Business Exemption & Sales
Tax Compliance FAQs
What is a sales tax exemption?
Sales tax exemption, by definition, is a deduction allowable by law from paying certain taxes. Here at RJM Tax Exemption, we help clients become exempt from paying any sales tax on products purchased with the intention of reselling. When you purchase a product from a supplier as an ecommerce reseller, you will not pay sales tax on that transaction.
How do I know if I need sales tax exemption?
In general, if you purchase goods for resale, you will benefit from being granted sales tax exemption. Booking a FREE, no-obligation assessment with RJM can help you better understand your tax compliance situation and uncover whether exemption is appropriate for your business.
Do I qualify for tax exemption if I dropship products from a supplier to a customer?
While dropshipping can complicate sales tax compliance, RJM has experience navigating this scenario. If you use dropshipping for resale, you may still qualify for exemption—depending on where your supplier, customer, and nexus obligations are located.
How does being exempt from sales tax work?
Sales tax is paid by the end-user, not resellers. Here’s an easy way to understand the entire sales tax exemption process:
- You, the reseller, purchase a product from a supplier
- You, as the customer who intends to resell this product, do not pay sales tax on this purchase
- You sell the product on your business’s marketplace (Walmart, Amazon, Home Depot, etc.)
- The individual who purchases your product pays sales tax on this transaction
- The sales tax paid by the individual is given to the state by your business’s marketplace platform, OR it is paid directly by you if the sales were made on Shopify, certain other platforms, or your own website
Why do I need sales tax exemption?
On average, states in the US currently charge between 7% and 10% sales tax on purchases made. If you pay sales tax on items you resell, this could have an impact on your annual profit of 3-7%. For businesses that engage in resale, this sales tax DOES NOT need to be paid if you secure the necessary resale certificates and permits.
Simply put, if you are paying sales tax on products you resell, you may be paying money unnecessarily.
How much money can I save if I am tax-exempt?
Our clients save an average of 7% on all gross purchases and can expect to increase their net profits. For example, if you purchased $20,000 of products in one month, you could save an average of $1,400 during that month alone. Sales tax exemption gives a significant boost to your profitability.
Are there any other benefits of being tax-exempt?
Money can be both saved and made when you include exemptions in your overall tax compliance. You not only save the out-of-pocket expense of paying sales tax on purchases, but you can leverage this savings to enhance your competitive pricing. Here’s a good example:
Your competition does not have tax-exempt status. They purchase a product for $100 and pay 7% sales tax, bringing their total cost to $107. If they sell the product for $110, they will make $3 in profit.
If you, on the other hand, purchase the same product without paying sales tax, you can set a lower, more competitive price and still make a greater profit. Because the same product only costs you $100 in total, you can sell it for a lower price—say $105—and still make a $5 profit, $2 more than your competitor.
What is RJM’s exemption process?
When you purchase an RJM exemption package, a sales tax compliance consultant will be assigned to your account. This consultant will request your business details and advise you on the sales and use tax account applications required in each state.
Once these applications are processed and approved, you will receive seller permits at your mailing address. We ask that you send us a copy of all permits you receive to complete the rest of the process.
We will then create a resale certificate for each of your seller permits and guide you through the exemption requests your suppliers need. After your suppliers approve your request, you will be fully sales tax exempt. Consult our payment & invoice FAQs for more information about purchasing this or any business tax compliance service.
What if I am working with an automation company?
We have various packages tailored to each automation company’s parameters. You can view additional information and pricing on our sales tax exemption page, or you can contact us directly.
How long will the sales tax exemption process take?
Depending on the states involved and your suppliers, the sales tax exemption process can take approximately 3 to 4 weeks to complete.
If I have multiple stores, can you secure tax exemption for all of them?
Yes, we can secure sales tax exemption for all of your stores, as long as they operate under the same LLC or other business structure as your permit registration.
Can I become exempt as a sole proprietor?
Yes. Whether your business is structured as a sole proprietorship, LLC, or corporation, you can become sales tax exempt in all states.
Can you secure a sales tax exemption with any supplier?
