A seller’s permit is a state-issued license that authorizes your business to collect sales tax from customers on taxable sales and to buy inventory from suppliers tax-free for resale. Every state with a sales tax requires one before you make your first taxable sale. Five states don’t have a statewide sales tax at all: Alaska, Delaware, Montana, New Hampshire, and Oregon. If you operate exclusively in one of those, the requirement doesn’t apply to you.
The permit does two jobs at once. It makes you the state’s tax collector on retail transactions, and it lets you issue resale certificates to your own suppliers so tax isn’t charged twice on the same goods.
Who Needs a Seller’s Permit
If you sell tangible goods at retail in any of the 45 states (plus the District of Columbia) that levy a sales tax, you need a permit in each state where you have a tax obligation. That obligation is triggered by “nexus,” a sufficient connection between your business and a particular state.
Physical nexus is the straightforward version. You have it when your business maintains a store, office, warehouse, or employees in a state. Storing inventory in a third-party fulfillment center counts too, which catches a lot of e-commerce sellers off guard when their products sit in Amazon warehouses in states they’ve never visited.
Economic nexus applies to remote sellers who have no physical footprint in a state but sell enough into it to trigger registration. The U.S. Supreme Court authorized this approach in its 2018 decision in South Dakota v. Wayfair, which overruled older precedent requiring a physical presence before a state could impose tax collection duties on a seller.1Supreme Court of the United States. South Dakota v. Wayfair, Inc. The South Dakota law at issue set the threshold at $100,000 in annual gross sales or 200 separate transactions, and most states initially adopted similar numbers. The trend since has been to drop the transaction count and rely on a dollar figure alone. As of mid-2025, roughly 15 states have eliminated the 200-transaction test, and Illinois joined them in January 2026. Because the rules still differ, check each state where you sell.
Wholesale-only businesses aren’t off the hook. Even if you never sell directly to a consumer, you still need a permit so you can issue resale certificates to your suppliers. The certificate tells the supplier the goods are headed for resale, not end use, so no sales tax is charged on that purchase. Tax gets collected once, at the final retail sale.
Businesses that sell only non-tangible services generally don’t need a permit, but this is one of the murkier corners of sales tax. A growing number of states tax services like software subscriptions, digital downloads, landscaping, or data processing. If you sell services, confirm whether your specific service category is taxable in each state where you operate.
Seller’s Permit vs. Resale Certificate vs. Business License
People use these terms interchangeably, and they shouldn’t. A seller’s permit (sometimes called a sales tax license or sales tax permit) is your registration with the state to collect tax. A resale certificate is a document you hand a supplier to buy inventory tax-free. The permit is what makes you eligible to issue resale certificates. You can’t have one without the other.
A general business license is separate. It’s issued by your city or county and gives you permission to operate at a particular location. It has nothing to do with sales tax. Most businesses need both a local business license and a state seller’s permit, and they come from different agencies: the permit from the state’s department of revenue or equivalent, the business license from city hall or the county clerk.
Marketplace Sellers: When the Platform Handles Tax
If you sell through Amazon, Etsy, eBay, Walmart Marketplace, or a similar platform, the marketplace itself is almost certainly collecting and remitting sales tax on your behalf. Nearly every state with a sales tax has enacted marketplace facilitator laws that shift the collection duty from individual sellers to the platform.
That shift has limits. If you also sell through your own website, at craft fairs, or from a physical store, the marketplace isn’t handling those sales. You’re responsible for collecting and remitting tax on every non-marketplace transaction, which means you still need your own seller’s permit once you meet nexus thresholds. Some states require marketplace sellers to register regardless, even when the platform handles all the collection, because the state wants visibility into total sales volume.
Keep clean separation between marketplace sales, where the platform collected tax, and direct sales, where you collected it. Mixing them creates double-taxation problems and audit headaches. Pull tax remittance reports from each platform’s seller dashboard and keep them alongside your own sales records.
How to Apply for a Seller’s Permit
Applications go to the state agency that administers sales tax, usually called the Department of Revenue, Department of Taxation, or Comptroller’s Office. Nearly every state offers an online registration portal, and you can typically finish in one sitting if you have your documents ready.
What You’ll Need
- Tax identification numbers. Corporations and multi-member LLCs need their Federal Employer Identification Number. Sole proprietors and single-member LLCs can use a Social Security Number if they don’t have an EIN.
- Business details, including your legal business name, any DBA names, and the physical address of your primary location. This is where the state mails the permit certificate.
- Owner information: names, home addresses, Social Security Numbers, and driver’s license numbers for all owners, partners, or corporate officers.
- Estimated monthly or quarterly sales volume. The state uses this to assign your initial filing frequency.
- The specific date you began, or will begin, making taxable sales in that state.
