Seller's Permit vs Business License — What's the Difference?
People confuse these constantly. A seller's permit and a business license are two different documents from two different offices. Here's what each one does.
📋 Different things — here's the breakdown
What is a business license?
A business license is permission from your local government (city or county) to operate a business in their jurisdiction. It's about you operating a business, not about what you sell.
✅ Business license
Issued by: your city or county. Cost: $25–$150/year. Purpose: legal permission to operate a business. Who needs it: almost every business.
What is a seller's permit?
A seller's permit (also called a resale permit, reseller's permit, or sales tax permit) is a state registration that authorizes you to collect sales tax from customers and remit it to the state.
✅ Seller's permit
Issued by: your state's department of revenue (or equivalent). Cost: free in most states. Purpose: authority to collect sales tax. Who needs it: businesses that sell taxable physical products.
The key differences
❌ They are NOT interchangeable
A business license does NOT authorize you to collect sales tax. A seller's permit does NOT give you permission to operate a business in your city. They do completely different things, come from different offices, and you often need both.
Do you need both?
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Service businesses (designers, consultants, cleaners, coaches)
Business license: YES. Seller's permit: Probably no — most services are not subject to sales tax. But check your state — some states tax certain services.
Business license: YES. Seller's permit: YES — you collect sales tax on product sales. Apply at your state's department of revenue.
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Mixed businesses (services + products)
Business license: YES. Seller's permit: YES — even if most of your revenue is services, you need a seller's permit for the product portion.
What is a resale certificate?
Related but different: a resale certificate (also called a resale exemption certificate) lets you buy products wholesale without paying sales tax — because you'll collect the tax when you sell those products to your customers.
You can only use a resale certificate if you already have a seller's permit. It's not a separate registration — it's a document you present to your wholesale suppliers.
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Etsy and marketplace facilitators
If you sell only through Etsy, Amazon, or other marketplace facilitators, those platforms collect and remit sales tax on your behalf in most states. However, you still need a local business license, and you may still need a seller's permit if you also sell outside those platforms.
Quick answers
Apply for your business license first, then your seller's permit. Many states ask for your business license info when you apply for a seller's permit.
In most states, no. Services are generally not subject to sales tax. But some states do tax certain services — check your state's specific rules.
Yes, in most states. California, Florida, Texas, New York, and the majority of states issue seller's permits free of charge.
Search "[your state] seller's permit" or "[your state] sales tax permit" — look for the official state government website (usually the Department of Revenue, Department of Taxation, or Comptroller's office).
⚠️ Not legal advice. Rules vary by location and change frequently. Always verify with your city, county, or state office before taking any action.
⚠️ Heads up: This site explains business licensing in plain English. Not legal advice. Rules change. Always verify with your actual city or state office. Affiliate disclosure.