In Texas, it is necessary to obtain a Sales and Use Tax Permit (also known as a State Resale Certificate) for various reasons. To determine if you need one, ask yourself a simple question: “Will I purchase items and resell them?” If your answer is YES, having a Sales and Use Tax Permit is a legal requirement for conducting business. There are several situations where your business will need a Sales and Use Tax Permit. Here are a few examples:

Merchandise: A Sales and Use Tax Permit is required for any goods purchased with the intention of resale. This certificate offers significant benefits, as it allows you to make tax-free purchases of such goods. By presenting your Sales and Use Tax Permit, you can avoid paying sales tax on items intended for resale. Most reputable wholesale companies will require your Sales and Use Tax Permit before selling items to you. Without a valid certificate, it is typically not possible to establish accounts with distributors, vendors, or wholesalers. Even items that will be incorporated into other products, such as screws used in toy assembly, necessitate a Texas Sales and Use Tax Permit.

Services: When reselling services, it is also necessary to obtain a Texas Sales and Use Tax Permit. This provides a substantial advantage as it enables you to purchase services without paying taxes. With your Texas Sales and Use Tax Permit, you can save on costs and effectively resell various services. Examples of such services include white labeling services, online services, or in-person services.

Assets: If you plan to rent out any property, whether purchased or leased, obtaining a Texas Sales and Use Tax Permit is mandatory. Whether it’s your home, a vehicle, or any other form of property, you must possess a Sales and Use Tax Permit. This requirement applies to both real estate and personal property.