Becoming a Reseller & Sales Tax

Is getting a resale license for personal use considered fraud?

No. There is nothing wrong with getting a resale license for personal use. Most likely, you will not be buying hardware just for yourself, and instead will be selling hardware to friends and relatives too. In fact, the majority of the e-mails we have received on this article are from end-users who have turned resellers to sell hardware to their friends and family.

Is buying evaluation or demo units from manufacturers for personal use considered fraud?

No. Manufacturers often offer resellers special programs to buy their hardware or software at below retail cost so that resellers can be better educated on the products. If the reseller knows a particular brand of product better, chances are good that the reseller would in turn recommend them when making a sale. However, this is not to say that all legitimate resellers buy evaluation or demo units for the sole purpose of being better educated on them. A lot of resellers buy evaluation or demo units for themselves just because they are good deals. Nonetheless, any end-user who takes the effort to get a resale license and open accounts with distributors is probably not the average consumer. More often than not, users who go through this effort are opinion leaders amongst their group of friends or family. Thus, it can be argued that the better educated these users are on a product, the more likely they will recommend it to their friends and people they know. In that sense, they are not much different from the average full-time reseller, and thus should not be treated any differently from one. But we would like to point out that we do not encourage users to set up reseller accounts just for themselves. Distributors do spend a lot of time setting up the accounts, and it is not really fair to them if you only intend on just buying a couple items for yourself.

Do I have to pay sales tax even though the distributors don't require me to?

Yes. A lot of resellers do skip paying sales tax on personal items. In fact, a lot of shady resellers even offer their customers zero sales tax if they pay by cash. But we do not recommend you skip sales tax, even if the items are for personal use. If you get caught, you will most likely get audited and have your license revoked (if it's serious, expect some jail time too.) The only times you are not required to pay sales tax are 1) if you sell the product to someone out of state, or 2) the product is used for demo purposes.