How to Get a Wholesale License and State Compliance for Different States

If I tell you that you can save 50% of your inventory cost just by issuing a single license? Interesting, right? 

First, let’s discuss different business models. Some sell to other businesses (B2B), while others sell to end consumers (B2C). However, the primary purpose of any business remains the same – to sell goods and make profits. 

In this guide, we will discuss only the type of business that sells to other businesses: wholesalers. 

The question is: Can any business sell to other businesses? Well, yes, but with some rules and regulations. One rule is having a legal approval to sell to other businesses, which is known as a wholesale license.

Let’s start from here. There are two types of business: retailers that purchase in bulk from wholesalers, and then there are wholesalers that purchase directly from manufacturers or distributors. But when it comes to profit margins, there is a large window between the two.

Wholesale businesses mostly operate at a 15-30% markup, which is relatively less than retailers’ 30-50% markup on the wholesale price. 

To mend this gap, businesses required a license known as a wholesale license, which helped them buy products in bulk without paying sales tax (meaning at a discounted price) because the end consumer would ultimately pay the sales tax. That’s how a single license can save 50% of your inventory cost. 

What is a Wholesale License?

A legal document that businesses need to purchase bulk goods directly from manufacturers and distributors without paying sales tax. This means they can get discounted goods and sell them to other businesses at higher profit margins. 

If you haven’t heard of a wholesale license before, it might be its name. Wholesale license goes with multiple names, like;

• Resale certificate
• Seller’s permit
• Sales tax permit
• Sales and use tax certificate
• Transaction privilege tax license 

All these terms slightly vary in their meaning and purpose based on the state in which they are issued.

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How wholesale licenses make a difference for any business

Having a wholesale license offers you the following benefits:

1. Buy goods without sales tax.
2. Get wholesale prices (30-50% less than retail).
3. Build credibility with manufacturers and suppliers.
4. Access exclusive wholesale opportunities.

Is it necessary for wholesalers to have a wholesale license?

No, it’s not necessary to have a wholesale license to buy bulk goods, but with a license, you can significantly save on extra sales tax, increasing your profit margins. Without a wholesale license, most businesses lose profit margins because they purchase goods at retail rather than wholesale prices. That causes consumers to bear higher product costs. To retain good profit margins, up to 72% of businesses plan to increase their retail prices. But it’s not ideal in this competitive market. That’s why the knowledge of wholesale licenses is important to align your prices with the market standard. 

6 steps to get a Wholesale License

Now that you know the importance of a wholesale license, we will see how to get one.

1. Register your business

First, you need to register your company and make it legal. Start by selecting a legal structure for your business, such as a sole proprietorship or LLC (Limited Liability Company) that combines the benefits of partnership and sole proprietorship. For instance, in Alabama, corporations and LLCs must register with the Secretary of State to ensure that their businesses are legally recognized.

In whatever state you are, you can easily register your business by visiting their online portal. For example, in New York, if you want to register your wholesale business, you just have to provide details and submit your fees to start the process. 

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2. Get an employer identification number (EIN)

An EIN or Employer Identification Number is your business’s tax identification number that you need to file taxes or open a bank account. As a business, you can easily apply for an EIN online for free in less than 15 minutes. Whether you are a single-person business, a multi-member LLC, or if you plan to hire employees, you will need an EIN. 

3. Apply for a sales tax permit 

Before you can get a wholesale license, most states require you to have a sales tax permit. For instance, in Texas, you can use Form AP-201, whereas Alabama has its own process through the My Alabama Taxes portal. This step is important as it allows you to collect sales tax from your customers legally.

4. Gather the required information and documents

Generally, the following details are required to start the filling process;

• Business name
• Owner’s name
• Taxpayer ID
• NAICS code
• Business address
• Contact information
• Nature of the business
• Seller’s permit (if applicable)
• General business license
• Employer identification number (EIN)

But depending on your state, this basic information and document requirements may vary. Some states require more documents (you can check their portals), while others require less. For example, Georgia will reject applications that list a P.O. Box as the business address, so it’s important to follow the proper instructions when providing the information and to ensure that you provide a physical address.

