Get a Resale Tax ID for your Jewelry Business
Most states have some form of what is known as a State Seller’s Permit, Resale Tax Id or Reseller State ID. I don’t know how it is in other states, but in California this is free for businesses and is available at the State Board of Equalization (www.boe.ca.gov).
You can print, fill out, and mail in an application for a Seller’s Permit pretty easily. On the form you need to specify things like your Business Name, Permit Type (Sole Proprietor, Partnership, LLC), what type of items you are going to sell, a sample list of suppliers where you will buy your supplies from and your projected monthly gross sales. It is a fairly simple process. After it’s processed and assuming all is well, they mail you back the actual Seller’s Permit.
So why would you get a Seller’s Permit to start with? If you have one, then you are not required to pay State taxes on purchases of supplies that you are going to later resell or make into something and resell. I don’t know the exact terminology and language that is used to determine what items are targetable so don’t quote me on this. They give you a booklet when you get your permit which spells out everything you need to know.
So at your local beadstore, when you buy beads, gems, or precious stones, you aren’t required to pay the Sales Tax on them. Generally, the first time you purchase from the store, you can give them a photocopy of your Seller’s Permit. They will enter the information into their records and then every time you return to the store, you simply tell them that you have a Permit on file and they will pull the information up.
At a show like Rings ‘N Things, where it’s quite easy to spend hundreds if not thousands of dollars, having a resale tax ID will save you a bundle. In fact, I don’t believe you can get into their shows unless you either have a flyer (they give these out to most anyone who has ordered from them) or you have your resale ID.
The “downside” for using a seller’s permit is that you will have to start collecting sales tax from your customers from the state you live in. Again, the specifics may vary in your particular state or county. But in general, just like a normal business that is selling things you will now have to collect sales tax. I don’t believe this will deter customers from purchasing things, but it’s something to keep in mind.
Also, you will have to remit the collected sales tax at specificed periods during the year. I believe they provide an easy way to do this by mail. How often do they collect it? Well, remember when you filled out your “gross monthly taxable sales” in the form? I believe that the frequency of payment is dependent on this. For monthly sales under $500 I think it is at most once a year. The greater the number you put for sales, the more frequently you will have to send in your collected tax.
