Today we're conquering the great storage auction enigma...the resale license! Your Storage Treasures Family has unlocked the mystery of the veteran auction hunter's most powerful resource...and we're hooking you up with the details.
#1 What you need to know about resale licenses:
Storage facilities are supposed to collect sales tax on storage units sold at auction (lucky for you, many storage facilities aren't aware of this!). However, if you have a resale license, then you don't have to pay sales tax on your unit. Sound too good to be true? The thing is, you must buy the items for resale, and when you resell the items you must collect sales tax from the buyer and send it to the state.
The idea is to avoid collecting sales tax twice...but it must still be collected. The good news is that you do NOT need a resale license to attend or bid at storage auctions. You'll just have to pay sales tax, if the facility collects it, so be sure to calculate that into your bid amount.
#2 How a resale license may benefit you:
Wtih a resale license you can buy a unit wholesale and collect sales tax when you resell the individual items. Without a resale license you pay sales tax when you buy and you are also supposed to collect it when you resell the items - so the taxes cut into your profit.
Another benefit is that you don't pay sales tax at the time you buy a unit but, only later when you submit your return and any sales tax you've collected along the way.
Nobody wants to be subject to double taxation and most people would rather owe money in the future than have to pay it right away. Whether postponing the payment of sales tax is worth the hassle will largely depend on your resale volume, and perhaps whether you have the discipline to sock away the sales tax moolah you collect along the way.
#3 How you can apply for a resale license:
The process to obtain a resale license varies by state. Generally, you'll get a resale license through your state's tax department. In California for example, you'd contact the Board of Equalization while in New York you'd need to get in touch with the State Department of Taxation. We're working on preparing some state specific resources to help you muddle through the red tape and legal jargon, so if you want to know more about getting a resale license tell us on Facebook so we can prepare a "how to" for your state!
And be sure to check out what our Pros have to say this week...gems of information here!
P.S. Have you practiced reselling something yet?
Send me an email to tell me how it went!