The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
The purpose of a resale certificate--also known as a tax exemption certificate--is to allow you to buy goods through your business without paying local sales tax.
When doing this, it's your responsibility to collect the tax from the customer when you sell the item.
The wholesaler that you purchase the goods from will request to see your resale certificate (aka tax exemption certificate) as proof that the property is being purchased for resale.
A resale certificate typically states the name and address of the buyer, the reseller’s permit number, a description of the items being purchased and a statement that the property is being purchased for resale.
Without a resale certificate, a business or individual is typically required to pay sales tax on all purchases.
A tax exemption certificate can be beneficial to your business by allowing you to avoid sales tax and pass the savings on to your consumer. It can also allow you to buy more merchandise in order to grow your business.
Please note that if you intend to make multiple purchases from the same vendor, you can usually provide your resale certificate only once to that vendor and the vendor will keep it on file.
A business owner can typically apply for a resale certificate with his/her's state tax department. Once you receive your tax exemption certificate, the state will start sending you monthly or quarterly statements.
The physical location of your business is what determines where you apply for the resale certificate, rather than the state in which you formed the company. Therefore, if you sell merchandise in more than one state, you will need to apply for resale certificates in the all states in which you operate—it does not matter where your business was incorporated.
One of the requirements for a resale certificate is to be qualified in your state to do business. If your company is physically operating in a state outside the state of formation, you will need to complete the process of Foreign Qualification, which enables a company to transact business in a jurisdiction other than where it was formed.
For more information on obtaining a resale certificate, aka tax exemption certificate, consult your local state department.
If you're interested in becoming an entrepreneur, you may be thinking, "I want to start a business. Where do I start?" When starting a business, many entrepreneurs will crowdsource others—friends, attorneys, accountants—for advice.
Planning to do the same? First, you have to ask yourself these important questions:
"What Type of Business Is Best for Me?"
A key decision is to determine the type of business you want to start. Most people will select one of three types: A corporation, a limited liability company (LLC), or a sole proprietorship. You can read about and compare these business types, and decide which is right for you.
"Can I Make a Profit?"
Every entrepreneur should ask this question up front. It will take a lot of research into production costs. If you find you can’t make money, then ask yourself, "If I reduced my costs or increased my price, can I make money?" Figure it out on paper first by making a cash flow spreadsheet.
You're also going to want to determine if you'll need investment money, and if so, how much you will need. Once you have this, one of the most important things that you can do for yourself is to create a business plan that will show all your research and present your plan for marketing your product or service.
"Do I Have the Money to Start a Business?"
By doing the above, you can determine if you have the money to start the business. Most businesses start out in the negative, so you really have to budget yourself. Not having enough startup money and proceeding anyway is why many businesses fail early and leave the entrepreneur with a big financial mess.
"What State Should I Incorporate In?"
Next, you have to determine in which state you want to incorporate your business. You can incorporate your business in any state that you would like. Generally, the two big choices are Delaware or your home state.
Your home state may be easier, but may offer pitfalls you will find out about later. Delaware is well-known for its excellent corporate law and efficient secretary of state’s office.
For 11 years in a row, the U.S. Chamber of Commerce has voted Delaware as having the best legal climate in the U.S. Delaware's Court of Chancery is run by judges, not juries, which typically results in fair business decisions and protection of the individuals behind the company.
"Where Should I Go to Start My Business?"
Typically, entrepreneurs will consult an attorney or an accountant, but you don’t need an attorney or an accountant to incorporate your business. Business formation is a relatively easy process and should cost you anywhere from $250 to $500.
Call us here at Harvard Business Services (800-345-2677). Since 1981, we have been helping entrepreneurs from all over the world form Delaware LLCs and corporations. We will guide you through the entire process from start to finish. We'll explain the difference between the LLC and corporation, discuss why a number of businesses incorporate in Delaware, walk you through how to form the company, help check the business name's availability, and take care of preparing and filing the Certificate of Formation/Incorporation with the State of Delaware. We make it easy for you.
It takes just a few minutes for us to gather all the information we need. We will have your company filed on the same day, and approved documents will be delivered to you in two to three business days via email.
We can also help you obtain your federal tax ID number (EIN), which is needed to conduct lawful business activities in the United States. (Think of it as a social security number for your business.) Once you obtain a federal tax ID number and have the Certificate of Formation, you can open a business bank account, hire employees, and open up an office.
