Generally each State requires a Sales Tax Identification Number. Some people believe because they are selling on the Internet, that they won’t have to collect and pay sales tax to their State of residence. Not so Kemosahbee. If you go to any major online site selling merchandise, they are all generally collect sales tax. At the time of this writing, you are generally only required to collect sales tax for the State in which you live if you are selling to someone from within your State, however, many States (most recently Kansas, following States such as Tennessee, Ohio, Illinois, California, Texas, Florida, and Maine) have been seeking legislation to require collection of sales tax or impose license fees from all sales occurring from within their State, regardless of the location of the buyer. The larger online retail sites are collecting and paying taxes to each State as they can see the writing on the wall. At some point in the future, we’ll likely all have to do the same thing.
While paying collecting & paying sales tax is not one of the more exciting things associated with your business, it is a necessity. But there are also other reasons for having a Sales Tax ID Number. Nearly every wholesale supplier will require a copy of your State Tax Identification Number before they will do business with you. If you are buying wholesale, they will not be collecting sales tax on sales to you and will need to report the sale to the State in which you live with your tax ID number. The State expects you to properly collect the taxes associated with the sale of your products and report/pay them to the State (Generally every quarter. Consult your State’s reporting requirements to determine what the specific requirements of your State are) as required by the guidelines of the State in which you live.
You State Tax ID number will also afford you certain advantages at flea markets, antique shops, craft malls, etc. as you will not have to pay tax on items you purchase for resale, and many dealer will offer you additional discounts since you are a dealer as well.
For information on the business registration and tax practices of your State, click on your State’s link below. Some of the links will allow you to complete your application online.