subject: How To Use Resale License For Your Business [print this page] How To Use Resale License For Your Business
Resale licenses are very important for your business. It is actually meant to benefit the reseller, so there is absolutely no reason why you should not get one. Here are some tips to use the resale license for growing your business effectively.
Taxes: If you purchase from the manufacturer, distributor or anyone in the supply chain, they will need the license number. This is because it is their duty to collect taxes and then pass it on to the government. However, if you are going to resell the items, they will pass the duty on to you and sell to you without the taxes. You, in turn will collect the taxes from the customer and pay the government. On the other hand, if you do not have a resale license, you will have to pay the taxes twice, which obviously makes you uncompetitive.
Buying wholesale: For reasons mentioned above, wholesalers will deal with you only if you have a resale license. Getting good wholesalers can be the heart of any retail business as we know. So, a resale license opens you up to the whole gamut of wholesalers, which may ship to you at rock bottom prices. If you happen to operate an online business, you can use them for Dropshipping as well. They are partners you ought to have on your side and resale license allows you to do just that.
Convenience: The thought of collecting taxes and paying to the government brings to mind the truckload of paperwork that has to be completed along with it. But now with information systems, it has almost become a cakewalk. You may have to register with your wholesaler once and from the next time onwards, they won't even bother asking you because they already have the details.
Cash Flow: Believe it or not, a resale license can be your way to get an interest free short term loan. In startup businesses, there is a tendency to run out of cash even when the business is profitable. Taxes are collected each time you make a sale but are payable only at periodic intervals. In the meanwhile, you can use them for your business. So in essence, it becomes a loan the government has extended to you, interest free! But make sure that you are indeed profitable and will have the required cash flow on the required dates. The fines and penalties for late payment are pretty severe and will cost you much more than the interest.
To sum it up, apart from being illegal to operate without a resale license in some states, there are many reasons why you should register yourself. More often than not, it hardly costs anything and as you can see, it certainly has got more benefits than costs in the long term. Having all the paperwork in order also makes you a genuine business which is eligible for bank loans in the future, when the need for expansion arises.