With the right resources, starting a business is not complicated. When you have a company that wants to help you become successful, it's even easier.
When you’re ready to start your business, please reach out to us via phone (800-345-2677), email, or live chat. You can also form your company online with our easy-to-use order form. We always have friendly incorporation specialists standing by to help!
We are noticing a new business trend that many clients are taking advantage of. First, they form an LLC and THEN they apply for their FFL (Federal Firearms License) with the ATF. This generally allows you to operate a home business or store in the business of servicing, manufacturing, importing, and selling of firearms. This FFL license application business idea is becoming more and more popular. Here are some tips we learned from our clients.
If you are planning on applying for a federal firearms license with the ATF, you may wish to consider forming an LLC first. Why? The ATF is typically more inclined to approve your application if you apply as a business and not as an individual. An FFL can allow you to purchase, sell, and even manufacture handguns for a profit, among other things, depending on your specific license. Because the Federal Firearms License allows you to take these actions, the ATF wants to know that this is your business and not just a hobby. The ATF typically will not approve this license for a person just looking to buy firearms for his personal collection. They are looking for you to run this as a business for the purpose of making a profit.
Your LLC will have many other benefits as well when it comes to your Federal Firearms License. Many wholesalers would rather do business with another company than an individual. Creating a good relationship with wholesalers can be a great start in getting your business off of the ground. On top of that, your LLC’s expenses, as well as the other costs involved in getting your FFL can be deducted. Speak with your tax professional on the specifics of exactly how your LLC can be a tax benefit for your Federal Firearms License as a business.
Another reason to form an LLC is for liability purposes. Clients form LLCs every day in order to separate their business activities from their personal assets. This is an important consideration, especially with the potentially dangerous nature of the products you are selling and receiving.
Clients typically do not use their personal name when filing an LLC for the Federal Firearms License for privacy reasons. For example, John Smith LLC, tells everyone that John Smith is most likely the owner of John Smith, LLC. This just takes away some of the privacy and security that your LLC can provide.
For more information and help in forming your LLC, contact Harvard Business Services, Inc by phone (800-345-2677), email, or live chat. We have representatives that form companies every day, all day, and are happy to answer your questions. We can form an LLC for you in any state you choose, and can also give you the advantages of one state over another.
If you'd rather form your LLC online, please visit our easy-to-use LLC order form.
The Delaware limited liability company (LLC) is certainly our most popular entity type. More than two-thirds of all new companies that we form are LLCs! Many clients use the Delaware LLC due to the protection of personal assets and flexibility that it offers.
One of the questions that we are often presented with is, "I need to know how to prove ownership of a Delaware LLC. How can I do that?" When you form a Delaware LLC, you are not required to provide the state of Delaware with any owner / member information. For more information on what is required, take a look at this article, which explains the requirements. The minimal information required is great for many clients, as they are aware this offers another layer of protection on top of Delaware's strong corporate law. However, this often leads to the question of how they will then display ownership.
The Delaware LLC is governed by a contract among all the members called the "operating agreement," which all members must sign. As a member, you should have a copy of the agreement, which you can then present to a bank or other official to verify that you are a member of the LLC.
In addition to the Delaware LLC operating agreement, you are also able to prove ownership by showing your LLC membership certificates. Like a stock certificate, the LLC membership certificate should be distributed to the members, displaying the percentage of ownership they have in the business. In many cases, clients also use what is called the "member resolutions," which can also display specific privileges or responsibilities of a member or members within the Delaware LLC. You can find templates of all these documents within our company kit that is included in our Standard and Premium packages.
We're available to answer any questions you may have about forming and maintaining a Delaware LLC. Simply call (800-345-2677), email, or live chat with us!
When you want to buy something online, how do you know if the company is legit? Typically, you read reviews of their services and products.
Within the past few years, several companies have sprung up that act as independent collectors of customer comments about merchants. Since these companies are not affiliated with the merchants, their findings and reviews are typically considered more trustworthy.
From the merchant’s point of view, having an independent company monitor and archive comments about them online provides them with valuable unbiased information to improve their customer experience and maintain a high quality reputation online.
That's why we've teamed up with Trustpilot, the industry’s most trusted source for independent customer service data. We invite all of our clients to write a review on Trustpilot of their experience with us, both to help us better serve you in the future and educate others about our great service!
Whether you're a new client or have worked with us for years, we'd love for you to share your experience with us! To do so, simply click the image below and write a review. The process is fast and easy!