Resale certificate
Also called reseller’s certificate
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is resale certificate?
A resale certificate is a form a business gives its supplier to show it is buying goods to resell, so the supplier doesn’t charge sales tax on them. Distributors collect resale certificates from customers who resell, such as dealers, and give their own to the manufacturers they buy from.
How it works
It is the most common kind of sales tax exemption certificate, and the same rules apply: keep a valid one on file, for the right state.
Resale certificate example
A lumberyard that resells the roofing it buys sends the distributor its resale certificate when it opens the account, and its invoices go out without sales tax.
Related terms
- Sales tax exemption certificateA sales tax exemption certificate is a form a customer gives a seller to show that a purchase isn’t subject to sales tax, so tax is left off the invoice.
- Drop shipmentA drop shipment is an order the distributor sells but has the manufacturer ship straight to the customer, so the goods never pass through its warehouse.
- InvoiceAn invoice is the seller’s bill for goods or services delivered, listing the items, quantities, prices, freight, tax, payment terms and amount due.
