So you want to start selling wholesale clothing? Congratulations! Getting a wholesale license is just one step in turning your passion into a legitimate business.
Whether you’re selling from home or have a physical storefront, you’ll need to obtain a wholesale license to do it legally. In this post, we’ll go over the requirements of how to get a wholesale license and some other necessary info.
First, we need to establish what a wholesale license is and why you are required to have one. This information will be important and is the first step in getting started if you are to have a successful wholesale business.
What Is a Wholesale License?
In short, a wholesale license is a business document that authorizes you to buy and resell bulk goods from manufacturers. It lets government entities and manufacturer partners know that your business is lawful.
On top of that, a wholesale license means that you legally don’t have to pay taxes on the bulk goods you buy for future resale. Without a license, you are required to pay sales tax on everything you purchase from a wholesaler. This can mean significant savings for your business over the long haul.
As far as clothing sales go, having a wholesale license enables you to make eCommerce sales and take B2B payments without any legal repercussions. Without it, you risk legal action from the government.
So to summarize:
- A wholesale license authorizes you to buy and resell bulk goods from manufacturers
- It legally removes sales tax from the wholesale products you buy for future resell
- And it signals to the government and other manufacturers that your business is lawful
What Are the Requirements to Get a Wholesale License?
The exact requirements might be slightly different based on your location. But in general, here are the steps you need to take to obtain a wholesale license:
- Register your business. This includes giving your business a name and setting up its legal structure. Depending on your specific situation, this could mean registering your business as a sole proprietorship, a corporation, an LLC, or another type of organization.
- Apply for an Employer Identification Number (EIN) or Federal Tax Identification Number (FTID) for your business. You’ll only need one or the other.
- Obtain your sales tax license. Sometimes called a sales tax permit, this is a different document that allows you to charge sales tax on the products or services you sell. The fees and requirements will vary from state to state.
- Apply for your wholesale license. Once you’ve done all the steps above, you can start the application process with your state’s tax or revenue office. If you are interested in getting started online, here is an amazing resource that can help you get started.
Other Requirements for Getting a Wholesale License
When making the application with your state, you may need to provide additional information about your business. This can include:
- Your full name and the names of your business partners (if applicable)
- Your DBA (Doing Business As, the public name of your business if different from your registered business name)
- Your business license
- Proof of business insurance
- Any other legal documents relating to your business
Check with your state’s local tax or revenue office for all the requirements.
Once you’ve met all the requirements and submitted your application, all that’s left to do is wait. The waiting period can be anywhere from just a few days up to a few weeks. Just hang in there and be patient!
How Much Is a Wholesale License?
Getting a wholesale license can cost anywhere from $3,000 to $10,000, with the average cost being around $6,500.
Now, this seems like a pretty wide range. There are a few reasons for this.
First, each state has different requirements, so they may charge according to local tax and business laws.
Second, the type of business you run may be subject to different fees. For example, a business-to-business (B2B) shop will be subject to varying fees than a direct-to-consumer (D2C) business.
The fees for getting a wholesale license may be separate from the other registration fees needed to become a lawful business. Check with your state to learn all the exact costs and requirements to become a wholesaler.
Buying and Selling Wholesale Clothing
Now comes the fun part – getting your business off the ground! Once you’ve obtained your wholesale license, it’s time to start stocking up. Start by browsing OrangeShine’s wholesale clothing marketplace to find vendors.
Insider Tip: Get ahead of the game by checking out our complete guide for buying wholesale clothing.
While it sounds fun to sell men’s socks, women’s activewear, and kids’ dresses, you can’t just stock your shelves with anything and everything. Part of your strategy should involve niching down to a specific type of product or target customer—the more specific, the better.
Frequently Asked Questions About Wholesale Licenses
Getting your wholesale license is a huge step in turning your entrepreneurial dreams into a reality. Like many others, you may have some additional questions about them. Here are some of the most common questions
Can I buy wholesale with a seller’s permit?
A wholesale license is the same thing as a seller’s permit in many states. It’s required to buy wholesale goods and resell them. The requirements may vary depending on where your business is and what type of business you run.
Can I buy wholesale as a sole proprietor?
Yes, but you’ll still need a wholesale license to do so. Sole proprietorships are subject to the same requirements as any other business. So if you plan on running a retail or wholesale business, plan on getting a wholesale license.
Can I use my EIN to buy wholesale?
Your EIN alone won’t be enough. You’ll need your EIN and a wholesale license to buy wholesale goods. The government requires both of these numbers to track your income, sales tax, and other business activities.
Can anyone go to a wholesaler?
If the wholesaler sells to the public, then a consumer can go directly to them rather than a retail store or online marketplace. Most wholesalers choose not to sell to the public because their business model revolves around selling goods in bulk to other distributors.
Become a Wholesale Clothing Buyer with OrangeShine
Now that you know how to get a wholesale license, it’s time to get started. Register with OrangeShine and make your clothing business a reality. Still have questions? Reach out, and we’ll gladly walk you through the process.