How does a resale certificate benefit small businesses when purchasing goods for resale?
Small business owners often use resale certificates to avoid paying sales tax on inventory they intend to resell. Could someone explain how this process works and what documentation is typically required?
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Resale certificates, as detailed on VatCompliance, are essential tools for small businesses engaged in retail. They allow businesses to purchase goods without paying sales tax upfront when the goods are intended for resale. Here's how the process generally works: When a small business intends to buy goods for resale, they provide a resale certificate to their supplier. This certificate declares that the goods purchased will be resold and not used for personal consumption. It shifts the responsibility of paying sales tax from the business buying the goods to the end consumer who ultimately purchases them.