Sales Tax Permit
Definition
A Sales Tax Permit (also known as a Seller's Permit, Resale Certificate, or Vendor License) is a state-level registration that allows your business to legally collect sales tax from customers and remit it to the state Department of Revenue. It also allows you to buy wholesale goods tax-free, provided you intend to resell them.
Why it matters
If you sell physical goods (and in some states, digital goods or services), you are legally required to collect sales tax from your customers. You cannot legally collect this tax without first obtaining a Sales Tax Permit from the state. Furthermore, if you sell online across state lines, you may be required to get permits in multiple states if you cross their "economic nexus" thresholds (e.g., selling more than $100,000 into a specific state).
Example
Jenna starts an LLC to sell handmade candles online. She lives in Texas, which requires sales tax on physical goods. She applies for a Texas Sales Tax Permit. When a customer in Austin buys a $20 candle, Jenna's website charges them $21.65 (adding 8.25% sales tax). At the end of the quarter, Jenna files a return using her permit number and sends that $1.65 to the Texas Comptroller.