If you have recently launched or are planning to launch a limited liability company (LLC) that will sell products or services in Louisiana, 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 the sales and use tax on those items, as well as costly fines.
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 Louisiana
Louisiana requires businesses to file their resale certificates with the Department of Revenue. It’s important to note that to access the application, you will need an LaTAP account. If you don’t have one, you can register here.
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 Louisiana, 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 Louisiana Resale Certificate
Again, in Louisiana, the Department of Revenue handles both the filing and issuing of resale certificates through their online LaTAP service. But before you log in, start by gathering the required information:
- The physical and mailing addresses of all business locations
- The account numbers and NAICS code for all business locations
- Your business’s resale inventory purchase amounts for the last two years
Next, visit LaTAP’s homepage and follow these simple steps:
- Log into your LaTap account.
- On the My Summary page, select your business account.
- Click the link in the upper-right corner to access resale certificate applications and renewals.
- Carefully fill in the application with the information you gathered.
- Submit your request for a resale certificate.
For assistance, you can contact Louisiana’s Department of Revenue.
Hours: Monday through Friday, 8:00 AM – 4:30 PM
You’ll be able to monitor the status of your resale certificate application through your LaTAP account, but you can expect processing to take two to three days. When your resale certificate is successfully filed, print a copy to present to the seller you’re purchasing from.
Does a Louisiana Resale Certificate Expire?
When your resale certificate has been filed with Louisiana’s Department of Revenue, you’ll be informed of its expiration date. Yearly certificate renewals are automatic as long as your business’s taxes, required filings, and reports of in-state sales are up to date. Conversely, blanket resale certificates are valid for two years before they must be updated and renewed.
If for any reason a resale certificate does not automatically renew, you’ll have 60 days from the expiration date to apply for renewal. Renewals must be requested online using the Louisiana Department of Revenue LaTAP service.
It’s best to create calendar reminders for upcoming certificate expirations to ensure you’re able to apply for renewal in time and run your business without interruption.
Resale certificates can be a bit of a hassle, but in Louisiana 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.