You might be wondering if you can use your Employer Identification Number (EIN) to make wholesale purchases if you own a small business and want to. Yes, you can utilize your EIN number to make wholesale purchases. However, there are a few crucial details you should be aware of.
A resale license or permit is distinct from an EIN number, which should be understood before anything else. While the IRS requires an EIN number for tax purposes, your state may issue you with a resale license or permit that enables you to purchase goods at wholesale costs without paying sales tax. Therefore, you might still require a resale license or authorization to purchase wholesale even if you have an EIN number.
For instance, in Montana, a resale license is required to purchase goods at wholesale prices without paying sales tax. You must register your business with the Montana Department of Revenue and supply some basic information about your firm, such as your business name, address, and EIN number, in order to receive a resale license in Montana.
If you intend to sell goods in Montana, you might additionally require a seller’s permission in addition to a resale license. Businesses that sell physical products, such as apparel or electronics, are needed to have a seller’s permit, which enables you to collect and send sales tax to the state. You must submit an application to the Montana Department of Revenue and supply some fundamental details about your company in order to receive a seller’s permit in Montana.
To avoid paying sales tax while buying goods from out-of-state suppliers, you might also need to give them a resale certificate. However, not all states recognize out-of-state resale certificates, so it’s crucial to confirm this with the state you’re buying from.
Finally, it’s critical to be aware of the states with the biggest tax burdens if you’re trying to purchase wholesale goods. The five states with the highest tax burdens are New York, Connecticut, New Jersey, Hawaii, and Rhode Island, according to a Tax Foundation research. When choosing your price and profit margins if you operate in one of these states, it’s critical to consider the high tax rates.
As a result, even though you can use your EIN number to purchase wholesale goods, it’s crucial to also acquire a resale license or permission if your state mandates one. Additionally, you might require a seller’s permit if you intend to sell goods within your state. Finally, make sure to confirm if they accept out-of-state resale certificates before making a purchase from an out-of-state merchant. When purchasing wholesale goods for your company, you can save money and stay out of trouble if you are aware of these rules.
Alaska, Delaware, Montana, New Hampshire, Oregon, and Massachusetts and Minnesota each have their own exemptions for clothes and footwear, making up the seven tax-free states in the US. It’s crucial to remember that there may still be local sales taxes in some regions even in these states.