While in New York, you can file for the application by providing the following details;

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5. Submit your application and pay your fees

Different states have varying fees for a wholesale license. For example, North Carolina has no general business license fee, but there can be different application fees associated with particular types of wholesale business, such as vehicles or alcohol wholesaler permits.

6. Wait for approval

Once you submit your application, wait for the approval. Processing times vary by state – it usually takes 2 to 4 weeks in Texas, while in Georgia, you can even get same-day approval. In New York, approvals via FastFilings can take about 10 or more business days.

Wholesale license requirements in different states

How to Get a Wholesale License in Texas

In Texas, you don’t need to get a separate wholesale license. You can apply for a Texas tax sale permit and register yourself as a tax-exempt wholesaler. This allows you to purchase or resell bulk goods without paying taxes.

How to Get a Wholesale License in Florida

In Florida, first you get your sales permit by proving your EIN, and then you will get your wholesale license according to the wholesale sale products you plan to deal in.

Here’s how to get licensed:

• Choose a Business Structure
• Register Your Business
• Get an Employer Identification Number (EIN)
• Obtain a Sales Tax License in Florida
• Apply for the Annual Resale Certificate
• Maintain Compliance

How to Get a Wholesale License in North Carolina

To get a wholesale license in North Carolina, first register your business with the North Carolina Department of Revenue (NCDOR) and complete the Business Registration Application (Form NC-BR). This includes getting a sales tax ID number and fulfilling any additional state or local requirements for your industry. If you’re a remote seller and your sales exceed $100,000 or you have over 200 transactions in a year, you also need a NC wholesale license.

How to Get a Wholesale License in Georgia

To get a wholesale license in Georgia, first get the sales permit from the Georgia Department of Revenue. You can easily apply for this permit through the Georgia Tax Center (GTC) by providing the required details. 

• Your business name and address
• Your federal employer identification number (EIN)
• A list of the products you intend to sell
• Banking details for electronic payments

You will get your local license once you register your business with the Georgia Secretary of State. 

Your permit may vary depending on the type of goods you are dealing in. For instance, if you deal in alcohol, you may need extra permits from the Georgia Department of Revenue. 

How to Get a Wholesale License in South Carolina

Depending on your wholesale business type, you can register with the South Carolina Department of Revenue (SCDOR) or the South Carolina Department of Labor, Licensing and Regulation (SCDL). The process is simple: just fill out the required information, pay fees, and complete a pre-licensing course. 

How to Get a Wholesale License in Arizona

In Arizona, businesses selling tangible goods need a Transaction Privilege Tax (TPT) license from the Arizona Department of Revenue (ADOR) instead of a regular seller’s permit or wholesale permit. 

This license:

• It is necessary to sell tangible goods in the state
• Allows purchases for resale without tax
• Enables access to wholesale pricing discounts

You can apply for it online at the Arizona Department of Revenue website.

Conclusion

Now that you know how to get a wholesale license, don’t be lazy. Build a profitable wholesale business that generates revenue with good profit margins. Sending an application takes a maximum of 30 minutes. Start your application process today and register your wholesale business on SeeBiz to gain maximum B2B sales, and don’t play with tight markups. 

FAQs

What is a wholesale license?

A legal document that businesses need to purchase bulk goods from manufacturers and distributors without paying sales tax. It means they can get goods at discounted prices that they can sell to other businesses at higher profit margins. 

Can I use one license for multiple states?

Not every state has its own wholesale license or sales permit. For example, you cannot use the Texas sales Tax Permit in Georgia. 

Do online sellers need a license?

Yes, if you are a wholesale business involved in buying and selling, you need a license. For example, Amazon FBA sellers in Texas must collect sales tax.

Do I need a physical location to get a wholesale license?

Yes, most states require a physical business address when filling out an application form, but it’s not compulsory. You might not need to include the physical address if you have an online store, though requirements vary by state and business type.

How much does a wholesale license cost?

The wholesale license fee varies from state to state. In some states, like Georgia, it’s free, while in others, it may cost several hundred dollars, depending on the business type and sales volume.

How long is a wholesale license valid?

Validity periods vary by state. In some states, you have to renew your license annually, while in others it might be valid as long as you have the same business information.