How to Get a Resale Certificate in Alabama

Suppose you’re starting a limited liability company (LLC) in Alabama and plan to sell goods subject to sales tax. In that case, you’ll need a resale certificate or several of them before you start doing business. 

This comprehensive guide explains why you need a resale certificate and how to get one in Alabama.

What Is a Resale Certificate? 

If your LLC expects to sell tangible goods in Alabama, a resale certificate will enable you to purchase those goods without paying sales tax. This prevents your goods from being double taxed, as you will need to charge your customer’s sales tax when they buy the goods. 

If you purchase goods without paying sales tax and neglect to charge sales tax to customers who buy those goods, or if you fail to sell the goods, you and your LLC will be responsible for the sales tax and could face steep fines if you don’t pay the state. 

If you purposely purchase an item not intended for resale, such as office equipment, and use your resale certificate to avoid paying sales tax, that’s tax fraud, a federal offense. In Alabama, penalties include steep fines and even imprisonment. 

Each resale certificate applies to only one vendor, so you’ll need one for each vendor. 

Suppliers and vendors do not have to accept resale certificates. However, a vendor may refuse a resale certificate if it is invalid, which would make the vendor responsible for the sales tax.

How to Obtain a Resale Certificate in Alabama

In Alabama, your sales tax permit serves as your resale certificate. 

To obtain a sales tax permit, visit the Alabama Department of Revenue website to register for a tax account. You’ll need your federal EIN to get started. 

The registration may take about a half hour, as you’ll have to enter detailed information about the products you sell. There is no fee, and you should receive your permit within ten days. 

Once you have your sales tax permit, you’ll present it to your vendor. Be sure to keep a copy for your records.

Does a Resale Certificate Expire in Alabama?

Sales tax permits in Alabama expire after one year, so you’ll need to keep track of the expiration date to renew it on time. 

In Closing

Obtaining a sales tax permit in Alabama is relatively easy and will save you money every year and help you and your LLC avoid potentially significant penalties.  

Be sure to present the correct certificate to your vendors, keep copies for your records, and keep track of expiration dates, so your certificates are always current. You don’t want to find yourself paying unnecessary sales tax.