Requirements for a Wholesale License – 3 Easy Steps

How to Get a Wholesale License

If you own a retail store, you might have thought about buying products from a wholesaler to help save on costs for your business and increase your profits.

When you purchase products from manufacturers in bulk, you don’t need to pay sales tax for the goods you sell to clients.

When you don’t pay sales tax, the International Revenue Service (IRS) requires you to hold something to buy these items wholesale—the Wholesale License.

With that being said, what are the requirements for a wholesale license? How can you obtain it? Let’s dive into it.

3 Steps to Get a Wholesale License

Follow these three steps to receive a wholesale license.

1. Register Your Business.

Whether you have a small or large company/organization, an online store, or a home-based business, you need to legally register your business in order to get a wholesale license.

To accomplish this step, apply for an Employer Identification Number (EIN) from the IRS which is also called Federal Tax Identification Number that allows you to conduct your business and hire workers legally. It is mandatory to have this number even if you don’t have to employ others.

It can take up to 2-3 weeks for your application to process and get the Employer Identification Number (EIN).

You can’t do business legally unless you have this number.

2. Obtain a Sales Tax License.

When you’ve successfully registered your business, next, you need to obtain a sales tax license.

This license allows you to charge sales tax on the products you sell or the services you provide. You can contact your nearby (state) tax office to get a sales tax permit.

You’d have to complete some additional requirements depending on in which state your business operates.

If you’re not able to determine what license you need to obtain in your location, consider consulting with the Small Business Administration.

3. Apply for a Wholesale License.

After obtaining a sales tax permit, contact your state’s revenue office to get a wholesale license.

It’s the license that exempts you from paying sales tax on the goods you buy. It means that with a wholesale permit, you don’t need to pay taxes on the products you buy in bulk and then resell them through your business.

You’ll have to pay some amount of fee that varies depending on where you live—consult the tax office for further additional information.

The Bottom Line

Reselling wholesale products through your business is a great way to raise your company’s profits.

However, you need to have some necessary licenses to remain in compliance with Internal Revenue Service (IRS) or local laws.

What is a Wholesale License?

It’s a license that enables you to buy products in bulk from manufacturers at a low price and then resells them in smaller quantities by making some profits on each product.

Why do you need a Wholesale License?

With a wholesale permit, you don’t need to pay taxes on the products you buy in bulk and then resell them through your business.

What are the requirements for a Wholesale License? (in brief)

You need to register your business first. Then apply for obtaining a sales tax permit. After this, contact your state tax office—eventually, the wholesale license would be in your hands.

Do I need a Wholesale License to buy wholesales?

Yes, in order to buy products wholesale, you need them. Otherwise, you’ll have to pay sales tax on every product you purchase.

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