Resale License/Tax ID: FAQ
*The following information is intended as a basic overview ONLY and should not be used in place of consultation with your state's Department of Revenue, or adherence to applicable National, State, or Local law.
Why do you require a Tax ID? As a wholesale distributor, we do not charge sales tax, as our customers are either bead store reselling our beads, or designers selling finished product, meaning that your state is planning to collect sales tax when the product is sold to the end user.
Am I Eligible for a Tax ID?
If you're selling finished jewelry (or re-selling beads to other makers), you are indeed!
Why do I want a Tax ID?
A Tax ID number not only opens the door to Dakota Stones, it also allows you to get into wholesale-only trade shows, may help you to get a discount at your local bead store, as well as potentially mean you get an additional discount at retail shows with certain vendors. It also means you can gain access to wholesale sites for findings and other materials.
How do I get a Tax ID?
You can get a Tax ID by going to your state's Department of Revenue website. Each site will vary slightly in the questions they ask. If you're doing a relatively low volume of annual sales, it's going to be easiest for you to plan to file annually. If they ask about your accounting system- it's most likely cash- meaning that your customers pay you prior to receipt of product.
The site is asking me about an NAICS code, what is that?
NAICS codes help the government (and other distributors) keep track of whether or not you're eligible to buy certain products with tax exemption. If you already have a business selling boat motors and a Tax ID for that business, you shouldn't be using that Tax ID number to buy beads.
OK- now I know what an NAICS code is, but what is mine?
There are tools available to search the most current NAICS codes by keyword. The keywords most likely applicable to you as a seller of your finished jewelry will likely apply in some way to design or jewelry, but will vary based on the exact nature of your business.
Should I be scared? This sounds official...Absolutely no need to fear. If you're able to keep track of your sales (and any personal purchases you make without paying tax) it's about a 10 minute process to file each year.
I have a Tax ID number, now what?
First, obviously, sign up for your Dakota Stones account! Then, print out a few copies of documentation from your state's website that includes your name, business info and Tax ID number. Many businesses require physical copies of this information, so it's nice to have on hand.
What if I want to buy beads for my stash or for a piece I don't plan to sell?
This is where a little bit of record-keeping is important. When you go to file, the state will ask you about something called "Use" tax- this is where you get to pay sales tax on items you purchased tax exempt but won't be selling. People use different methods to keep this straight for themselves, ranging from spreadsheets, to highlighted receipts to separate transactions.
IMPORTANT: Having a Tax ID and paying Sales & Use Tax does NOT exempt you from applicable income-related taxes. You must pay income taxes on the profits from your jewelry business. You should consult an accountant to optimize your income tax deductions.