Are you considering starting a retail business in Florida? If so, one of the most crucial steps of starting a retail or wholesale business in Florida is to get a Florida sales tax permit for your business entity. You won't be able to sell retail or buy wholesale in the state without it.
Don't worry though. The process is a simple one if you follow this guideline on how to get a wholesale license in Florida.
What Is a Wholesale License?
A wholesale license is also known as a seller's permit or sales tax permit. It is necessary for buying and/or selling wholesale. You can have a business without a wholesale license but if you are buying and/or selling, it would not be in your best interest.
Why Should I Have a Sales Tax Permit?
You must register for a Florida seller's permit so you can purchase bulk merchandise and also in order to have a tax ID. The object of retailing is to make a profit.
Benefits of a Wholesale License
The feat of making a financial gain is much easier to accomplish when you are able to buy wholesale at a cheaper rate. You are also able to buy in bulk quantities.
Also, you do not pay sales tax on your purchases. Those who present a wholesale license don't pay tax upon checkout. You do, however, have to prove you have a valid license issued in the state of Florida.
The sales tax is passed on to your customers who ultimately pay it for you when you collect sales tax on their purchase of your product. You are responsible for turning it in, however, when you pay taxes through your business entity because you charge sales tax.
The Bottom Line
Sales taxes are always collected from someone. When you have a sales tax permit, you collect sales tax from your customer. If you don't follow through and pay the sales taxes you collected, you'll find yourself in deep trouble.
The bottom line is that the tax liability rests on your shoulder after the sale is completed.
Something you may encounter at a wholesale dealer is a "members only" rule stating you must have a membership in order to purchase goods. There may be membership fees as well. Still, the savings you are eligible for as a member and the fact that you won't pay sales taxes typically make it worthwhile to join.
It's always wise to add your outgoing money and your incoming so you know for sure if the price you are paying for wholesale goods plus any membership fee is leaving you enough room for profit.
Wholesale License vs. Business License
Many people mistakenly think a wholesale license is the same thing as a business license. They are not the same although both are things you may need when you begin a business.
A Florida seller's permit (or wholesale license) is a sales tax license that allows you to buy wholesale and to sell retail. It also allows you to collect sales tax. A wholesale license is not required in order to operate a Florida business. It is, however, a must if you wish to buy wholesale and sell retail and/or sell wholesale.
A wholesale license is also required for certain businesses that sell services and charge taxes. You will need to check to see if your particular service needs a wholesale license to operate lest you be found in violation.
A Florida business license is a general business tax registration that is based on gross income, number of employees, type of business, and location of business. Although some states require you to have a business license to conduct business in their state, Florida does not.
Oftentimes business licenses are regulated by the city rather than the state. Many cities within Florida do require business licenses. Be sure to check with your city and/or county to find out if you need one.
The rules governing business licenses vary depending on the location and the nature of the business. Some businesses, such as an intrastate courier services, will need to provide additional information.
Who Needs a Wholesale Permit?
If you are selling wholesale or retail, you need a permit. Examples include:
- clothing retailers
- garment services
If you have a business and you operate with services taxed, you need a wholesale permit. Examples include:
- coal mining services
- limousine service
- automotive road service
- oil field services
- interstate air courier
- pest control (includes termite services)
- Other fields that require wholesale licensing that you might not think would are:
- medical test laboratories
- tax return preparation
- commercial fishing vessels
- local advertising companies
- investment counseling services
- financial reporting services
- hunting guide services
- dating services
- management consulting
- managing customers property
- any auto service
- funeral services
- professional sports events
- telemarketing services
- travel agent services
- commercial linen supply
- real estate management fees
- advertising agency fees
- court reporting services
- loan broker
- telephone answering service
- process server fees
- insurance services
- management consulting e-business
- bail bond fees
- armored car services
- property sales agents
- personal property management
- marine towing service
- auto towing services
- veterinary services
- employment agencies
- massage services
How to Obtain a Sales Tax Permit
Name Your Business
For your seller's permit you will need a name for your business. Once you have one, you'll need to register it. You can file for a "doing business as" (DBA) or paying es businesses online or you can register a name as the official name you want it to have.
Employer Identification Number
The second step in acquiring a seller's permit for a sales tax license is filing for an Employer Identification Number (EIN). This can be done through the IRS.
Check the Internal Revenue Service website for more information regarding the process.
Obtain Your Seller's Permit Wholesale License
The last step in filing for a Florida seller's permit application with Florida Department of Revenue is to do the paperwork and send it off, email it, or deliver it in person.
