If you're starting a retail business or involved in reselling products in Texas, one important step is obtaining a Resale Certificate. This certificate allows you to purchase products for resale without paying sales tax.
A Texas Resale Certificate, also known as a Sales Tax Exemption Certificate, allows business owners to buy inventory and supplies without paying sales tax to the supplier. However, you must intend to resell those items in the ordinary course of business.
It's important to remember that you are required to collect sales tax from your customers (by charging them the sales tax based on a percentage of the sale price) and remit the amount collected to the Comptroller on a quarterly basis. The rate you charge is currently 6.25% (as set by the Comptroller), plus any additional tax required by your local jurisdictions.
Businesses that sell tangible personal property, including those in retail, wholesale, or other resale-related activities, typically need a resale certificate. If you're planning to buy goods for resale and sell them to customers, this certificate is essential.
Step 1: Determine Your Eligibility
To qualify for a resale certificate, you must:
you are engaged in business in Texas; and
you sell or lease tangible personal property in Texas; or
you sell taxable services in Texas.
Step 2: Register for a Sales Tax Permit
Before applying for the resale certificate, you need to register for a Sales Tax Permit with the Texas Comptroller's office. This is a simple process that can be done online through the Comptroller's website. Click the link here.
Step 3: Complete the Resale Certificate Form Once you have your Sales Tax Permit, you can apply for a resale certificate by completing Form 01-339 (Texas Sales and Use Tax Resale Certificate). This form is available on the Texas Comptroller’s website. Click here and must include:
Your Sales Tax Permit number
Your business information
A description of the goods you're purchasing for resale
Step 4: Provide the Resale Certificate to Your Supplier
After filling out the resale certificate, you’ll need to provide it to the supplier when making purchases for resale. The supplier will then exempt you from paying sales tax on those items.
Step 5: Keep Records
You must keep accurate records of all resale certificate transactions. This includes keeping copies of your certificates and invoices from suppliers. These records are necessary if you're ever audited by the Texas Comptroller's office.
Getting a Texas Resale Certificate is a simple and essential step for businesses that plan to purchase inventory for resale. By following these steps, you can ensure that you’re operating legally and avoiding unnecessary tax expenses on products you plan to resell.
Have more questions? Need more information? Contact the SBDC at Tarleton State University
Comments