To get a sales and use tax certificate, you register with the department of revenue in each state where your business has a tax obligation, and in most states you can finish the application online in under an hour. The certificate, also called a seller’s permit or vendor license in some states, gives you legal authority to collect sales tax from customers and to buy inventory tax-free for resale. Forty-five states and the District of Columbia impose a sales tax. Five states do not: Alaska, Delaware, Montana, New Hampshire, and Oregon. If all your sales happen in those states, you have nothing to register for.
Confirm You Actually Need to Register
Your obligation to register in any given state depends on whether you have “nexus” there. Nexus is a legal term for a connection strong enough to require you to collect that state’s sales tax. Two kinds exist, and triggering either one is enough.
Physical Presence
A retail store, office, warehouse, or a single employee working from home creates physical presence nexus in that state. This is the traditional standard. If you run a brick-and-mortar shop, you clearly have nexus where it sits.
Economic Nexus
Since the 2018 Supreme Court decision in South Dakota v. Wayfair, states can require you to collect sales tax based purely on the volume of sales into the state, with no physical presence required.1Supreme Court of the United States. South Dakota v. Wayfair, Inc. Nearly every sales-tax state has adopted an economic nexus law since.
The most common threshold is $100,000 in gross sales into a state during a calendar year. Some states add an alternative trigger of 200 or more separate transactions, though that transaction count is being dropped in a growing number of states in favor of the dollar figure alone.2Streamlined Sales Tax. Remote Seller State Guidance If you ship to customers across many states, check each state’s specific threshold and effective date.
One boundary worth flagging: if you sell exclusively through a marketplace like Amazon, Etsy, or eBay, the platform generally collects and remits sales tax on your behalf under marketplace facilitator laws.3Streamlined Sales Tax. Marketplace Facilitator State Guidance The moment you also sell through your own website, at fairs, or through any other channel, those sales count toward the nexus thresholds and pull you back into direct registration.
Gather Your Business Information
State applications ask for roughly the same core information no matter which state you’re registering in. Having everything ready before you open the portal keeps the application moving and reduces the chance of rejection.
- Your legal business structure: sole proprietorship, LLC, S-corporation, or C-corporation. This affects how the state classifies your tax account.
- Federal Employer Identification Number (EIN). Sole proprietors without employees can sometimes substitute a Social Security Number, but an EIN is generally better practice.
- Business addresses, including your primary location, any additional locations, and a separate mailing address if you use one.
- Names, home addresses, and Social Security Numbers for all principal owners, partners, or officers. States use this to establish who is personally responsible if collected tax goes unremitted.
- Estimated monthly or quarterly sales, split between taxable and nontaxable. The state uses this projection to assign your initial filing frequency.
- Bank routing and account numbers. Nearly every state requires electronic funds transfer for tax payments.
Submit the Application
Registration is handled by each state’s department of revenue, department of taxation, or a similarly named agency. Every sales-tax state now has an online portal, and it’s the fastest route by a wide margin. Once you’ve gathered the information above, the online form itself typically takes 30 to 60 minutes. Paper applications still exist in most states but add weeks to the timeline.
Fees and Deposits
More than 40 states charge nothing for a basic sales tax permit. Where a fee does apply, it’s usually between $10 and $100. A larger potential cost is a security deposit, which states may require from new businesses, from applicants whose owners have a history of tax delinquency, or from businesses in industries with high noncompliance rates. The deposit is usually set at several months of your estimated sales tax liability and is held until you build a track record of timely filing, often two to three years.
When You Get the Certificate and Start Collecting
Many states issue a registration number or temporary certificate immediately after you submit, so you can start collecting tax right away. Through an online portal, the permanent certificate number arrives anywhere from the same day to a few weeks later, depending on whether your application triggers additional review. A physical certificate mailed on top of that adds standard postal delay. Your obligation to collect tax begins as soon as the state activates your registration, regardless of when the paper shows up.
Once you’re collecting, you’re responsible for charging the correct combined state and local rate based on the customer’s delivery address. Local rates can vary significantly within a single state, so invest in tax-rate lookup tools early rather than guessing.
Registering in Several States at Once
If you need to register in multiple states, filing separate applications with each one is a slog. The Streamlined Sales Tax Registration System (SSTRS) is a free, centralized online tool that lets you register in over 20 participating member states through a single application.4Streamlined Sales Tax. Sales Tax Registration SSTRS Member states include Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.5Streamlined Sales Tax. Streamlined Sales Tax
Non-member states, including California, Texas, New York, Florida, and Illinois, still require direct registration through each state’s own portal. Third-party tax compliance services can handle multi-state registration for you, but going directly through each state is always free.
