Buying wholesale clothing or other goods from quality suppliers and reselling them can be a great model for your business.
With wholesale, there’s no need to worry about the intricacies of creating products from scratch with a manufacturer. Instead, you get to select the products you want to sell in the quantity you need, and they’re available in your store!
However, buying wholesale goods isn’t as easy as placing an order from any website you find. First, you must ensure you have all the paperwork and permits to show you’re allowed to do so. One of those crucial certifications is a wholesale license.
But how do you get a wholesale license? Can you go online and file for one? Here’s what you need to know about how to get a wholesale license to start reselling.
Learn the Differences Between a Seller’s Permit vs. a Wholesale License vs. a Reseller’s Permit
When determining the kind of permit you’ll need, you may hear a lot of different terms — seller’s permit, wholesale license, and reseller’s permit. What’s more, you may notice the words “certificate,” “license,” or “permit” used interchangeably. So, what’s the difference?
Seller’s Permit: This allows your business to collect sales tax from customers, payable to state or local jurisdictions.
Wholesale License: This shows you have the legal ability to buy bulk goods from manufacturers or suppliers and resell them to consumers. Some states may also require wholesale distributors (those manufacturing and selling goods wholesale) to get a license under this name.
Reseller’s Permit: This document allows you to purchase goods tax-free from a wholesaler and instead collect taxes from your customers at the time of sale.
You may need one or a combination of all these certificates to show your business is authorized to buy and resell goods. Depending on the state, a seller’s permit and wholesale license may be under the same umbrella — more on that below.
Know Your State and Local Laws
Depending on where you live — and the states where you’ll be selling products to consumers — the requirements for a wholesale license may differ.
Do some research to determine which permits you’ll need and the requirements to get that permit. However, this may vary state-to-state and even within cities or counties.
Specific industries — like agriculture, alcoholic beverages, and others — require you to get federal licenses or permits. However, this shouldn’t be necessary if you’re operating a retail clothing business and just looking to shop and sell wholesale pullover hoodies and other garments.
You can consult your local Small Business Administration (SBA) office or an advisor if unsure. They can help you set up with all the proper permits you need.
A wholesale license may not be the only permit or paperwork you need. Some states may require you to file for an LLC or similar business filing to ensure proper filing and taxing. In addition, you’ll likely want to register your business under an official name and get an employer identification number (EIN) from the IRS.
Ensure You File and Track Taxes Properly for Each State
Just as each state has different requirements for obtaining a reseller’s permit, you’ll also want to properly file and pay the necessary taxes to each state you sell.
For example, California requires all businesses making sales to those within the state to:
- Register with the California Department of Tax and Fee Administration (CDTFA)
- Collect California use tax
- According to the number of sales made to those in the state, pay respective taxes to the CDTFA
These laws apply even if the business is not physically located within California but makes sales to those residing there. Not paying the proper taxes can lead to hefty fines and possible imprisonment in some states, so it’s essential to ensure you can keep using your wholesale license and running your business.
How To File for a Wholesale License
After you ensure you have the proper registration for your business and properly collect and pay taxes, you’re ready to file for a wholesale license. While there may be a lot of work leading up to applying for the wholesale license, it’s easy to apply for a wholesale license.
Before starting your application, however, it’s essential to ensure you’ve registered with an EIN or as a business entity and have all the necessary tax filings in order. Therefore, making filling out and filing the application as straightforward as possible.
To file for a wholesale license (and any other necessary permits that go along with it):
- Have your EIN on hand.
- Get paperwork showing you’ve filed for any necessary taxes.
- Fill out the wholesale license application, online or in person, depending on the jurisdiction. The application will likely ask for your business name, operating address, EIN, and other related information.
- Pay any necessary wholesale license registration fees.
- Submit your application for approval.
Once you ensure the submission of your application and that it’s cleared, you’ll receive your license and be ready to start buying and selling!
Shop the Best Wholesale Sites With Your Wholesale License
Your wholesale license acts as a pass to buy from the best sites in the industry, with unbeatable bulk prices on quality goods.
When searching for wholesale sites for your business, search for those prioritizing quality goods over the lowest price possible, like Bella + Canvas. As a result, it will ensure you’re able to give your customers products that stand the test of time — rather than ones at the bottom dollar that fall apart after a few wears.
You may need to register for an account to buy from wholesale companies, including filling out information like your company name, website, license number, EIN, and more.
Once you create an account, you get access to wholesale goods at those wholesale prices! Select whatever you need for your shop, and you’re ready to resell back to your customers — whether online, in-store, or both.
