Certificate of Authority: What It Is, Who Needs One, and How It Works

A certificate of authority is one of those documents that goes by a dozen different names depending on which state you are in. New York calls it a Certificate of Authority. California calls it a Seller's Permit. Texas calls it a Sales Tax Permit. Colorado calls it a Sales Tax License.

They all mean the same thing: the state has authorized your business to collect sales tax from customers.

If you sell taxable goods or services, you almost certainly need one. And if you plan to get a resale certificate to buy inventory tax-free, you will likely need a certificate of authority first.

What Exactly Is a Certificate of Authority?

A certificate of authority is a state-issued registration that gives your business the legal right (and obligation) to:

1. Collect sales tax from customers on taxable transactions
2. File sales tax returns on the schedule assigned by the state
3. Remit the collected tax to the state treasury

Think of it as your license to participate in the sales tax system. Without it, you are technically operating outside the law if you are making taxable sales.

The document itself typically includes:

• Your business name and address
• Your state tax identification number
• The effective date of your registration
• Your filing frequency (monthly, quarterly, or annually)
• In some states, the specific locations where you are authorized to collect

In New York, for example, the Certificate of Authority (Form DTF-17) assigns you a Sales Tax Identification Number. You are required to display this certificate at your place of business. Operating without one while making taxable sales can result in a misdemeanor charge, fines of up to $500 per day, and seizure of your inventory.

Certificate of Authority vs. Resale Certificate

This is the distinction that trips up most business owners. These two documents serve opposite functions in the sales tax system.

Here is the simplest way to remember it:

Certificate of authority = collecting side. You collect tax from buyers.

Resale certificate = purchasing side. You avoid tax when buying from suppliers.

Most retail businesses need both. The certificate of authority lets you collect sales tax from your customers. The resale certificate lets you buy your inventory without paying sales tax to your wholesaler.

The Connection Between the Two

In most states, you cannot get a valid resale certificate without first having a certificate of authority (or its equivalent). The resale certificate requires you to provide your state sales tax ID number, which you receive when you register for the certificate of authority.

The logic is straightforward. A resale certificate says: "I am buying these goods to resell them, and I will collect sales tax from the end buyer." For that promise to mean anything, you need to be registered to collect and remit sales tax. The certificate of authority is that registration.

Practical example: You want to open a wholesale account with a supplier in New Jersey. They ask for your resale certificate. On that certificate, you need to provide your state sales tax registration number. If you have not registered for a certificate of authority in your home state, you do not have that number, and you cannot complete the resale certificate.

Apply for your resale certificate and sales tax registration today.

What Every State Calls It

The terminology varies widely. Here is what each state calls its sales tax collection authorization:

Five states have no general sales tax and therefore do not issue these documents: Alaska (no state sales tax, though some localities do), Delaware, Montana, New Hampshire, and Oregon.

Who Needs a Certificate of Authority?

The short answer: any business that makes taxable sales in a state.

You Definitely Need One If You:

• Operate a retail store selling tangible goods
• Sell products online to customers in a state where you have nexus (physical presence or economic nexus above the state's threshold)
• Sell at craft fairs, trade shows, or flea markets in a state
• Provide taxable services (the list of taxable services varies by state; New York taxes over 80 categories of services)
• Sell food and beverages as a restaurant, food truck, or catering business
• Rent tangible personal property (equipment rentals, party supply rentals)

You Might Not Need One If You:

• You only sell nontaxable items (certain groceries, prescription drugs, and other exempt goods, depending on the state)
• You only provide nontaxable services
• You operate exclusively in a state with no sales tax
• You sell exclusively through a marketplace facilitator (like Amazon or eBay) that collects on your behalf, though many states still require you to register

Multi-State Sellers

If you sell into multiple states and have nexus in each, you need a separate certificate of authority (or equivalent) in every state. This is where things get complicated for e-commerce sellers. A Shopify store owner in Georgia selling nationwide might need registrations in 20 or 30 states once economic nexus thresholds are met.

The Streamlined Sales Tax Registration System (SSTRS) at sstregister.org lets you register in 24 participating states through a single application. For non-participating states, you must register individually with each state's department of revenue.

How to Get a Certificate of Authority

The process varies by state, but the general steps are consistent.