Fees, Deposits, and Processing Times
Most states issue seller’s permits at no cost, though some charge a small application fee, generally between $5 and $100. The bigger financial surprise for new applicants is the security deposit. Several states require a refundable deposit or surety bond from new businesses, calculated as a multiple of your estimated monthly tax liability. Deposits of a few hundred to several thousand dollars are common for brand-new businesses. If you file cleanly, the state typically refunds the deposit after a set period.
Processing times vary. Some states issue a temporary permit number instantly on submission, letting you start collecting right away. Others take two to four weeks for full verification. Rejected applications almost always come down to a mismatch in identification details or an incomplete field. Contact the agency’s business registration unit to find out what needs correcting.
Registering in Multiple States
If you sell into many states, filing separate applications with each one is a slog. The Streamlined Sales Tax Registration System lets you register for sales tax in 24 member states through a single free online application.2Streamlined Sales Tax. Sales Tax Registration SSTRS For non-member states like California, New York, and Texas, you’ll still need to register individually through each state’s portal.
What Happens After You Get the Permit
Getting the permit is the easy part. The ongoing obligation is filing sales tax returns on time, every time, for as long as the permit is active. States with brick-and-mortar businesses generally require you to post the permit conspicuously at the point of sale.
Filing Frequency
The state assigns your filing schedule based on sales volume. High-volume businesses typically file monthly, mid-range businesses quarterly, and very small sellers annually. If your volume changes significantly, the state can reassign your frequency.
Zero Returns
This trips people up. You must file a return even during periods when you collected no tax. Skipping a filing because you had no sales doesn’t register as “nothing happened” with the state. It registers as a missed return. Penalties for late or missing returns apply regardless of whether any tax was due, and in many states those penalties start at $50 or more per missed return. Some states will eventually cancel your permit if you go too many consecutive periods without filing, which creates a fresh set of problems when you try to start selling again.
Vendor Discounts for On-Time Filing
Close to 30 states offer a small financial reward for filing and paying on time. These vendor discounts, sometimes called collection allowances, let you keep a percentage of the tax you collected, typically between 0.5% and 5% of the amount due, often subject to a monthly cap. Not life-changing, but free money for doing what you’re already required to do. Some states have recently reduced or eliminated their discounts, so check your state’s current rule.
Penalties
Late filings carry both penalties and interest. Penalty structures vary by state but commonly start at 5% to 10% of the tax due when you’re a few weeks late and escalate from there. Interest accrues on top of the penalty. Selling without a valid permit at all is a more serious violation that can result in back-tax assessments covering the entire period you should have been collecting, plus penalties and, in some states, criminal misdemeanor charges.
Record-Keeping
Keep detailed transaction records for every sale: date, amount, tax collected, and whether any exemption or resale certificate was accepted. Records should clearly separate taxable sales from exempt sales. The IRS recommends retaining general tax records for at least three years from the filing date, and up to six or seven years in specific circumstances like substantial underreporting of income or bad-debt deductions.3Internal Revenue Service. Topic No. 305, Recordkeeping State retention periods for sales tax typically run three to four years but can extend longer. When in doubt, keep records for at least four years from the date the return was due or the tax was paid, whichever is later.
Moving, Closing, or Changing Your Business
A seller’s permit is tied to a specific business entity at a specific address, and it can’t be transferred to a new owner. If you sell your business, the buyer must apply for a brand-new permit. The same is true if your structure changes: a sole proprietor who incorporates needs a new permit for the corporation and must close the old sole proprietorship permit.
If you move locations, add a new store, or change your legal name, notify the state and update your registration. Some changes require a new permit number; others are simple amendments.
When you stop making taxable sales permanently, close the permit with the state. Don’t just let it sit. An open permit means the state expects returns, and missing returns generate penalties even when the business is dormant. File a final return through your last day of sales, remit any remaining tax, and formally request closure through the state’s portal or on the appropriate closeout form.
Buying an Existing Business: Successor Liability
If you’re buying a business rather than starting one, this matters more than anything else here. In most states, the buyer of a business can be held liable for the previous owner’s unpaid sales tax, including accumulated penalties and interest. This is called successor liability, and it applies even if you had no idea the seller owed back taxes.
Protect yourself by requesting a tax clearance certificate from the state before closing. The certificate confirms the seller has no outstanding sales tax obligations. Many states require the buyer to notify the tax authority 10 to 30 days before the sale closes, and some require the buyer to withhold a portion of the purchase price in escrow until the state confirms the seller is clear. If the seller can’t produce a clearance certificate, treat it as a reason to pause the deal. Inheriting someone else’s tax debt is one of the more expensive surprises in a small business acquisition, and it’s almost entirely preventable with basic due diligence.