As an Amazon seller, you’re always looking for ways to cut costs and maximize profits. One strategy that can make a significant impact is using a resale certificate to qualify for a sales tax exemption when purchasing goods for resale. This exemption allows you to buy items tax-free, which can help reduce your expenses and improve your bottom line.
In this post, I’ll walk you through the steps of how to use your resale certificate, using Kansas as an example.
Step 1: Obtain a Sales Tax Permit
Before you can use a resale certificate, you need to get a sales tax permit from the state(s) where you have a nexus (a business connection like a physical presence or significant sales volume). Your nexus is often where your business is based, but it could also include other states if you sell a substantial amount of products there.
Let’s say your business is registered in Kansas. In this case, your first step would be to Google “how to apply for a resale certificate in Kansas.” You’ll find that the process involves completing the Business Tax Application (CR-16). This application will assign your business a sales tax account number.
Once you have your sales tax account number, you’ll need to provide it on a Resale Exemption Certificate (ST-28A) or Form PR-78SSTA. These forms are required to prove that your purchases are intended for resale and therefore qualify for the sales tax exemption.
Step 2: Provide the Resale Certificate to Suppliers
Once you have your resale certificate, the next step is to use it when purchasing goods from your suppliers. Different suppliers may have different processes for applying the sales tax exemption, so I recommend Googling “[Supplier Name] + sales tax exempt” for specific instructions.
For example, if you’re purchasing products from Home Depot, you would fill out Form ST-28A and submit it to them. After they accept the form, any goods you purchase for resale will be tax exempt from that point forward.
Key Points to Remember:
- A resale certificate is only valid for purchases intended for resale. If you’re buying something for personal or business use (not resale), you still have to pay sales tax.
- Make sure you have your sales tax permit from the state(s) where you have nexus before applying for the resale certificate.
- Each state and supplier may have different requirements for applying the tax exemption, so it’s important to follow the specific instructions they provide.
Still Have Questions?
Navigating the world of resale certificates and sales tax exemptions can be tricky, but I’m here to help. If you still have questions or need guidance on how to use your resale certificate, let’s chat!
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