Wholesale License: What Is & How To Get It


Tue Mar 23 2021

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Owning a boutique affords you the ability to be your own boss. If you have a passion for fashion and selling clothing that makes people feel confident and beautiful, this could be a great career path.

One of the crucial parts of learning how to start a boutique is planning where you’ll get your inventory from. Many boutiques buy products wholesale for resale, as this is the most cost-effective way to keep your shop stocked with a constant flow of clothing. But before you can get started, you’ll need to become a wholesaler.

Keep reading to learn the ins and outs of how to become a wholesaler and how to buy wholesale clothing.

What is a wholesale license?

Wondering do I need a wholesale license to buy wholesale? The answer is yes.

Before you can become a wholesaler, you need to obtain a wholesale license. This is a document that legally allows you to buy products from manufacturers in bulk, and in turn you resell them. The permit signals to suppliers, retailers, and the government that you’re a lawful goods dealer.

Having a wholesale license also offers tax benefits. Because wholesalers purchase items in bulk, there is generally no sales tax to pay. Without a license, you’re stuck paying sales tax on each purchase that you make.

Wholesale license vs. seller’s permit

More often than not, a wholesale license and a seller’s permit are the same document that’s being called two different things. However, there are some instances where a whole license and seller’s permit may be different. It’s crucial to understand the laws based on your state and federal government.

For example, in some states, a reseller’s permit is needed for wholesalers who are selling to other retailers. Call your state’s tax office to confirm the types of permits you need to legally operate a boutique while selling wholesale items.

How much does it cost?

As a small business owner, you know the importance of making smart financial decisions. While a wholesale license does come at a cost, you’ll find that the return on investment is well worth the upfront fees.

The average wholesale license costs around $6,500. However, the cost can range anywhere from $3,000 to $10,000. There are many factors that dictate the cost of the permit, including where you live, where your business operates, and the type of business you run.

How to apply for a wholesale license

Once you’ve decided to get your wholesale license, the process of doing so is simple. Be aware that the process does come at a cost and may take months, so plan accordingly.

Here’s the basic process for obtaining a wholesale license.

  1. Obtain an employer identification number (EIN) or a federal tax identification number (FTID). Before you can apply for the license, you need an EIN or a FTID. These numbers are used by the government to track legal business activities. To make wholesale sales, you will need an EIN. The process takes 2-3 weeks.

  2. Get a sales tax ID. This document allows you to legally collect sales tax on the products you sell. It also simplifies things once tax season rolls around.

  3. Apply for a wholesale license. After completing the first two steps, you’re ready to apply for your wholesale license. Contact your state’s tax and revenue office so that you can fill out the required paperwork. Each state’s process is different, but generally you’ll need the following information:

    • Full name and the full names of any business partners you have

    • Your FTID or EIN

    • Your doing business as (DBA)

    • The nature of your business

    • eCommerce business license and business insurance

Once you’ve submitted your application, waiting begins. Depending on where you live, it can take anywhere from a few days to a few weeks.

You’re now licensed to sell

After receiving your seller’s permit, you’ve taken a huge step towards launching your clothing boutique. Now that you’re approved to buy items in bulk, you can begin purchasing inventory for your shop.

Buying items in bulk ensures that you’re getting the best deal on products while also enabling you to maintain a steady inventory. As a small business owner, buying wholesale is one of the best decisions if you want to cut costs without impacting your inventory levels or customer experience.

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