If you're interested in starting your own jewelry-making business, but haven't made it official yet, obtaining a business license or otherwise registering your business, and/or obtaining resale tax identification (sometimes called a tax number, sellers permit or reseller's permit) is a simple but major step along the way.
How Tax ID's Work
Each state or country has its own specific rules and regulations regarding sales tax but, generally speaking, if you sell your artistic creations in a region that charges sales tax, you are required to collect sales tax when you sell your product. Having resale identification exempts you from paying taxes on items that will ultimately be used for resale. For example, you will not have to pay taxes on beads, wire, clasps, etc. used in making a finished piece of jewelry to be sold to someone else, with tax charged to that person.
Even with a resale ID, you will still need to pay a Use Tax on business items that will not be resold, for example tools that you use to create your jewelry (again, this varies from state to state). In most states, you will also have to file your own sales tax reports and pay the sales tax you have collected. If you do not resell items bought for your business that are marked (TX) on your invoice, report and pay Use Tax when filing out your state's sales tax return.
Additional advantages of a Business License and/or a Tax ID:
- It is typically a minimal expense.
- It legitimizes your business in the eyes of potential suppliers and fellow craftspeople.
- It enables you to purchase from a larger number of wholesale suppliers.
- It helps you get into wholesale bead and craft-supply trade shows.
- It expands where you can sell your wares (some craft shows won't let you exhibit without one).
- It qualifies you for our Wholesale Program.
U.S. Residents Outside Washington State
For details about the state where you live, check the Jewelry Making HQ's State by State Business Start Up Guide and/or the Federation of Tax Administrators.
Washington State Residents
In January, 2010, Washington State's resale certificate was replaced with a Reseller Permit, issued by the Department of Revenue. All resale certificates became invalid, and businesses in Washington State must pay sales tax if they don't have a current, valid Reseller Permit. For more information on Reseller Permits, visit the Washington State Department of Revenue's website.
The WA State reseller permit costs nothing. However, you must register your business before you can get a reseller permit, and there is a small fee to register your business with the Department of Licensing. There might be additional fees, depending on your type of business.
- Your UBI # or business license qualifies you for our wholesale program, but does not qualify you for tax-exempt purchases.
- The Reseller Permit takes care of both: To sign up for our Wholesale program AND be exempt from paying taxes on resale purchases, log in and go to My Account > Settings > Tax Section, to add your reseller permit information to your account. If we do not have a valid reseller permit on file for you, we have to charge you tax, even if you have a UBI, Business License or EIN.
If you have a UBI number, you may already have a Reseller Permit. To find out, check the Washington State Department of Revenue's Lookup Tool
If you don't yet have a reseller permit but can't wait to make your purchases for resale, you can take a "Tax Paid at Source" deduction on your tax return, or request a refund from the Department of Revenue.
If you have more questions, please contact the Washington State Department of Revenue.
Idaho and British Columbia Residents
In the last few years, Idaho and British Columbia made similar changes, so if you purchase in our Spokane Showroom or have your orders shipped to a Washington address, you may need to check with your state or province to make sure your resale ID is up-to-date. You can verify your Idaho sellers permit here: https://idahotap.gentax.com. For British Columbia residents, our tax form only allows 20 characters for your tax ID so at this point in time we are just asking for your PST#, but we may need to ask for additional information later. (If we are shipping to addresses outside Washington state, we do not charge you sales tax.)
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