A Florida Resale Certificate allows businesses to buy goods and services from suppliers tax-free to resell them. To use one, the seller must provide a Florida Resale Certificate.
Find out more about a resale certification and how to obtain one.
What is a Resale Certificate and how do you use it?
Links: Florida Dept of Revenue
Florida Annual Resale Certificate for Sales Tax
A Resale Certificate allows the retailer to make tax-exempt purchases for products they intend to resell. Retailers often purchase products for resale and don’t have to pay sales tax. While sales tax is still payable, the retailer will charge sales tax to the customer on the final price of the merchandise. The retailer then sends the Florida Department of Revenue the collected sales tax. |
A pet shop might purchase dog toys from a supplier to sell in their store. The pet store owner will not normally pay the supplier sales taxes.
The retailer will charge the customer sales tax based on the full cost of the dog toy when a customer (or end-user) purchases it.
The retailer will collect sales tax from all transactions and send it to the state periodically, usually at the end of the month.
The certificate serves to prove that no sales tax was collected on a transaction. A resale certificate can also be called a reseller number, seller’s permit, or exemption certificate. T
o allow tax-exempt purchases, the seller must prove that the buyer intends to resell the product. This can be done by providing a valid certificate.
The exemption from sales tax is for inventory that will be sold and not for tax-free purchases of normal business items such as paper, pens, etc.
Is a Florida Sales Tax Permit Required?
Yes, a Florida Sales Tax Permit is required before a business can sell products or provide taxable services. Sometimes called a seller’s permit or sales tax certificate, a sales tax number, or a sales tax license, the Sales Tax Permit can be used to identify taxable services.
How Do I Apply for a Florida Resale Certificate?
When you apply for a sales tax license in Florida, you will automatically receive a resale certificate, and you will receive a new one annually when you renew your sales tax license. The certificate for resale must be presented to all of your suppliers.
In a few states, a seller’s permit or sales tax permit also serves as an all-vendor resale certificate. In the majority of states, including Florida, however, you will need a seller’s permit and resale certificates for each of your suppliers.
The seller’s permit identifies you as a tax collector within your state. If you sell tangible goods or personal property, you must have a sales tax permit. In some states, service providers such as attorneys are required to possess a sales tax permit and collect state sales tax.
The resale certificate applies to items purchased for resale, as well as parts purchased to manufacture items for resale.
Is a Resale Permit the same as a Sales Tax Permit or a Resale Certificate?
Although they may be mistaken for one another, the Resale Certificate and Sales Tax Permit are two distinct documents. The Resale Certificate permits a retailer to purchase tax-exempt products for resale.
Register for a Florida Sales tax Permit to get started (sometimes called a state tax ID, Form DR-1 Florida Tax Application).
After registering for the Sales Tax Permit (Form DR-11), the Department of Revenue issues a Florida Certificate of Registration and a Florida Annual Resale Certificate to Sales Tax (Form DR-13) for the vendor to present.
What is the Cost of a Florida Resale Certificate?
While online registration is free, you will need to pay $5 to register by post.
What Happens to a Florida Resale Certificate?
Florida Resale Certificates are valid for one year and expire on December 31. The Florida Department of Revenue will automatically renew the certificate for active businesses.
Do Sellers Have to Accept the Resale Certificate?
Although sellers are not required to accept certificates of resale, many do. The buyer will be responsible for any sales tax if the seller refuses to accept the certificate. In most cases, the seller will accept the certificate.
Florida is one of the few states that doesn’t recognize out-of-state resale certificates if the seller is located outside of Florida. To purchase tax-free items from sellers in other states the buyer must register for a sales permit in that state.
What steps should a business take to accept a certificate of resale?
The seller is responsible for proving that the buyer’s information has been correct when he presents a resale certification to a business. He must also keep the records. Failure to verify the information could lead to the seller being liable for Florida sales tax.
Get a copy the annual Resale Certificate of the buyer. You have three options to get a certificate.
Option 1 – Have the buyer send either a paper copy or an electronic copy. A copy of the certificate should be kept by the seller for three years. The seller and buyer should keep a copy of the resale certificates on file. It is not filed with any state.
Option 2 – Obtain a transaction authorization number for each sale using the buyer’s certification number. The authorization number will be recorded along with the invoice without the need for a copy of the certificate. You can get the authorization number by calling 877-357-3725 or visiting the Florida Department of Revenue’s verification page or using the FL Tax mobile application.
Option 3 – Each calendar year, the seller may obtain vendor authorization numbers for customers who are regular customers and qualify to buy tax-free. Upload a batch file to verify customer certificates.
The certificate must be examined by the seller to determine if the goods are reasonably compatible with the buyer’s business. The seller might want to look into whether the buyer is looking to buy office supplies tax-free if their business is a dealership of cars.
Does a Florida Resale Certificate Expire?
In Florida, resale certificates expire when your sales tax license expires after one year. You will receive a new certificate upon renewal of your sales tax license. It is best to create calendar reminders so you are aware of upcoming expirations so you can apply for renewal in time and continue to operate your business without interruption.
Wrapping Up With Some Florida Business Tips
Forming an LLC in Florida involves several key steps and considerations. To begin, you must complete the necessary paperwork and filings to form an LLC in Florida.
Conducting a thorough Florida LLC name search is crucial to ensure that your desired business name is available and meets the state’s requirements and get your Florida entity name registered. Additionally, drafting a Florida LLC operating agreement is essential as it outlines the internal management structure and operational guidelines for your LLC.
While you have the option to be your own registered agent in Florida, many entrepreneurs opt to enlist the services of professional registered agents for their expertise and convenience. The length of time it takes to get an LLC in Florida can vary depending on various factors such as processing times and the complexity of your application.
Alongside the formation process, you’ll need to obtain a Florida Employer Identification Number (EIN) from the IRS, which is necessary for tax purposes. To streamline the process and ensure compliance, it is advisable to seek the assistance of the top-rated LLC services in Florida and the best registered agents in Florida, who can guide you through the process and handle the necessary documentation.
Moreover, it’s essential to consider any required business licenses in Florida specific to your industry and location. Understanding the associated costs to form an LLC in Florida is crucial, as it includes filing fees and potentially additional expenses based on the services you require.
If you need information on getting a Florida resale certificate, we have that.
Lastly, if you ever need to change your Florida registered agent or dissolve an LLC in Florida, it’s important to follow the state’s dissolution procedures to conclude your business operations effectively.
Resale certificates can be a nuisance, but in Florida, they are required by law. Therefore, take the time to obtain certificates for each of your vendors to ensure full compliance with the tax regulations of your state.