If you’re starting a limited liability company (LLC) in North Dakota and planning to sell goods subject to sales tax, you’ll need to get a resale certificate, or several of them, before doing business.
But don’t worry; this guide lays out all you need to do to get a resale certificate in North Dakota.
What Is a Resale Certificate?
If your LLC expects to sell tangible goods in North Dakota, 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 North Dakota, the penalty for tax fraud is repayment of the tax owed plus interest and possibly a $3,000 fine and a year 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. A vendor might refuse a resale certificate if your certificate is invalid, and the vendor would be responsible for the sales tax.
How to Obtain a Resale Certificate in North Dakota
To obtain a resale certificate in North Dakota, visit the Department of Taxation website. You’ll scroll down to sales and use tax forms, then select certificate of resale.
You can fill out the form online and print it.
Obtaining the certificate is free; you can use it as soon as it’s filled out.
Once you have the certificate, present it to your vendor and keep a copy for your records.
Does a Resale Certificate Expire in North Dakota?
North Dakota resale certificates do not expire. It’s a good idea to review them every few years to ensure all the information is up to date.
In North Dakota, 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.