There are four ways you can go about attaining and submitting your Florida business tax application for your seller's permit including:
Go online to the Florida Department of Revenue website and download the form. Fill it out completely. Sign, scan a copy and send it in according to the instructions. You will be allowed to pay electronically.
You can also turn your application in at a taxpayer service center or in person at the Florida Department of Revenue. Either download the form online so you can have it filled out before you go, or you can attain a form when you go to the Department of Revenue or a taxpayer service center.
- By Mail
Another way to obtain your wholesale license is to apply by mail. You will need to get a copy of the form online or in person. Complete and legibly fill out the form and sign it. Send it to the address given for the Florida Department of Revenue.
Conduct an online search for 'sales tax license in Florida'. You will see many listings for online data processing services that specialize in helping customers get their sales tax permits in the state of Florida.
Do be cautious. Although it is common practice to charge a fee and also to collect the charge for the permit, some companies don't treat their customers properly. Some are greedy, and others are downright scams. Check out the third-party's credentials and references.
Conduct a search with the Better Business Bureau to make sure there aren't any complaints filed on the company you are potentially paying to represent you in your quest for a wholesaler's license.
FDR Contact Information
The FDR has information on the Florida Department of Revenue website that can help you when navigating your wholesale license application process. Questions can be addressed with a phone call to the Florida Department of Revenue.
You can also contact the FDR by email - DORGTA@floridarevenue.com.
Information You Will Need When Applying
To save time and frustration, it's a good idea to have the information you will need ready when applying for a wholesale license (seller's permit). Information includes:
- Date of birth. Your date of birth is necessary in order to verify your identity.
- Driver's license number. Have your driver's license number ready and you'll also be asked what state it was issued in.
- Internet address. You will be asked for your internet address. If you have multiple ones, you can decide the best one to conduct correspondence through and use it.
- Employer identification number (EIN). As mentioned before, before you can apply for a seller's permit, you'll need to apply for an employer identification number with the Internal Revenue Service. An EIN is necessary in order to attain a seller's permit so of course, this application must precede the seller's permit application.
- Type of business. Different types of Florida businesses pay different amounts of tax. For example, if you sell tobacco or liquor, you will pay more taxes. You also will most likely need to provide more information than the average retail store or landscaping services or construction service.
- Address of business. Be sure to put the physical location of the business, not just your home address unless your business is run from your home.
- Additional information. Depending on what type of business you plan to have, you may need to give more information on your seller's permit application. You may have to answer questions about personal property, mainframe computer access, your business structure, and other tangible property.
Florida Department of Revenue
The Florida Department of Revenue is responsible for issuing seller's permits in the state. They are also responsible for other areas such as the collection of delinquent taxes and child support.
Sales Tax and Sales Use Tax
A seller's tax permit is not the same as sales use tax. Sales use tax is a transaction tax, charged at the point of sale except when products are sold wholesale in which the tax is collected once the goods are sold retail. Certain services are subject to sales tax too.
Sales use tax is the tax charged on the use or consumption of an item. It is paid when sales tax has not been charged. For instance, if your vendor didn't charge or pay sales tax on an item delivered to you, you will owe it or you'll pass it to your customer. Use tax is typically due on contracted property or services for the use of the property or service. If you are leasing the building you are doing business in, chances are good you'll be the one paying a use charge.
To sum up, the difference between sales tax and use tax, if you own a bowling alley, you'll likely be the one paying a use tax for operating the business out of the building. Items you sell, such as promotional merchandise, will not be taxed when you buy them wholesale but will be taxed when you sell them retail. If you sell alcoholic beverages, your customer will pay taxes on their drinks and the rate of tax will be higher than the merchandise tax rate is.
Sales tax and use tax can be confusing. It is best to ask a professional or make sure to exhaustively research yourself when in doubt so you don't end up owing and getting into trouble.
Proper User of Your Wholesale Permit
Once you have attained your wholesale permit, it's time to do business. The opportunity to make a profit is now almost assured because you can legally purchase discounted, bulk items without paying sales tax on them. Be responsible with your seller's permit. You are not allowed to let others use your wholesale privileges or use your retail license for personal products. Failure to comply with the rules and regulations can result in losing your license and you certainly don't want to do that.
Obtaining a wholesale permit is one of the easiest things you'll need to do when opening your Florida business. The information you've learned here should greatly help since you will be able to buy bulk, tax-free wholesale, and sell the goods retail or even wholesale. Congratulations on being well on your way to becoming a successful Florida business.