If you’re starting a limited liability company (LLC) in New Hampshire and planning to sell goods subject to sales tax, you’ll need to get a resale certificate, or several of them, before doing business.
New Hampshire does not have state or local sales tax, but if you’re selling goods in other states, you may need to obtain resale certificates in those states.
But don’t worry; this guide lays out all you need to do to get a resale certificate in most states.
What Is a Resale Certificate?
If your LLC expects to sell tangible goods in states with sales tax, 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 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 New Hampshire, the penalty for tax fraud is repayment of the tax owed plus a 50% penalty and possibly a fine and time served in prison.
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 might refuse a resale certificate because if your certificate is invalid, the vendor would be responsible for the sales tax.
How to Obtain a Resale Certificate in Most States
To obtain a resale certificate in most states, visit the Department of Revenue website. Generally, a blank resale certificate can be downloaded. Then, you’ll fill out the certificate and present it to your vendor.
Obtaining the certificate is generally free, and you can use it as soon as it’s completed.
Once you have the certificate, present it to your vendor and keep a copy for your records.
Does a Resale Certificate Expire in Most States?
Expiration dates for resale certificates vary by state. In some states, they need to be renewed every one to three years, while in other states, they never expire.
In most states, a resale certificate is relatively easy to obtain yet provides significant savings. It will also help you and your LLC avoid potentially significant penalties.
Be sure to present the correct certificate to your vendors and keep track of expiration dates, so your certificates are always current. You don’t want to find yourself paying sales tax when you don’t have to.