If you sell taxable goods in a state that charges sales tax, you need a vendor license to collect sales tax from your customers. The license — also called a seller’s permit or sales tax permit — is issued by your state’s department of revenue and must be in hand before your first taxable sale, not after. Five states don’t have a statewide sales tax, so businesses operating only there don’t need one for sales tax purposes. Everywhere else, the answer is almost always yes.
Who the Requirement Covers
The license requirement applies broadly to anyone selling tangible personal property: clothing, electronics, furniture, food, building materials, or anything else a customer physically takes home. Many states extend the requirement to certain services as well, such as landscaping, dry cleaning, or software subscriptions, though which services qualify varies widely from state to state.
The sales channel doesn’t change the answer. Brick-and-mortar stores need a license. So do food trucks, craft-fair booths, and flea-market vendors. Temporary and event-based sellers often need a short-term permit tied to the specific event, even when they don’t operate the rest of the year. If you sell taxable goods in any regular capacity, assume you need to register.
Timing matters. You apply through your state’s department of revenue (or its equivalent agency) before you start selling. Some states issue a permit number instantly through an online application; others mail a physical certificate within a few weeks.
States Without a Sales Tax
Five states impose no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. A business operating exclusively in one of these states doesn’t need a vendor license for sales tax purposes. Alaska is a partial exception — it has no state tax, but some local jurisdictions in Alaska levy their own sales taxes and may require registration with those local authorities.
No sales tax doesn’t mean no licensing at all. You may still need a general business license, a professional license, or local permits depending on your industry and location.
Selling Online Into Other States
If you sell online, your obligation reaches beyond the state where your business sits. Since the Supreme Court’s 2018 decision in South Dakota v. Wayfair, states can require out-of-state sellers to collect sales tax once they cross certain revenue or transaction thresholds in that state. This is called economic nexus.
The most common threshold is $100,000 in sales during the current or prior calendar year. A few states set higher bars: California and Texas use $500,000, and New York requires $500,000 combined with more than 100 transactions. Some states also trigger the requirement at 200 separate transactions regardless of dollar amount. Once you cross a threshold in a given state, you need to register for a vendor license there, collect that state’s sales tax, and file returns.
Tracking this across many states gets complicated fast. Thresholds, measurement periods, and rules about whether exempt sales count toward the total all vary. If your online sales are growing, check your exposure in each state at least quarterly. Discovering you crossed a threshold six months ago is far more expensive than registering on time.
Selling Through Amazon, Etsy, or Another Marketplace
Marketplace facilitator laws in virtually every sales-tax state shift the responsibility for collecting and remitting sales tax from the seller to the platform. If you sell through Amazon, Etsy, Walmart Marketplace, or a similar site, the marketplace handles the calculation, collection, and payment of sales tax on sales it facilitates.
That doesn’t eliminate the licensing question. You’re still responsible for sales tax on anything you sell outside the marketplace: your own website, trade shows, a physical store. And some states still require marketplace sellers to hold their own sales tax permit even when the platform does the actual collecting. The safest approach is to register wherever you have a filing obligation, let the marketplace handle the tax on its transactions, and handle everything else yourself.
When You Don’t Need a License
Not every sale of a physical product triggers the licensing requirement. The main exceptions:
Isolated or casual sales. The occasional garage sale or a one-time sale of personal belongings generally doesn’t require a license. States draw the line differently on what counts as “occasional” — some cap the exemption at a dollar amount of annual sales, others look at frequency. Regular or repeated selling is almost always treated as a business activity that requires registration, no matter how informal it feels.
Certain nonprofit activity. Charitable organizations may qualify for exemption from collecting sales tax, but the scope is narrower than people assume. Federal tax-exempt status under Section 501(c)(3) doesn’t automatically exempt an organization from state sales tax obligations.1Internal Revenue Service. Exempt Organization Types Many states grant the exemption only for sales directly tied to the charitable purpose, not unrelated commercial activity. Any nonprofit planning regular sales should check with its state revenue department first.
Wholesale sales. When you sell goods to another business that intends to resell them, the buyer provides you with a resale certificate instead of paying sales tax. The certificate documents why you didn’t collect tax on that sale; the buyer picks up the obligation when it sells to the end customer. Keep resale certificates on file for at least four years. If you can’t produce one during an audit, you can be held liable for the uncollected tax.
How to Apply
Applications go through your state’s department of revenue, tax commission, or equivalent agency. Most states offer online applications and process them immediately — you may receive your permit number the same day. Paper applications still exist in most states but can take several weeks.
The application typically asks for:
- Your legal business name, any DBA (“doing business as”) name, physical address, and contact information
- Your business structure: sole proprietorship, partnership, LLC, or corporation
- A tax ID: your Social Security Number if you’re a sole proprietor, or your Federal Employer Identification Number for other structures
- Your business start date, a description of what you sell, and sometimes names of your primary suppliers
Most states charge nothing for the initial application. A few charge modest fees, generally under $100. States can also require a security deposit if you have a history of tax noncompliance or if the business is considered high-risk; deposits are typically tied to your estimated tax liability and are refundable after you establish a track record of timely filing.2U.S. Small Business Administration. Apply for Licenses and Permits
Once approved, most states require you to display the license at your place of business. Online-only sellers should keep the certificate accessible for customers or auditors who request it.
What Happens If You Sell Without One
Skipping the license carries real cost. At minimum, you’ll owe every dollar of sales tax you should have collected during the unlicensed period, plus interest. Many businesses in this spot absorbed the tax rather than collecting it, which means the back-tax bill comes entirely out of pocket.
States layer financial penalties on top of the back tax. Some charge a flat fee, others calculate the penalty as a percentage of unpaid tax, and the amount compounds the longer the noncompliance continues.
States can also issue a cease-and-desist order and force the business to shut down until it comes into compliance. For repeated or willful violations, some states treat unlicensed selling as a criminal offense, starting as a minor misdemeanor and escalating with each violation, potentially to jail time for persistent offenders. Each day of unlicensed operation can count as a separate violation.
Getting caught usually isn’t a matter of if. States cross-reference business registrations, bank records, and payment processor data, and anyone running credit card transactions or listing products online is visible to the revenue department. Registering upfront is almost always cheaper and simpler than cleaning up afterward.