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How to Obtain a Wholesale License & Why You Need One

8 min read

For wholesalers, one of the most critical documents your business can obtain is a wholesale license. Having this type of license can significantly benefit your business in a few ways, but most importantly, the cost savings can be astronomical.

In this post, we’re breaking down the steps you’ll need to take in order to apply for wholesale license documents. This includes the personal and business information you should be prepared to share, the average cost of a wholesale license, and other helpful insights along the way.

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What is a Wholesale License?

As a wholesaler, you are probably familiar with the components of buying and selling goods. First, there’s the manufacturer, who creates the products. Then, the wholesaler buys the products and goods from the manufacturer in bulk. Lastly is the retailer, who buys the products from wholesalers and sells them to their customers.

In order to purchase products in bulk directly from the manufacturer and resell them to retailers, wholesalers must obtain a wholesale license to do so. A wholesale license proves that you are a legitimate company so that manufacturers and retailers will agree to do business with you.

Steps to Complete Before Applying for a Wholesale License

There are a few things you need to do before you can even apply for a wholesale license. These are all related to your business itself, so the IRS can determine how to tax your company and what rules and tax laws apply to you.

1. Register your business

Before you do take any steps towards acquiring a wholesale license, you must register your business in the state you are operating. You’ll have to specify if you are a partnership, corporation, sole proprietor, or LLC (limited liability company).

2. Apply for an EIN (Employer Identification Number)

After your business is registered in your state, it’s time to apply for an Employer Identification Number (EIN) which means you can hire employees. Applying for an EIN can be completed online in most states, which will save you time as you gather your paperwork for a wholesale license.

3. Get a sales tax license

A sales tax license or permit allows you to charge sales tax on every item you sell to your retailers. You can obtain a sales tax license by filing an application through your state’s tax office.

Now you’re ready to apply for your wholesale dealer license!

How to Get a Wholesale License

If the stress of “How do I get a wholesale license?” is keeping you up at night, we’re here to shed some light on the process. You may be pleasantly surprised at how straightforward it is!

The documents you’ll need when completing a wholesale license application include the following:

  • Your EIN (Employer Identification Number) or FTID (Federal Tax ID)
  • Sales Tax ID and license

Keep in mind that every state has different rules and laws, so be sure to familiarize yourself with these before starting the process.

Once you have these items, you can begin the process of applying for your wholesale license. On the application, you’ll most likely be prompted to include information about your business, like:

  • Your first and last name
  • The names of any business partners you have
  • The EIN and FTID we mentioned above
  • Your business’s DBA (Doing Business As) or official name
  • Information about the business and what you’re buying/ selling

Your wholesale license will be approved by your local tax office.

The Average Wholesale License Cost

The average cost of a wholesale license depends on the state you’re doing business in, but most licenses cost anywhere from $3,000 to $10,000. On average, most wholesale businesses pay around $6,500 for a wholesale license.

FAQ: How do I get a wholesale license?

Acquiring a wholesale license to buy in bulk and resell products is required to operate a legal business in all 50 states. The process may seem daunting, but it’s not all that difficult if you follow the steps we outlined above. Here are a few common questions you may have about the process.

How long does it take to get a wholesale license?

Once you’ve completed the steps listed above, securing a wholesale license can take anywhere from 2 to 5 days up to 2 weeks.

The time frame depends on where you’re doing business and any complications of the nature of your business or what you’re selling. For example, wholesalers selling some products and goods must follow additional regulations, which should be accounted for when applying for a wholesale license.

Is a seller’s permit the same as a wholesale license?

A seller’s permit also provides a business the ability to collect sales tax on every product they sell, just as a wholesale license does. Different states call a seller’s permit different terms. A few of these include a reseller license, vendor permit, or a resale card. This can be confusing, but they all mean the same thing.

Do I need an EIN to operate as a wholesaler?

While it’s not required to hire employees as a wholesaler, you do need to obtain a legal Employer Identification Number (EIN) so the government and the IRS can track your business activities, including purchases and sales.

Purchasing wholesale without a business license is possible, but you’ll be sold the products as a consumer. In doing so, you’d miss out on the incredible cost-savings that wholesalers enjoy, including the elimination of sales tax on any purchased goods.

Get Insight Into Starting a Wholesale Business with Ecwid

A wholesale business can be a highly lucrative business model, and if you take the correct approach, you can quickly turn it into a cash-making machine.

Acquiring a license is just one of the initial steps you need to complete to build a successful business and establish yourself as a credible wholesaler in the industry. Following the guidelines we’ve laid out in this blog post will ensure you find incredible success as a wholesaler.

Ecwid is committed to providing relevant, informational guides and resources for entrepreneurs who are ready to start their own businesses. Explore our free guides and other content to learn more.


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About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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