The U.S. Census Bureau reports retail sales expanded at a rapid rate from the turn of the 19th century through the present, and states quickly discovered a source of income by licensing stores and taxing retail sales. States level an excise tax on alcohol, tobacco products and motor fuel, but a significant income comes from the retail sales tax and from the company licenses held by both resale and retail stores.
The term "resale," according to FindLaw, involves the act of selling again. The term related to commercial business law describes companies open to the trade to resell goods to retail business owners. Once the retail store owner purchases the goods from the resale outlet, the price increases to pay for the overhead of the store, labor involved in reselling the item and, hopefully for the store owner, a profit. The definition for resale blurs when resale establishments also allow consumers without a retail license to shop in the store. The availability of resale goods to the public sometimes requires a membership fee or additional fees added to the cost of the goods.
Resale Taxes and Business Licenses
Businesses holding resale licenses sell goods to other businesses. States, with the exception of Alaska, Delaware, Montana, New Hampshire and Oregon, collect retail taxes from the state licensees based on a percentage of the retail sales made at the establishment. Companies do not collect retail taxes from other businesses buying goods, provided the firm holds a resale license. Businesses with these licenses are tax exempt from state retail tax collection on any goods purchased for resale use. Goods bought for personal use at resale stores, however, are not exempt from collection of state retail sales taxes. Resellers must register with each store or business to avoid tax collection, and all states require resale businesses to hold licenses.
Retail establishments include stores of all sizes, from small mom-and-pop to big box stores. The classification also includes chain and standalone stores open to the public for general sales. States require retail establishments to hold licenses and collect sales taxes on all personal goods, excluding foodstuffs and drugs, and on a variety of services. The type of service tax varies with the state laws. Many states, including Washington and California, collect retail taxes on licensed businesses doing construction and installation as well as personal services such as landscape maintenance, sightseeing trips, telephone services and equipment rentals.
Retail Taxes and Business Licenses
Retail businesses hold seller's licenses or permits issued by the state where the business operates. Some county and local governments also require additional licenses and collect additional taxes. Companies collect retail taxes on behalf of the state and localities and pass the costs on to consumers. Consumer store or service receipts must list tax collected as a separate line item, with the percentage amount assessed. State laws require a sign or store posting to inform customers of retail tax if the receipt fails to list the tax separately. All states require retail licenses to do brick-and-mortar business within the state boundaries.