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How to Obtain a Wholesale License & Why You Need One

For wholesalers, one ofÌýtheÌýmost critical documents your business can obtain isÌýaÌýwholesale license. Having this type ofÌýlicense can significantly benefit your business inÌýaÌýfew ways, but most importantly, theÌýcost savings can beÌýastronomical.

InÌýthis post, we’re breaking down theÌýsteps you’ll need toÌýtake inÌýorder toÌýapply forÌýwholesale license documents. This includes theÌýpersonal andÌýbusiness information you should beÌýprepared toÌýshare, theÌýaverage cost ofÌýaÌýwholesale license, andÌýother helpful insights along theÌýway.

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What isÌýaÌýWholesale License?

AsÌýaÌýwholesaler, you are probably familiar with theÌýcomponents ofÌýbuying andÌýselling goods. First, there’s theÌýmanufacturer, who creates theÌýproducts. Then, theÌýwholesaler buys theÌýproducts andÌýgoods from theÌýmanufacturer inÌýbulk. Lastly isÌýtheÌýretailer, who buys theÌýproducts from wholesalers andÌýsells them toÌýtheir customers.

InÌýorder toÌýpurchase products inÌýbulk directly from theÌýmanufacturer andÌýresell them toÌýretailers, wholesalers must obtain aÌýwholesale license toÌýdoÌýso. AÌýwholesale license proves that you are aÌýlegitimate company soÌýthat manufacturers andÌýretailers will agree toÌýdoÌýbusiness with you.

Steps toÌýComplete Before Applying forÌýaÌýWholesale License

There are aÌýfew things you need toÌýdoÌýbefore you can even apply forÌýaÌýwholesale license. These are all related toÌýyour business itself, soÌýtheÌýIRS can determine how toÌýtax your company andÌýwhat rules andÌýtax laws apply toÌýyou.

1.ÌýRegister your business

Before you doÌýtake anyÌýsteps towards acquiring aÌýwholesale license, you must inÌýtheÌýstate you are operating. You’ll have toÌýspecify ifÌýyou are aÌýpartnership, corporation, sole proprietor, orÌýLLC (limited liability company).

2.ÌýApply forÌýanÌýEIN (Employer Identification Number)

After your business isÌýregistered inÌýyour state, it’s time toÌýapply forÌýanÌýEmployer Identification Number (EIN) which means you can hire employees. Applying forÌýanÌýEIN can beÌýcompleted online inÌýmost states, which will save you time asÌýyou gather your paperwork forÌýaÌýwholesale license.

3.ÌýGet aÌýsales tax license

AÌýsales tax license orÌýpermit allows you toÌýcharge sales tax onÌýevery item you sell toÌýyour retailers. You can obtain aÌýsales tax license byÌýfiling anÌýapplication through your state’s tax office.

Now you’re ready toÌýapply forÌýyour wholesale dealer license!

How toÌýGet aÌýWholesale License

IfÌýtheÌýstress ofÌý“How doÌýIÌýget aÌýwholesale license?” isÌýkeeping you upÌýatÌýnight, we’re here toÌýshed some light onÌýtheÌýprocess. You may beÌýpleasantly surprised atÌýhow straightforward itÌýis!

The documents you’ll need when completing aÌýwholesale license application include theÌýfollowing:

Keep inÌýmind that every state has different rules andÌýlaws, soÌýbeÌýsure toÌýfamiliarize yourself with these before starting theÌýprocess.

Once you have these items, you can begin theÌýprocess ofÌýapplying forÌýyour wholesale license. OnÌýtheÌýapplication, you’ll most likely beÌýprompted toÌýinclude information about your business, like:

Your wholesale license will beÌýapproved byÌýyour local tax office.

The Average Wholesale License Cost

The average cost ofÌýaÌýwholesale license depends onÌýtheÌýstate you’re doing business in, but most licenses cost anywhere from $3,000ÌýtoÌý$10,000. OnÌýaverage, most wholesale businesses pay around $6,500ÌýforÌýaÌýwholesale license.

FAQ: How doÌýIÌýget aÌýwholesale license?

Acquiring aÌýwholesale license toÌýbuy inÌýbulk andÌýresell products isÌýrequired toÌýoperate aÌýlegal business inÌýall 50Ìýstates. The process may seem daunting, but it’s not all that difficult ifÌýyou follow theÌýsteps weÌýoutlined above. Here are aÌýfew common questions you may have about theÌýprocess.

How long does itÌýtake toÌýget aÌýwholesale license?

Once you’ve completed theÌýsteps listed above, securing aÌýwholesale license can take anywhere from 2ÌýtoÌý5Ìýdays upÌýtoÌý2Ìýweeks.

The time frame depends onÌýwhere you’re doing business andÌýanyÌýcomplications ofÌýtheÌýnature ofÌýyour business orÌýwhat you’re selling. For example, wholesalers selling some products andÌýgoods must follow additional regulations, which should beÌýaccounted forÌýwhen applying forÌýaÌýwholesale license.

IsÌýaÌýseller’s permit theÌýsame asÌýaÌýwholesale license?

AÌýseller’s permit also provides aÌýbusiness theÌýability toÌýcollect sales tax onÌýevery product they sell, just asÌýaÌýwholesale license does. Different states call aÌýseller’s permit different terms. AÌýfew ofÌýthese include aÌýreseller license, vendor permit, orÌýaÌýresale card. This can beÌýconfusing, but they all mean theÌýsame thing.

DoÌýIÌýneed anÌýEIN toÌýoperate asÌýaÌýwholesaler?

While it’s not required toÌýhire employees asÌýaÌýwholesaler, you doÌýneed toÌýobtain aÌýlegal Employer Identification Number (EIN) soÌýtheÌýgovernment andÌýtheÌýIRS can track your business activities, including purchases andÌýsales.

Purchasing wholesale without aÌýbusiness license isÌýpossible, but you’ll beÌýsold theÌýproducts asÌýaÌýconsumer. InÌýdoing so, you’d miss out onÌýtheÌýincredible cost-savings that wholesalers enjoy, including theÌýelimination ofÌýsales tax onÌýanyÌýpurchased goods.

Get Insight Into Starting aÌýWholesale Business with 51ÊÓÆµ

AÌýwholesale business can beÌýaÌýhighly lucrative business model, andÌýifÌýyou take theÌýcorrect approach, you can quickly turn itÌýinto aÌýcash-making machine.

Acquiring aÌýlicense isÌýjust one ofÌýtheÌýinitial steps you need toÌýcomplete toÌýbuild aÌýsuccessful business andÌýestablish yourself asÌýaÌýcredible wholesaler inÌýtheÌýindustry. Following theÌýguidelines we’ve laid out inÌýthis blog post will ensure you find incredible success asÌýaÌýwholesaler.

51ÊÓÆµ isÌýcommitted toÌýproviding relevant, informational guides andÌýresources forÌýentrepreneurs who are ready toÌýstart their own businesses. Explore our free guides andÌýother content toÌýlearn more.

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About The Author
Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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