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Resale certificate for materials used to make grooming apparel?

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  • Resale certificate for materials used to make grooming apparel?

    Do I apply for a resale certificate for the cloth, etc., used to make a grooming apparel product? At what point should I do it? Can I do it after I have sold a certain amount, instead of doing it now? Why do it? Advantages? Disadvantages? Thanks!

  • #2
    Emma...I have a resale certificate. I never use it anymore I don’t buy enough product from any supplier that I need it. And suppliers have changed that aspect of their business.

    In the old days, we could go to a warehouse to pick up grooming supplies. I needed proof that I was a business to buy from them as sales taxes were exempt.
    Then, out-of-state wholesale companies became more available and you didn’t need proof. They didn’t charge sales tax.

    This explanation can get lengthy so I’ll say, check with your CPA as to what is correct for your State, and for selling over the internet.

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    • #3
      Crackdowns are happening though. More and more wholesaling on the net is FAST catching up with 2020 laws. Before you can even buy anything without sales tax in all 50 states you must give a resale certificate copy online. Some people by the way just before this went into effect like got a letter, and I wasn't buying wholesale, but said they are catching up with laws and we have informed your state of all your purchases in 2018 where you didn't pay tax. NOT that I did anything wrong, I was paying retail but that national company had to go back so many months and inform your state. Then the state sent me a notice they reported my sales to my state.

      Back to you Emma, you should get a resale certificate now. Don't get confused some say we sell wholesale prices, but did they charge tax. Not really wholesale unless they asked for a resale cert. If you are buying without tax today in 2020 even out of state, you are supposed to use a resale cert. It is just not easily enforceable unless you are buying from a big national company that is audited a lot by their state. Sometimes it is like if the company sells over $5,000,000 a year they must ask for a resale cert while small companies should be but they don't enforce it.

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      • #4
        So true we got a letter from a major online seller that didn't charge because we are dozens of states away. Those new laws went into effect that major sellers have to collect tax for all 50 states. They informed WA state of every sale they made to us in the last year and informed us we should contact WA state to pay sales tax. WA never contacted us but yes there are new mail order laws on sales tax. If the company does this much sales a year, they have to collect tax in all 50 states where they sell.
        Most questions regarding GroomerTALK are answered in the Board Help Talk Forum. Thanks for coming to our community a part of PetGroomer.com https://www.petgroomer.com.

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        • #5
          Thank you! So far I have been paying sales tax. I am doing that because I am making samples. Will get a resale certificate as soon as I am making products for my site.

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          • #6
            Before you buy anything wholesale. If you don't use it all year, so be it. No reports to do.

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            • #7
              Even if you buy wholesale and don't pay tax and then use it personally, you pay it later via use tax. I used to work for state govt.

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              • #8
                What is “use tax”?

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                • #9
                  Moochie is right. Use tax is—I buy shampoo wholesale and use it in my business. I’m not selling it, I’m using it to produce my saleable product...in this case, my product is a groomed dog.
                  The wholesale company didn’t charge me sales tax at time of purchase. I pay that sales tax when my CPA figures out my taxes.

                  I became aware of this years and years ago when a fellow groomer/pet shop owner got hit with thousands of dollars in back taxes for not paying use tax.
                  At that point I made sure my CPA was aware too and was reporting and I was paying.

                  This is why I said, “it can be complicated. Ask your CPA”

                  But....it’s also good to ask here. Then you can make sure your finance people are crossing all the T’s

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                  • #10
                    I would just pay the sales tax until you are actively selling and buying bulk wholesale product. One less form to fill out.

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                    • #11
                      Originally posted by coldnose View Post
                      I would just pay the sales tax until you are actively selling and buying bulk wholesale product. One less form to fill out.
                      Think I will do this.
                      I am paying for a Shopify store, but still working on picking styles so it isn't open yet.

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