In this post, I want to share one of the mistakes I made when I first started selling, specifically for new sellers or those who have been selling for a while but haven’t taken advantage of this strategy.
When I first started selling on Amazon, I sourced most of my items from Walmart or Big Lots. I would buy items from their shelves and send them to Amazon FBA. However, one day I realized that I was spending more on sales tax each month than I would on a car payment. I had heard of people getting tax exemptions, but I was initially scared to do it. Eventually, I mustered up the courage and went to Walmart to sign up for a sales tax exempt card. It was surprisingly easy to do – all I needed was my state tax ID number for my business, and the service desk took care of it. Soon after, I obtained tax exemptions from other stores like Big Lots, Menards, and Rural King.
I don’t know why I didn’t start using sales tax exemptions sooner, but over time, I realized that it made a significant difference in my bottom line. In Indiana, the tax rate was 7%, so if I paid taxes on items and my competitors didn’t, they had a 7% advantage over me. This could explain why sometimes I couldn’t figure out why my competitors were able to sell items at such low prices.
If you’re new to reselling and have the proper business license and tax ID numbers for your state, don’t be afraid to go to stores and sign up for sales tax exemptions. It can be a bit of a hassle at the checkout, as some cashiers may not be familiar with the process and may need to call customer service for assistance. However, when you’re making a large purchase, the savings can be substantial.
It’s important to note that using sales tax exemptions for your online business is not illegal. You are running a legitimate business, and you are allowed to take advantage of this strategy. Chances are, many of your competitors are already doing it, so don’t miss out on the potential savings.