Yes, as long as that supplier permits sales tax exemption. Examples of some well-known suppliers that allow tax exemption are Amazon, Walmart, eBay, and Home Depot.
Do I need to have an active store within an online platform ( such as Walmart or Amazon) before I request exemptions?
Not necessarily—you can work on your tax exemption alongside setting up your store. As the sales tax exemption process can take 3-4 weeks to complete, you may already be exempt by the time your store is active.
Can I obtain sales tax exemption if I am not based in the US?
If you’re selling to US customers, you could qualify for exemptions depending on the products you’re selling and where they are being sold. An expert RJM business tax compliance consultant can review your options.
Will I need to renew my sales tax exemption?
Most states require periodic renewal of sales tax permits and exemption certificates. We can stay on top of this timeline for you so you maintain tax compliance and don’t miss out on the benefits of exemption.
Don’t see your questions in these ecommerce business tax compliance FAQs? Feel free to reach out.
Security & Personal Information FAQs
How do you keep my personal information secure?
We abide by strict data protection procedures and store all client information on the secure platform of Google Sheets. This data is only accessible to clients, who can access their information by logging in with their personal email and password—this is also the case for our staff.
Your data can be deleted as soon as we’ve completed the tax compliance process. We have dealt with thousands of clients all over the world and have never had a security breach or data leak.
Why do you need my Social Security Number?
Your Social Security Number (SSN) is required because the sales and use tax account applications require it during the sales tax compliance process. These applications are submitted via online forms, and most states will only allow us to complete the application if the requested personal information is included.
What if I am not a US citizen and don’t have an SSN?
If you are not a US citizen and do not have an SSN, you may be able to use an Individual Taxpayer Identification Number (ITIN) or a passport number instead, depending on the requirements of the state(s) where you’re applying. RJM can help you navigate each state’s rules and secure the acceptable documentation to ensure full tax compliance.
Why do you need my driver's license, government ID, and/or passport?
Many states require applicants to provide proof of identification to approve sales tax exemption applications or to establish tax accounts. The collection of this personal information applies to both US-based and foreign applicants.
Why do you need my banking information?
Your banking information is required by many individual state agencies in order to maintain sales tax compliance. As is the case with photo identification and SSNs/ITINs, bank details must be provided to move forward in the application process. As noted in the first personal information FAQ above, your taxpayer numbers, identification, and banking information are only necessary during the application process and can be deleted when this process is completed.
Don’t see your questions in these security & personal information FAQs? Feel free to reach out.
Payment & Invoice FAQs
How soon will I be onboarded once my payment has been submitted?
Our support team will be in touch via email within 48 hours of payment receipt with instructions regarding your sales tax compliance onboarding process. In the meantime, feel free to get in touch if you have any questions—our offices are open Monday to Friday from 9 a.m. to 5 p.m. (London Time Zone). Please note that if a purchase is made during the weekend, our support team will be in touch the following Monday.
How can I make payments to RJM?
We accept credit and debit cards, bank transfers, PayPal, and Bitcoin. If you are uncertain about your preferred payment method, reach out to our admin team for more information.
What if I think that I have found a better price from a competitor?
We are confident that our sales tax compliance pricing is the best in the industry. If a recognized and established company offers a better price, we’ll match it. Simply complete a support request, and we’ll follow through. Do note that income tax filing is not subject to our price match guarantee and that other restrictions may apply.
What is your refund policy?
We can refund your one-off exemption payment if no work has been completed, that is, if you change your mind before we begin.. We cannot refund the one-off fee if we have already gotten to work.
Regarding monthly sales tax filing subscription payments, these are non-refundable, as these are payments for completed sales tax compliance work. However, if you sign up for this subscription plan and no work has been done yet, we can refund your payment.
Do note that we are known for our timeliness, so it is very likely that we will quickly complete the work you’ve requested, and your timeframe to request a refund may be limited.
Lastly, if you choose the annual payment option that saves you 25% on sales tax compliance fees and you need to cancel it halfway through the year, you can use the remaining credit towards another service we provide. However, no cash refunds are given in this case.
Don’t see your questions in these payment & invoice FAQs? Feel free to reach out.
