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Home based business in PA, do I need reseller permit?

Asked by: Susan - 24 March, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/default.png-f1597c1da25f30f8c1a941405e8391c8 I live in PA and want to start a home based single level direct selling/party plan business. I would purchase merchandise to include in sales kits which will be sold online. I will also store merchandise to fill orders. I would purchase products from another state, delivered to my home in PA, and ship products from my home either as part of a start up kit or to fill orders.

I planned to incorporate in Wyoming and want to transaction business there. Would I need to register in PA if I'm not selling in PA? Also, which state would I obtain the reseller certificate?
Answered by: Robert Kowalski - 25 March, 2012
https://d25eic0jctudgb.cloudfront.net/images/site/avatars/35.jpg-687fc92d5f6c5febcbdccb6895b08b8c Dear Susan,

Lets talk about sales tax. This tax applies to sales of tangible items and some services (depending on the state) if the following conditions are met:

1) The state (and in some cases county or town) where the end use of the purchased item/service is located has sales tax.
2) The company selling the item has nexus in this jurisdiction.

So when you decide to sell first in those states where there is no sales tax to begin with you greatly limit yourself. I would suggest to first analyze your business situation to see where you are going to have nexus to begin with.

Since you are in Pennsylvania, will run the business from Pennsylvania, and will store and ship the merchandize in and from Pennsylvania, it is safe to assume you create nexus in that state. In fact, regardless of where you will form the company (be it Wyoming, or Delaware, or any other state), if you plan to have activity in Pennsylvania and plan to deduct business expenses in PA you would be required to register your company in Pennsylvania as well. That means you should consider forming your LLC in Pennsylvania to begin with.

If you choose to register you company in Pennsylvania then the only reseller permit you would need to obtain would be PA reseller permit. You would not need to collect any sales tax if you don't sell to PA residents, however to buy the merchandize without having to pay sales tax on it you would need to present the wholesalers with the reseller permit number.

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