Information on Resale Tax ID's
If you're looking into starting your own jewelry-making business, but haven't become official yet, obtaining resale tax identification (sometimes called a tax number or reseller's permit) is a simple but major step along the way.
How Tax ID's Work
Each state has its own specific rules and regulations regarding sales tax but, generally speaking, if you sell your artistic creations in a state 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.
Advantages of Tax ID's:
- 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).
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 reseller's permit. For more information, go to the Washington State Department of Revenue's website.
The WA State reseller permit costs nothing. However, there is a fee to register your business with the Department of Licensing, which you will need to do to obtain your reseller's permit. There might be additional fees, depending on your type of business.
To be exempt from paying taxes on resale purchases, send us a copy of your reseller permit. If we do not have a valid reseller permit on file for you, we have to charge you tax, even if you have a tax number. If you have not yet ordered from us, you can send a copy in advance.
If you don't have a reseller permit but need to make 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.
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