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Seller’s Permit vs Business License: Differences & Similarities In 2022
What is a seller’s permit vs a business license? How is a seller’s permit different from a business license? If you’ve ever had to ask these questions, this article will have answers for you.
We will also discuss how and when you should get a seller’s permit or business license. The article will also explain where you can get this license or permit, and if they can be acquired online. Stick with us.
What is a Seller’s Permit?
According to Forbes.com a seller’s permit is a business license that allows you to collect sales tax on taxable goods and services. Your business is then responsible for sending the tax you’ve collected to your state taxing authority.
Seller’s permits are state-specific, meaning they allow you to collect and remit the required sales tax in the state where the permit is issued transaction. Because seller’s permits are state-specific, you may need more than one if you conduct business in multiple states.
A seller’s permit is sometimes called a sales tax permit or sales and uses tax permit.
When Should I Get A Seller’s Permit?
Immediately you’re ready to start your business, the first thing you should think of is getting a seller’s permit or business license. Inability to do so might get you fined for failing to collect and remit sales tax.
This applies to all businesses rendering services or selling products. With exemption to certain states like Alaska, Delaware, Montana, New Hampshire, and Oregon that do not have sales tax.
Where And How Do I Get A Seller’s Permit?
Where and how to get a seller’s permit differs according to your state of residence. Most state requires that you send your application to the Department of Revenue.
To be sure you’re doing it right, confirm with the business regulatory and taxing bodies to see what the process is in the states where your business is located.
What is a Business License?
A business license is any form of license or permits that a state or government agency mandates businesses to get in order to operate.
Federal, state, and local agencies issue different types of business licenses and permits for a variety of business operations.
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What Kinds of Businesses Need a License?
The type of business you do and the state your business is located determine if you need a business license or not.
However, there are general factors that influence businesses to get operating licenses or permits. Some are as follows;
- If you operate a brick-and-mortar business, if your business requires a physical location, you will need a business permit. The permit will allow business activities to go on on the property. It’s also the permit that will help you build or remodel the property to suit your business needs. This said you’d probably need to get additional permits from your municipality for signages and fire safety approvals.
- If you sell goods, In order to help state agencies collect tax, you would need to get a seller’s permit to sell in most states. This is why the seller’s permit is also called sales tax.
- If you provide services that require licenses, i.e. a stylist, electrician, childcare provider, lawyer, medical care provider, accountant; or you sell food, alcohol, or tobacco; or provide other services that are regulated by state or federal laws, you’ll need industry-specific licenses.
Who Needs a Business License?
The types of business licenses you need to legally operate depend on where your business is located and what kind of business you run.
The button below contains a list of state requirements for a business license to be issued.
Note that even if your state doesn’t require a statewide license, you may need local licenses or permits from your county or municipality. Check with your city or county clerk’s office to cover your bases.
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How Do You Get a Business License?
It’s pertinent to understand that a business operating license isn’t necessary for all businesses in every state.
Still, the procedure to get a business permit and other licenses is quite different from one state to the other. It also varies from country and municipality.
Even so, you’ll follow these basic steps to get a business license if you need one:
- Form your business entity. You apply for a business license in the name of your business, so if you’re going to form a business entity like a corporation or LLC, do that first.. Otherwise, you might have to file a change later and pay an additional fee.
- Apply for an employer identification number (EIN). You might need this on applications for business licenses or permits. forms. All businesses other than sole proprietors with no employees need an EIN. You can get an EIN through the IRS online.
- Determine which license(s) you need. Depending on your industry and where your business is located, you may need licenses from federal, state, or local agencies. A lawyer or resources from your local Small Business Administration office can help you figure it out.
- Apply for a business license. You may be able to apply for licenses online, or you may need to submit paper applications for local licenses. Some licenses, like general business licenses and seller’s permits, can be approved right away. In some states, or for some licenses, the review process might be longer, so plan to apply well before you need to start operating your business.
- Renew your business license. You’ll probably have to renew licenses and permits as often as once a year. Talk with your lawyer and pay attention to the regulations in your state and locality to avoid a lapse in your licensing.
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Seller’s Permit vs Business License
While the state where the business is located regulates sellers’ permits, the municipality or city where the business is located typically issues a business license in exchange for an additional operational tax.
So, if you have the state-issued seller’s permit in hand, you should get in touch with your city’s and/or county’s business license office to get a separate business license.
What should I Do With My Business License vs My Seller’s Permit?
If you have obtained either or both of these documents, posting them on your walls would be the appropriate thing. This way the public can see that you’re authorized to render such services or permitted to sell a product as the case may be.
Conclusion
FAQs
Can I get a seller’s permit online?
While some states have updated their systems to accept online applications for seller’s permits, checking with your state’s Department of Revenue to see what the process is and whether you can complete it online would be best.
Are there any states that do not require a seller’s permit?
There are certain states that do not collect state sales tax and, therefore, do not require companies that do business there to have seller’s permits. These include Alaska, Delaware, Montana, New Hampshire, and Oregon.
Is a seller’s permit the same as a business license?
No, a seller’s permit and a business license are completely different. Sales tax is regulated by the state of the location of the business while a business license is generally issued through the municipality or city the business is located in for an additional operating tax. You should contact your city and/or county business license department to obtain a separate business license after the state-issued seller’s permit is obtained. You may file your seller’s permit by selecting the service tab above.
Do I Need a Seller’s Permit to Sell Online?
Unless you are selling products or services in a regulated industry such as health care, you don’t need a seller’s permit to conduct business online.
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References
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