If you have recently opened or plan to create a business in Florida that will sell items or services, you should obtain a resale certificate, or several of them, before you begin doing business. This can save you a lot of time and money. This certificate also allows you to buy wholesale products without paying sales tax. To apply for this Florida annual resale certificate for sales tax, we have provided a relatively simple process, as detailed in this step-by-step guide, including how you can renew from time to time. Let’s get to it!
What is a Resale Certificate?
When retailers buy things to resell, they frequently do not pay sales tax to the source. The sales tax will still be paid, but instead of the retailer paying it, the retailer will charge the customer sales tax on the final value of the goods. The retailer then sends the collected state sales tax to the Florida Department of Revenue.
For example, if a restaurant in Florida gets materials and food supplies from a wholesaler to create meals for their clients, the restaurant owner will not have to pay sales tax on the purchase of these items since they have a resale certificate. When a customer orders a meal at a restaurant, the company will charge the consumer sales tax based on the total amount of the meal.
Read Also: https://businessyield.com/tax/sales-tax-exemption/
Throughout the working day, the restaurant will collect sales tax on all transactions with customers. Periodically, often at the end of each quarter, the restaurant owner will collect and remit all sales tax collected from consumers to the state of Florida. The sales tax is thus essentially paid by the final consumer rather than the enterprises participating in the supply chain.
The resale certificate’s aim is to offer documentation as to why sales tax was not paid on a transaction. Resale number, seller’s permission, exemption certificate, wholesale license, sales tax exemption certificate, reseller’s permit, or reseller’s license are all terms that are similar to a resale certificate. To authorize the tax-exempt purchase, the seller needs proof that the buyer intends to resell the product by producing a valid resale certificate.
The sales tax exemption is exclusively intended for the purchase of tangible personal property that will be resold and not for the tax-free purchase of products used in normal business operations such as paper, pencils, and so on.
What is Florida Annual Resale Certificate for Sales Tax
A Florida Annual Resale Certificate for Sales Tax is a tax-exempt certificate that allows a company to buy products from a supplier and resell them without having to pay sales tax on them.
Businesses that register to collect sales tax with the Florida Department of Revenue are awarded a Florida Annual Resale Certificate for Sales Tax (Annual Resale Certificate). When the property or service is resold or rented, the certificate authorizes business owners or their representatives to acquire or rent it tax-free.
You can avoid paying sales and use tax by making the following purchases or renting:
- Items that become a component part of a product you sell, such as nails, fabric, and wood that are incorporated into a chair,
- Items resold as tangible personal property,
- Services that will be resold as part of your regular business operations, or
- Rentals that will be rented as real property or tangible personal property.
You may not use your Annual Resale Certificate to make tax-free purchases or rentals of property or services that will be utilized in the following ways:
- But not resold or rented,
- Before selling or renting the goods, or
- By your business or for personal purposes, such as furniture, office equipment, computers, or supplies.
Getting Started
A firm must first get a Florida Sales Tax Permit from the Florida Department of Revenue before it can begin selling products or offering taxable services. A seller’s permit, sales tax certificate, resale license, sales tax number, or sales tax license are all names for the Sales Tax Permit.
The Sales Tax Permit and Resale Certificate are frequently confused, however, they are two independent papers. The Sales Tax Permit permits a company to sell and collect sales tax on taxable goods and services in the state, but the Resale Certificate lets a merchant make tax-free purchases on goods they intend to resell.
To begin, you must first apply for a Florida Sales Tax Permit (also known as a state tax ID or Form DR-1 Florida Business Tax Application).
After applying for a Sales Tax Permit, the Department of Revenue issues the seller a Florida Certificate of Registration (Form DR-11) and a Florida Annual Resale Certificate for Sales Tax (Form DR-13).
How to Apply for a Resale Certificate in Florida
When you apply for a sales tax license in Florida, you will be automatically awarded a resale certificate, and you will receive a new one each year when you renew your sales tax license.
Fortunately, applying for a Florida resale certificate online is simple. After answering a series of questions in the state’s online questionnaire, a screen will appear informing you of the taxes you must register for. Continue to click the “Next” button to be directed through the registration procedure.
You can only apply for a resale certificate in Florida for one year at a time. Remember that the Florida resale certificate will expire at the end of the calendar year after you apply. Every year, the state will automatically renew your Florida Resale Certificate for Sales Tax. Beginning in November, you can download and renew your Florida resale certificate automatically for the next year.
If You are Presented with a Florida Resale Certificate
If you are a Nexus retailer in Florida and your customer offers you a resale certificate, you must document each tax-exempt sale using one of the three methods listed below:
- Request a physical or electronic copy from the buyer. A copy of this certificate should be kept by the vendor for three years. Both the buyer and seller should keep the resale certificate on file, as it is not recorded with the state.
- Obtain a transaction authorization number for each sale using your customer’s Annual Resale Certificate number. Each transaction must be registered via phone (877-357-3725), Florida’s Certificate Verification site, or the FL Tax Mobile app. Each time you do this, you will be given a transaction authorization number that is only good for that particular purchase.
