What You Need to Begin Buying Wholesale

If you've decided to become a retailer or wholesaler and need to find wholesale merchandise sources, that's terrific; but don't start buying up wholesale product lots just yet. Making sure your new venture is legal and following all the government guidelines is very important, as noncompliance could end up with you paying steep fines or being forced to shut down your business.

For many reasons, you'll want to create a business name for your wholesaling business. This could be the name of your website, or a newly-created name. If you plan on doing business with several reputable wholesalers, it's much more professional to have an actual business name rather than just "Joe Smith." Without one, you'll have a hard time getting the bigger distributors to take you seriously in the beginning, and many may require you to have certain business documentation in order to begin working with them.

Once you have your business name worked out, you'll need to get the required licenses and permits. They are all very easy and inexpensive to obtain, so there is no need to be intimidated. There are hundreds of companies online who will try to sell you their services of obtaining these for you-but you'll just end up paying several hundred dollars for something you could have done yourself, quickly and cheaply.

While requirements vary from state to state, here is a list of things that may be necessary for you to have before beginning to buy and sell products.

Local Business License - Typically, the city or county where you are operating your business will require that you have a local business license. Just call or visit your city hall to find out what the requirement is in your jurisdiction.

State Business License - Unless you are selling products such as alcohol or cigarettes, you probably won't be required to have this license. You can find out your state's requirements by simply calling your local government offices.

Sales Tax License - If you live in a state that collects sales tax, you will most likely need this license. Having it will allow you to legally charge sales tax to customers purchasing your items. By calling your State Franchise Tax Board you can find out how to get this license.

Federal License - This license really only applies to a very small portion of businesses that are selling products or services that are highly regulated by government agencies (i.e., if you are selling firearms or offering investment advice). If you think your business falls into that category, you can call your state government offices for more information. However, if your business is required to have this type of license, it may be best to hire an attorney to make sure you are complying with every law and have all the necessary licenses, permits and documentation.

Seller's Permit (also referred to as a reseller's permit or sales tax permit) - This permit is typically required for businesses that are purchasing wholesale products for resale. Usually your State Franchise Tax Board is the agency that grants this permit.

By getting all the necessary paperwork resolved in the beginning, you will create less hassle for yourself in the long run. However, when working with individual wholesalers, it would be wise to ask them what their specific requirements are for licensing, permits, etc.