If you’re starting a limited liability company (LLC) in Ohio 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 Ohio.
What Is a Resale Certificate?
If your LLC expects to sell tangible goods in Ohio, 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 Ohio, the penalty for tax fraud is repayment of the tax owed plus interest and possibly a $250,000 fine and five years 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 Ohio
To obtain a resale certificate, known as an exemption certificate in Ohio, visit the Department of Taxation website. You can download either a unit exemption certificate if you’re only making one purchase from a vendor or a blank exemption certificate if you are going to make ongoing purchases from a vendor.
You’ll simply download the form you need and fill it out.
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 an Exemption Certificate Expire in Ohio?
Ohio exemption certificates do not expire. It’s advisable, however, to review them every few years to ensure the information is up to date.
In Ohio, an exemption 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.