Learning how to get a wholesale license can be tricky, depending on your location.
However, it unlocks massive benefits for sellers once you get it.
If you’re looking for information on how to get a wholesale permit, you’re also likely asking these questions.
How much is a wholesale license?
Do I need a wholesale license to buy wholesale?
What are the requirements for wholesale license permits?
You’ve come to the right place for answers.
I wrote this step-by-step guide to discuss everything about wholesale licenses.
How To Get a Wholesale License
Before learning how to get a wholesale business license, you must understand what it is and what you get with it.
What Is a Wholesale License?
The simple answer is that a wholesale license permits wholesalers to buy in bulk and resell goods.
Some manufacturers in different industries only deal with businesses that hold wholesalers’ permit certificates.
Here’s a more complex answer.
We can divide the wholesale license into two: 1) the wholesaler buyer license and 2) the wholesale sellers’ permit.
The wholesale buyer license lets businesses buy in bulk, helping them avoid sales taxes. This license provides long-term benefits to wholesalers since they don’t need to pay a sales tax on each purchase.
The wholesale seller’s permit allows businesses to make ecommerce sales and accept B2B payments legally.
If you run an ecommerce company and sell goods without a wholesale license, the government can take legal action against your business.
Wholesale License vs. Seller’s Permit
A wholesale license and a seller’s permit are usually one document.
However, sometimes they are different. Depending on the legislation, a wholesale license already covers the seller’s permit.
Some states also require a wholesale reseller license if you plan to buy and sell products.
Requirements vary by state, with some requiring a wholesale license where you source the products and a seller’s permit (or resell permit) when you sell them.
You need to know the different state laws to pay the correct sales tax and avail of wholesaler benefits.
How To Get a Wholesale License
Here is the step-by-step process to get a wholesale license.
Register Your Business.
Register your business before entering the revenue office for a sales tax permit. You’ll only get your sales tax permit if you register your business.
Some states require a local business registration before you can operate a multi-state business. Each state’s requirements vary. Thus, learning the needed business documents for each state before registering is best.
Get Your Federal Employer Identification Number or Federal Tax Identification Number.
Depending on your status, you need a federal employer identification number (EIN) or federal tax identification number (FTID). You can ask your state to clarify, but either is usually fine.
Although you don’t need to hire employees, you must still produce an EIN. Normally, an EIN or FTID takes two weeks to release.
Get Your Sales Tax ID
Your sales tax ID proves that you collect sales tax on your products (not pay sales tax). Learning your local sales tax laws is essential since they differ from state to state.
Collecting your sales tax ID (which works as a sales tax license) helps simplify compliance practices on sales taxes later with your state’s tax office.
Paying sales tax is crucial, so don’t forget to document it.
Apply for a Wholesale License.
Contact your state’s tax office (or revenue office) for your relevant paperwork.
You’ll need these documents before you get the necessary paperwork.
Full name and identification documents
Names of your business partners and identification documents (if applicable)
EIN or FTID
DBA (doing business as), this is your business’ public-facing title
Business nature (containing your business information)
eCommerce business license
eCommerce business insurance
Wait for your license. You can follow up with the revenue or sales tax office to see if your license is available.
How To Obtain a Wholesale License Depending on State
The application process for wholesale licenses differs depending on the state. Here are two examples of states that have different requirements for wholesale vendors.
How To Get a Wholesale License in California
California state laws require a seller permit for both wholesalers and retailers.
How To Get a Wholesale License in Texas
Texas state laws require you to get a sales tax permit.
How To Get a Wholesale License in Florida
Florida state laws require you to get a seller’s permit before you can get a wholesale license.
How To Get a Wholesale License (Los Angeles)
Los Angeles city laws follow California state laws on wholesalers. If you only plan to sell within 90 days or a short-term event, apply for a temporary seller’s permit.
How To Get a Wholesale License in NY
New York City laws require you to follow the wholesale business registration process.
Why Get a Wholesale License
You should get a wholesale certificate to avoid paying taxes on bulk orders, letting you save on expenses.
A wholesale license works like a sales tax license and lets you avoid paying sales taxes on top of other taxes.
Here are the sales tax rates of some states.
California – 7.25%
Indiana – 7.00%
Mississippi – 7.00%
Rhode Island – 7.00%
Tennessee – 7.00%
Here are the states with the highest average combined state and local sales tax.
Louisiana – 9.55%
Tennessee – 9.547%
Arkansas – 9.48%
Washington – 9.29%
Alabama – 9.22%
Wholesale License Cost
To get your wholesaler sales tax license, you must pay a fee ranging from $3,000 to $10,000. On average, the sales tax permit costs $6,500.
The cost of a sales tax permit varies due to different requirements from your local tax and fee administration. Although this seems like a large fee, your sales tax permit lets you save more when you sell in bulk.
Additional Info on How to Get a Wholesale License
Here are other things you need to know about how to get a wholesale dealer license.
How To Apply for Wholesale License
If you want to apply for a wholesale license, head to your local sales tax office to ask for the requirements. You should also ask whether you need a buyer or seller license.
How To Buy Wholesale With Tax ID Number
When you have a wholesale license, you can buy from wholesale sellers. Give them your tax ID when ordering.
Application for Wholesale License
The application process for a wholesale license differs depending on the state. You need a business permit, employer identification number (EIN), sales tax ID, and additional state-specific requirements.
How To Get a Distributor License
Follow these steps.
Identify your industry
Register your business.
Look for suppliers and manufacturers.
Make a logistics strategy.
Send your distributor application.
How To Get a Wholesale License for Clothing
Wondering how to get a wholesale clothing license?
Specify that you are in the clothing industry.
Register your business.
Look for clothing suppliers.
Develop your logistics strategy.
Apply as a clothing distributor.
Build and maintain relationships.
Frequently Asked Questions (FAQs)
Can I Use My EIN Number To Buy Wholesale?
No. You must get a wholesale license with your EIN before buying wholesale and enjoying the benefits of the tax discount.
Can I Buy Wholesale and Sell?
Yes. You can buy wholesale with a license and avoid sales taxes. You can sell at a markup and profit on the difference.
Is Wholesaling a Type of Business?
Yes. A wholesale business earns by buying in bulk and then selling in bulk to smaller merchants.
The Bottom Line
Some manufacturers or suppliers have extremely high minimum quantity requirements, meaning you need significant capital for wholesaling.
Weigh the pros and cons of selling wholesale.
Unlike wholesaling, dropshipping doesn’t require a significant investment.
If you want to start a business but can’t afford wholesaling, learning how to start a dropshipping business is best.