digital copy to the email address you provided. Alternatively, some state websites have an option where you can access the downloadable document of your permit, which you can print and use temporarily until the original physical copy arrives. NOTE: Your permit should contain your sales tax account’s registration number. This is the number you’ll often need, especially when completing resale certificates to claim exemptions. Moreover, if your business has a physical store, you must keep your permit displayed at all times as part of your compliance duties.How to Manage Your Seller’s Permit for Compliance
After receiving your seller’s permit, you may wonder what you should do next. To help you stay compliant with varying state sales tax rules, here are 5 important tips to manage your seller’s permit in any state.- Take note of your filing schedule and due dates – Your permit often indicates the filing schedule assigned to you by the state. Typically, most businesses are assigned either a monthly or a quarterly schedule. To avoid penalties and ensure you file your sales tax returns on time, knowing your schedule is important.
- Keep records – Recordkeeping is a wise practice to prevent any possible audit risks. Always have secured copies in case of unforeseen events that may affect your permit’s condition. For example, some state websites are inaccessible when undergoing system maintenance. During that time, you won’t be able to access your online records on the state website. As a preventive measure, keep copies that you can also access offline.
- Learn the rules – Depending on the state you operate in, sales tax rules may vary. For instance, some states may revoke your permit if you incur some sales tax penalties. Compliance doesn’t stop after application; you must also ensure consistency to avoid any hassle for your business.
Renewal and Validity Period of Seller’s Permit in Each State
In relevance to the compliance tips above, you must also know that the validity period of your seller’s permit typically depends on the state’s discretion as well. Most of the time, these permits have no expiration date and will remain valid indefinitely. This usually applies to states that allow automatic renewal of permits as long as there are no significant changes in your business’s structure or ownership. Meanwhile, other states require you to renew your permit after a specific amount of time. IMPORTANT: If your permit expires, states may require you to re-register and pay the registration fee once again, as it counts as a new, separate application. Before a permit expires, some states would send you a notice first.States with automatic seller’s permit renewal
- Connecticut
- Florida
- Georgia
- Illinois
- Indiana
- Michigan
States that may require periodic permit renewal
- Alabama
- Arizona
- Colorado
- New York
- Oklahoma
- Pennsylvania
- Rhode Island
- Washington
- Wisconsin
How to Cancel your Seller’s Permit
If your business stops operating while you still have a nexus, most states offer an option to close your sales tax account. Cancelling your permit is important to avoid accidental sales tax penalties. However, you must follow the state’s requirements before you’re fully free from your sales tax duties. Typically, states will ask you to:- File a final sales tax return
- Halt all sales and sales tax collection activities
- Write a formal request letter and wait for approval
- Submit valid documents that prove your business’s closure
- Return the original physical document of your sales tax permit
Let Us Handle Your Seller’s Permit Registration
Applying for a seller’s permit can be overwhelming and hectic for online retailers receiving orders nationwide. With varying costs, requirements, and steps, ensuring a smooth process is difficult if you’re already busy running your business. Book a free call and talk to our CEO to understand TaxHero’s all-inclusive full-stack sales tax solution, and we’ll get your seller’s permit in any state right away.Frequently Asked Questions
1. How much is a resale certificate?+
Generally, resale certificates are free of cost and can be downloaded for free from a state’s respective website.
2. How to obtain a vendor’s license?+
Obtaining a vendor’s license depends on a state’s required process. The standard procedure involves registering your business through a state’s designated website. If available, an in-person application may also be an option for some states.
3. How much does a seller’s permit cost in Florida?+
A Florida seller’s permit is free when registering online, but costs $5 if you apply by mail.
4. How much does a seller permit cost in California?+
A California seller’s permit is free, but it may require certain businesses to pay a security deposit.
5. Are sales tax and sellers permit the same?+
A sales tax permit and a seller’s permit are generally the same documentation across states. However, some states may use a different term for these permits.