- Obtain an annual vendor authorization number from the Certificate Verification site for your regular clients each calendar year, submit your seller information, upload a batch file for verification, and recover that file 24 hours after submission.
Sellers must also inspect the certificate and determine if the items sold are fairly commensurate with the purchaser’s line of business. For example, if the buyer’s company is a car dealership and they want to acquire office supplies tax-free, the seller should look into it more.
Remember, as a buyer and seller, that Florida resale certifications expire on December 31st of each year. A Florida Annual Resale Certificate for Sales Tax will be granted to you each year if you are a registered dealer and are actively conducting business.
Are Sellers Required to Accept Resale Certificates?
Although sellers are not compelled to accept resale certificates, the majority do. If the vendor refuses to accept the certificate, the buyer must pay sales tax on the product purchased. When submitting the Florida sales tax return, a credit is usually available.
If the vendor is from another state, Florida is one of just a few states that do not accept out-of-state resale certificates. To buy tax-free from vendors in other states, the buyer must first apply for a sales tax permit in the seller’s state.
Examples of Items for Resale and Items Bought for Use
| Type of Business | Purchases that May Qualify for the Resale Exemption | Purchases that are Generally Taxable |
|---|---|---|
| Restaurants; Bars | Disposable food containers, paper napkins, plastic eating utensils, and beverages | Dishes, flatware, kitchen utensils, cleaning supplies, office equipment, office supplies, delivery vehicles, kitchen equipment, credit card machines, and menus |
| Barber Shops; Beauty Salons | Items for resale to customers for off-premises use, including shampoo, hair tonics, brushes, and cosmetics | Items used in serving customers on-site, including shampoo, brushes, cosmetics, cleaning supplies, hair dryers, curling irons, beautician chairs, scissors, combs, shears, office supplies, and office equipment |
| Car Dealers; Auto Repair Shops; Service Stations | Hoses, garden tools, lawnmowers, rakes, office equipment, supplies used in day-to-day operations, and delivery vehicles | Hand and power tools, machinery, tape, sandpaper, lubricants, solvents, rags, cleaning supplies, office supplies and equipment, free loaner vehicles, delivery vehicles, wreckers, lifts, and diagnostic equipment |
| Florists; Plant Nurseries; Landscape Gardeners | Fertilizers, flowers, shrubs, potting soil, and garden tools for resale to customers on an itemized invoice | Hoses, garden tools, lawn mowers, rakes, office equipment, supplies used in day-to-day operations, and delivery vehicles |
| Convenience Stores | Soft drinks, candy, beer, t-shirts, hats, kitchen supplies, office supplies, household supplies, cleaning supplies, and motor oil available for resale to customers | Cash registers, business equipment, cleaning supplies, office supplies, gas pumps, credit card machines, and ATMs |
| Pet Shops | Items intended for resale rather than use in business operations, including pet food, pet litter, brushes, and pet dishes | Items for use in day-to-day store operations, including pet food, pet litter, pet dishes, cleaning supplies, office supplies, and office equipment |
What Else Do I Need if I Sell in Florida?
To obtain a seller’s permit in Florida, you do not need a Federal tax ID for your firm; if you are a lone proprietor, your SSN will suffice. However, you will need to register your firm with the state. The Florida Business Tax Application is available online. The Sunshine State also has resources to assist prospective business owners in getting started and filing the necessary paperwork. If you want to call your kite shop Kitty’s Kite Emporium, the state will assist you register that name in order to protect yourself from a competitor who steals your name.
What Is a Resale Certificate in Florida?
When the property or service is resold or rented, the certificate authorizes business owners or their representatives to acquire or rent it tax-free.
Do I Need a Florida Resale Certificate?
You certainly do. When the property or service is resold, the certificate authorizes business owners or their representatives to buy or rent it tax-free.
What Are the Charges for a Resale Certificate in Florida?
When registering online for a sales tax permit in the state of Florida, there is no fee; however, there is a $5 fee if applying by mail.
What Is the Difference Between a Sales Tax Permit and a Resale Certificate in Florida?
A sales tax permit allows a company to collect and remit sales tax on taxable product and service sales as required by law. A seller’s permit and a resale certificate are not the same thing. A resale certificate enables a company to make tax-free purchases of taxable products that it intends to resell.
Do I Need a Seller’s Permit and Resale Certificate in Florida?
Because Florida does not have a “retail seller’s permit,” if you are a retailer, you must register your firm and obtain a sales tax permit in order to collect and pay sales tax.
How Do I Get a Wholesale License in Florida?
In Florida, there are two ways to receive a seller’s permit. You can apply online or through an accelerated ordering process through the Florida Department of Revenue.
How Much Is Tax per Dollar in Florida?
Florida has a state sales tax rate of 6.00 percent, a maximum municipal sales tax rate of 2.00 percent, and a combined state and local sales tax rate of 7.02 percent. On our 2023 State Business Tax Climate Index, Florida’s tax system ranks fourth overall.
Conclusion
I hope this has helped to clarify the procedure for using resale certificates in Florida. In just a few minutes, you may apply for your Florida Resale Certificate from the comfort of your own home office. Your new company has just become a little more official. You’re now ready to open your doors!
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