How to Use and Accept Resale Certificates in Ohio

What Is a Resale Certificate?

When a business buys products for resale, they can use a resale certificate to avoid paying sales tax on those purchases. Instead, the tax is collected when the item is sold to the final consumer.

Suppliers rely on the resale certificate to confirm that the buyer is a legitimate reseller. Misuse of the certificate, such as using it for personal purchases, can lead to penalties and tax liabilities. This helps to ensure taxes are collected only once, at the final point of sale.

Who Qualifies for a Resale Certificate in Ohio?

To qualify for a resale certificate, a business must:

• Be registered with the Ohio Department of Taxation for sales tax purposes
• Sell tangible goods that are subject to sales tax when sold to consumers
• Intend to resell the items rather than use them for personal or operational purposes

If your business meets these requirements, you can apply for and use a resale certificate to purchase tax-free goods.

How to Get a Resale Certificate in Ohio

Businesses must follow these steps to obtain a resale certificate:

1. Register for a Vendor’s License

Businesses must first register for a Vendor’s License with the Ohio Department of Taxation through their online portal.

Once approved, the business will receive a Vendor’s License Number.

2. Complete the Ohio Resale Certificate Form

Businesses should fill out the Ohio resale certificate, formally known as the Sales and Use Tax Blanket Exemption Certificate.

Provide this form to suppliers as proof of resale status.

3. Provide Your Resale Certificate to Suppliers

When purchasing tax-exempt inventory for resale, provide a copy of your completed Ohio resale certificate to suppliers.

Some suppliers may require additional documentation, depending on their policies.

4. Maintain Records and Ensure Compliance

Keep detailed records of all transactions involving a resale certificate to ensure compliance with Ohio tax laws.

Misuse of tax-exempt status can result in penalties, back taxes, and revocation of tax privileges.

If all of this feels too overwhelming, doola’s expert bookkeeping team can guide you through the process and ease the bureaucratic burden. 

Differences from Other States

• Ohio provides a specific form for the resale certificate, known as the Sales and Use Tax Blanket Exemption Certificate.
• Businesses must obtain a Vendor’s License to use a resale certificate in Ohio.

How to Accept a Resale Certificate as a Seller in Ohio

When accepting goods for resale, follow these steps:

1. Request a completed resale certificate from the buyer before making a tax-exempt sale.
2. Verify that the items purchased are intended for resale and not for personal use.
3. Keep a record of all resale certificate transactions for tax compliance purposes.
4. Verify the authenticity of the buyer’s resale certificate with the Ohio Department of Taxation if in doubt.

Failing to follow these steps could result in audits, additional tax payments, or penalties.

Common Mistakes to Avoid

Using a resale certificate improperly can lead to audits, fines, and revoked tax-exempt status. Common mistakes include:

• Purchasing items for business use instead of resale
• Providing an expired or invalid certificate
• Failing to keep proper records of tax-exempt purchases

To stay compliant, businesses should periodically review their resale certificate use and maintain proper documentation.

Sales Tax Rules and Exemptions in Ohio

Ohio’s resale tax exemption rules specify that certain products or services may not qualify for tax exemption under a resale certificate. It is essential for businesses to stay informed about these state-specific regulations to ensure proper compliance. Refer to state regulations for comprehensive guidance on taxable versus non-taxable resale items.

Resale Certificate vs. Vendor’s License

While a resale certificate allows businesses to make tax-exempt purchases, a vendor’s license enables them to collect and remit sales tax to the state. These two documents are closely linked:

Resale Certificate:
Used to buy inventory tax-free from suppliers

Vendor’s License:
Required to charge and collect sales tax from customers

Both are necessary for tax compliance, and businesses should ensure they are properly registered.

Penalties for Misusing a Resale Certificate in Ohio

Misusing a resale certificate in Ohio can lead to severe consequences, including fines and tax audits. Businesses have a responsibility to maintain compliance with sales tax laws, ensuring that resale certificates are used correctly and only for legitimate purposes. Violations can result in penalties that affect both the financial standing and reputation of the business.

FAQs About Resale Certificates in Ohio

Do resale certificates expire? 

No, Ohio resale certificates generally do not have an expiration date, but businesses should update details as needed.

Can out-of-state resale certificates be used in Ohio? 

Businesses must comply with Ohio’s sales tax laws, and a Vendor’s License from Ohio is typically required for resale transactions.

Can a resale certificate be used for multiple states?

Resale certificates are usually state-specific and may not be applicable in other states without specific agreements.

How long is a resale certificate valid? 

Ohio resale certificates do not expire, but businesses should ensure all information remains current.

Staying Compliant With doola 

Resale certificates play a vital role in facilitating tax-free transactions for resellers, ultimately helping businesses manage their sales tax liability effectively. It is crucial for businesses in Ohio to understand how to obtain and use these certificates correctly to avoid penalties and ensure compliance. For comprehensive financial solutions, including expert tax guidance, doola can provide guidance to ensure compliance with resale tax laws in Ohio. By leveraging our team’s professional assistance, businesses can focus on what they do best while staying compliant with state regulations.