If you have recently launched or are planning to launch a limited liability company (LLC) that will sell products or services in Georgia, you may want to get a resale certificate, or several of them, before you start doing business, as this can save you a lot of time and money.
It’s a relatively simple process, as detailed in this step-by-step guide.
What is a Resale Certificate?
If your LLC has a valid resale certificate, you can buy goods from a wholesaler without paying sales tax, though you may pay a use tax. Depending on the size of your business, this can save you tens of thousands of dollars each year.
The catch is that whenever you do use a resale certificate to purchase goods, you are legally bound to resell those items and collect sales tax when you do so. If you do not resell those items, or fail to collect sales tax, the punishment could be liability for use tax on the goods.
Keep in mind, each resale certificate, also known as a resale license, applies to a single vendor. This means you’ll need a resale certificate for each one of your vendors.
You cannot use a resale certificate to buy items you do not intend to resell, such as a new computer for your business. This would be tax fraud, a felony offense. You are only able to buy items tax-exempt if you are going to collect sales tax on them later.
Not all wholesalers will accept resale certificates, nor do they have to. They may choose not to because of the risk of expired or false certificates, which would put the wholesaler on the hook for the sales tax.
How to Apply for a Resale Certificate in Georgia
You’ll obtain a resale certificate, called a certificate of exemption, from the Georgia Department of Revenue. The form is not filed with the state. It is simply presented to your vendors at the time you start doing business with them.
In a few states, a seller’s permit, or sales tax permit, also serves as a resale certificate that applies to all vendors. But in most states, including Georgia, you’ll need a seller’s permit as well as resale certificates for each of your vendors.
The seller’s permit identifies you with your state as a collector of sales tax. If you sell tangible personal property or goods you are required to have a sales tax permit. In some states, even a service provider like a lawyer is required to have a sales tax permit and collect state sales tax.
The resale certificate applies to items that you buy for resale, or for parts that you buy to manufacture something for sale.
How to Fill out the Georgia Certificate of Resale
In Georgia, the Department of Revenue handles the issuance of resale certificates. Start by visiting the website, then follow these simple steps:
- Download the form from the provided link.
- Fill in the seller/supplier’s name and address.
- Check the appropriate box for the reason for exemption.
- Fill in your name, sales tax number, your type of business, and your business address, and sign the form.
There’s no need to file the form with the state. Just store it in your files and present it to your vendor.
Does a Georgia Resale Certificate Expire?
Georgia resale certificates do not expire.
Resale certificates can be a bit of a hassle, but in Georgia, they are an absolute necessity. So take the time to get certificates for each of your vendors to ensure full compliance with your state’s tax regulations.