Q: Do you help set up the tax resale certificate? If so, can you send me the instructions?
Thank you to a customer from North Carolina for that great question! Typically, North Carolina uses the term Certificate of Registration, also called a seller’s permit or sales and use tax license, to describe what you mean. A Certificate of Registration is issued by the North Carolina Department of Revenue and allows a business to collect sales tax from customers. A resale certificate, on the other hand, is a document that allows a business owner to purchase goods from a wholesaler to resell without paying sales tax. We’ll explain how to obtain both a Certificate of Registration and a resale certificate in North Carolina.
Applying For North Carolina Certificate of Registration
Before you can legally sell taxable goods in North Carolina, you need to register for sales and use tax with the North Carolina Department of Revenue and receive your Certificate of Registration. You can register through the NCDOR Online Business Registration portal, or by printing and mailing Form NC-BR to the Department of Revenue.
Here is the information you’ll need to have on hand to complete your registration:
- Tax ID number (Either social security number or EIN)
- Business name and address
- Name, address, and SSN of person responsible for the business
- Date when sales will begin
- Whether sales will be retail, wholesale, or both
- Business description
- Items and services to be sold
- Estimate of sales tax you expect to collect
- Accounting method you will use, either cash or accrual
- Months sales will be made (only for seasonal businesses)
After your application has been approved, you will be mailed your Certificate of Registration, Sales and Use Tax Account ID number, and your initial sales tax return.
Certificate of Registration Vs. Resale Certificate
A North Carolina Certificate of Registration, aka seller’s permit, is required before a business can sell taxable goods and services and collect sales tax from customers. While this license is often confused with a resale certificate, they are two different things.
A resale certificate, which in North Carolina is called a Sales and Use Tax Certificate of Exemption, is a document that a business owner fills out and gives to a wholesaler, permitting the wholesaler to sell items to the business owner without charging sales tax, with the understanding that the business owner plans to re-sell tem. For example, if you own a gift shop and purchase twenty snow globes from a wholesaler to resell, you would send your completed Certificate of Exemption to the wholesaler, who could then sell you the snow globes without sales tax. When you later resell the snow globes at your store, you’d collect sales tax from your customers.
Do I send my Certificate of Exemption to the North Carolina Department of Revenue?
No. The Certificate of Exemption is sent to the person selling you the products, not to the Department of Revenue. You should also keep a copy of the Certificate of Exemption with your business records.
Check out our meticulous guide to Starting a Business in North Carolina.