Storage Auctions

What is a seller's permit? How does having one benefit me?

Offline MovieMan

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What is a seller's permit? How does having one benefit me?
« on: December 03, 2012, 07:35:43 PM »
Many states issue what is called a seller's permit (or some similar name).

This is done to collect sales tax from sellers who buy goods without paying sales tax on THAT purchase and then are to collect sales tax when they re-sell the goods.

If you do this you won't be paying tax at the auctions, but you will be paying it either monthly, semi-yearly or yearly directly to the tax board of your state.

I won't go into more detail here unless some NEWBIE asks about it, at which time I will continue with more.

******

A seller's permit is not a business license. That's a whole other story and for most auction buyers won't be necessary. Sure it will be for a few who open stores.

Offline Travis

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Re: What is a seller's permit? How does having one benefit me?
« Reply #1 on: December 06, 2012, 06:27:53 PM »
Also known as a Sales & Use Tax Permit or Resale Certificate.

When businesses sell items professionally in most states, theyíre required to charge a certain amount of sales tax. This tax is then owed to the local government, and itís paid as an operating cost of doing business. Depending on the job, other taxes might be applied as well, but you should always assume that any business that sells merchandise will need to collect sales tax to fulfill its liability to the government. Business owners must be prepared to collect and pay these taxes for any business operations completed in their state.

People who sell goods as part of their business are required to obtain a sales tax permit. This includes people who sell items from an office, warehouse, storage facility, flea market, trade show or other location. Essentially, any time buying and selling items becomes a full or part-time job, youíll need to get a sales tax permit. If youíre just selling a handful of items on eBay a few times a year, you probably wonít need to worry about sales tax; if youíre making frequent sales, though, you should look into obtaining a sales tax permit.

Obtaining the permit itself is quite easy. Most states allow you to fill out and submit the form online. There are no fees associated with the permit itself, but you might need to post a security bond of up to four times the amount of the expected monthly owed tax. The purpose of this bond is to cover delinquent fees if you fail to pay your due share of sales taxes. Not everyone who applies will need to post this bond, so itís something youíll need to discuss with the state and plan around accordingly.

Once youíve obtained your permit, youíre required to post that permit at your place of business. You must then collect sales tax and keep records of all of your purchases so that you can report and pay your taxes on time. You can be audited at any time, so keeping good records is a vital part of maintaining your business. Itís usually a good idea to keep at least four years of tax records available at all times so you can avoid hassles when you get audited.

Between business licenses, sales tax, business or self-employment taxes and other operating costs, running your own business can be expensive. This is why itís a good idea to test the waters with any buying and selling venture before you jump in with both feet. Easing yourself into a new retail business will help keep you from getting overwhelmed.

Re: What is a seller's permit? How does having one benefit me?
« Reply #2 on: January 21, 2013, 09:01:01 AM »
Do you pay taxes when you purchase a unit in that state or do you pay taxes in the state that you sell the items, or both?  I'm new & interested in the experience of purchasing a storage locker. Would you suggest a seller's permit for the first locker one purchases or wait to see if this is what you want to do?

Offline Travis

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Re: What is a seller's permit? How does having one benefit me?
« Reply #3 on: January 21, 2013, 07:00:18 PM »
If you don't have a sales & use tax permit, you will need to pay state sales tax on the winning bid amount. If you have a sales & use tax permit, you must collect state sales tax or pay it out of your total sales. If you don't have a permit, technically you're still required to charge sales tax on the merchandise you resell, although a lot of buyers choose not to.

I recommend buying and reselling a few units before you take the permit plunge. Make sure this business is right for you first. Once you do file for the permit, you'll be required report and pay quarterly. Definitely keep meticulous records and always pay them on time. If you get behind on the money you owe the state, they can get pretty ugly. They can seize your assets, take you to court, garnish your wages and income tax return, etc. They have even been known to show up at your residence to intimidate you.  :o


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