If you intend to purchase goods for resale in Texas, you’ll need to obtain a Texas Resale Certificate. Here’s what to do:
What is a resale certificate in Texas?
A resale certificate (known in some states as a reseller permit) is a document that allows businesses to avoid paying sales tax on goods purchased from a distributor or wholesaler—so long as the business intends to re-sell those items. For example, items that can be purchased from a supplier then re-sold to a customer include: fabric to make clothing, to-go containers at restaurants, automotive parts installed by a mechanic, etc.
Why do I need a Texas Resale Certificate?
Technically, you don’t need a resale certificate in Texas—you could buy items for resale and choose to pay sales tax. However, if you’re purchasing items from a distributor and intend to re-sell them, you can choose to present a resale certificate instead of paying sales tax. This avoids double taxation.
In other words, without a resale certificate, your business would PAY sales tax when purchasing goods, then COLLECT sales tax when re-selling those goods to the public. Even though your business would only pay sales tax once, the goods themselves would be taxed twice (once when purchased from the distributor, and again when re-sold to the public). So a resale certificate prevents double taxation, while simultaneously saving your business money.
How do I get a Texas Resale Certificate?
You can download Texas’s Resale Certificate form right from the Texas Comptroller’s website. (Select the fifth option down—“Resale and Exemption Certificates”—then make sure to download Form 01-339: “Texas Sales and Use Tax Resale Certificate / Exemption Certification.”) You can print this form and fill it out yourself.
How do I use a Texas Resale Certificate?
When making a purchase for resale, you’ll need to present your Texas resale certificate to the distributor or wholesaler from whom you’re purchasing items for resale. If your supplier accepts your resale certificate, you won’t have to pay sales tax on that purchase. In this sense, your resale certificate is documented evidence for why sales tax wasn’t collected during that sale.
Do Texas Resale Certificates expire?
No. The only reason why a Texas Resale Certificate would be invalid is if the information you provided is inaccurate in any way. (For example, if your business address has changed, or if you filled out the form incorrectly.)
What does it cost to get a Texas Resale Certificate?
Nothing. Resale certificates in Texas are free.