Using the Certificate for Tax-Free Purchases
Beyond authorizing you to collect tax, the certificate lets you buy inventory without paying sales tax on it. When you purchase goods intended for resale, you give your supplier a resale certificate containing your registration number, and the supplier treats the sale as exempt because you’ll collect tax when the item reaches the end customer. Many states accept the Multistate Tax Commission’s Uniform Sales and Use Tax Resale Certificate, which covers participating states with a single form.6Multistate Tax Commission. Uniform Sales and Use Tax Resale Certificate Other states require their own form.
The exemption applies only to items you’ll resell or that become a physical component of something you sell. Office furniture, cleaning supplies, staff computers, and store fixtures are taxable purchases for your business, even though they support your sales operation. Using a resale certificate to avoid tax on those items is a routine audit flag.
What Happens After You’re Registered
A sales tax certificate is not a one-time filing. It turns you into an ongoing tax collector for the state, with recurring return deadlines and real penalties when missed.
Filing Frequency
The state assigns your filing frequency based on the sales volume you estimated on your application. High-volume sellers usually file monthly, moderate-volume sellers quarterly, and very small sellers annually. The most common deadline is the 20th of the month following the reporting period, though some states use different dates. Your registration confirmation will spell out your specific schedule.
File a return even during periods when you made zero taxable sales. Skipping a return because you owe nothing is one of the most common mistakes new businesses make, and it triggers late-filing penalties just as reliably as owing money and not paying.
Accepting Exemption Certificates From Customers
You’ll be on the receiving end of exemption certificates too. Nonprofits, government agencies, and other businesses buying for resale will hand you certificates claiming their purchases are exempt. You must accept valid certificates and keep copies on file for your state’s retention period, typically at least three to four years and longer in some states. If an auditor questions a tax-free sale and you can’t produce the certificate, you owe the tax plus penalties regardless of whether the customer’s exemption was legitimate. The burden of proof sits with the seller.
Use Tax
Sales tax has a counterpart called use tax. When you buy something taxable for your business from a vendor who doesn’t charge you sales tax, typically an out-of-state seller, you owe use tax at the same rate the state would have applied. Ordering office equipment from an online retailer that doesn’t collect your state’s tax is the classic example. You report and pay use tax on the same return you use for sales tax, and auditors routinely compare large out-of-state purchases against reported use tax.
Personal Liability
States treat the sales tax you collect from customers as money you’re holding in trust for the government, not as your revenue. If you collect the tax and fail to remit it, most states can pursue the individual officers, owners, or managers who had authority over tax compliance, not just the business entity. Corporate structure doesn’t shield you. Commingling collected sales tax with operating funds and spending it is one of the fastest ways to create personal financial exposure.
Buying an Existing Business
If you’re acquiring an existing business rather than starting from scratch, getting your own certificate is only half the equation. Most states impose successor liability, which means you can inherit the previous owner’s unpaid sales tax debts by purchasing the business, including back taxes, interest, and penalties accrued before you took over.
Request a tax clearance certificate (sometimes called a certificate of no tax due) from the state’s revenue department before closing. It confirms the seller is current on all tax obligations. Without one, you could be personally liable for the seller’s tax debts up to the purchase price you paid. Ask for the clearance well before your closing date, since processing takes time, and don’t rely on the seller’s assurance that taxes are current.
Catching Up If You’ve Been Selling Without a Permit
Businesses that realize they should have been collecting sales tax often panic, and for good reason. Operating without a required permit can produce back-tax assessments covering every year you were out of compliance, plus interest and penalties. In some states, willful failure to register carries criminal penalties, including fines and potential jail time.
The better path is a voluntary disclosure agreement. The Multistate Tax Commission runs a free Multistate Voluntary Disclosure Program that lets you negotiate simultaneously with multiple states through a single coordinated process, and your identity stays confidential until you actually sign an agreement with a state.7Multistate Tax Commission. Multistate Voluntary Disclosure Program In exchange for coming forward, states typically waive penalties and limit the lookback period to three or four years rather than reaching back indefinitely. You’ll still owe back taxes and interest, but total exposure drops considerably compared with waiting for an audit. To qualify, you can’t already be in contact with the state about the tax you owe, and the estimated liability must be at least $500 per state.
Keeping the Certificate Active or Closing It
In most states, a sales tax certificate stays valid indefinitely as long as the business remains active and continues filing returns. A few states issue certificates that expire annually and must be renewed or are reissued automatically. Either way, notify the state promptly whenever your business changes its legal name, physical address, ownership structure, or entity type. Most state portals let you make these updates online.
If you close your business or stop making taxable sales in a state, cancel the certificate. An open registration means the state expects returns from you every filing period. Miss them and you’ll accumulate late-filing penalties on a business that no longer exists. File a final return covering your last period of activity, remit any remaining tax, and submit a formal closure request through the state’s portal. Until you do, the meter keeps running.