Step 1: Gather Your Information

You will need:

• Business legal name and DBA (if applicable)
• Federal EIN (or SSN for sole proprietors)
• Business entity type (LLC, S-Corp, C-Corp, sole proprietorship, partnership)
• Business address and any additional locations
• Owner/officer information (names, SSNs, addresses)
• NAICS code (your industry classification)
• Estimated monthly taxable sales
• Date you will begin making sales

Step 2: Apply With the State

Most states offer online registration through their Department of Revenue or Secretary of State website.

Examples of where to apply:

• New York: New York Business Express (nybusinessexpress.ny.gov), Form DTF-17
• California: CDTFA Online Registration (cdtfa.ca.gov)
• Texas: Comptroller's Office (comptroller.texas.gov), eSystems portal
• Florida: Florida Department of Revenue (floridarevenue.com), Form DR-1
• Ohio: Ohio Business Gateway (gateway.ohio.gov)

Step 3: Wait for Approval

Processing times vary:

Some states issue a temporary certificate immediately and mail the permanent one later.

Step 4: Begin Collecting

Once you have your certificate, you are obligated to collect sales tax on all taxable sales effective from your registration date. You are also required to file returns on the schedule assigned to you, even if you had zero sales in a filing period.

Costs and Fees

Most states issue certificates of authority for free. A few charge a nominal registration fee:

California is notable for sometimes requiring a security deposit from new registrants. The amount depends on your estimated sales volume and can range from $0 to several thousand dollars. The deposit is refundable after you establish a good filing history.

What Happens After You Register

Filing Obligations

Your assigned filing frequency depends on your sales volume:

• Monthly: High-volume sellers (typically $1,000+ in monthly tax collected)
• Quarterly: Medium-volume sellers
• Annually: Low-volume sellers

Missing a filing deadline triggers penalties. In New York, the penalty is 10% of the tax due (minimum $50) plus 1% interest per month. In Texas, the penalty is 5% after 1 day late and 10% after 30 days.

Display Requirements

Some states require you to display your certificate of authority at your place of business. New York, for instance, requires it to be posted "in a conspicuous place" at each location. Online-only businesses should keep the certificate readily accessible for inspection.

Renewal

Most certificates of authority do not expire as long as your business remains active and you continue filing returns. Exceptions include:

• Florida: Annual Resale Certificate must be renewed each year (the Certificate of Registration itself does not expire)
• Hawaii: General Excise Tax License is permanent, but must be renewed if business structure changes
• New Mexico: CRS ID remains active as long as returns are filed

Closing Your Account

If you stop making taxable sales, you must formally close your sales tax account with the state. Simply stopping filing is not enough and can result in estimated assessments and penalties. Each state has a process for closing out, which includes filing a final return.

Common Mistakes to Avoid

Making Sales Before Registering

Some business owners start selling first and plan to "get around to" registering later. This creates an immediate compliance problem. You should have collected sales tax from day one. The state can assess back taxes, penalties, and interest for every sale made without proper registration.

Confusing It With a Business License

A city or county business license gives you permission to operate a business. A certificate of authority is specifically about sales tax. You likely need both, but they come from different agencies and serve different purposes.

Not Registering in States Where You Have Nexus

E-commerce sellers commonly register in their home state but ignore other states where they have economic nexus. If you exceeded $100,000 in sales to Texas customers last year, Texas expects you to be registered and collecting, regardless of where your business is located.

Letting Someone Else Use Your Number

Your sales tax registration number is tied to your business. Lending it to a friend, giving it to a family member, or sharing it with another business is illegal and can result in revocation of your certificate and fraud charges.

Getting Both Documents at Once

Because a resale certificate typically requires a certificate of authority, the most efficient approach is to handle both at the same time.

At ResaleCertificate.org, the application process covers your sales tax registration and resale certificate together. You provide your business information once, and we handle the filings with the appropriate state agencies.

Start your application for both documents now.

Key Takeaways

1. A certificate of authority authorizes your business to collect sales tax from customers.
2. It goes by different names in each state: seller's permit, sales tax permit, sales tax license, vendor's license, and more.
3. You need one in every state where you make taxable sales and have nexus.
4. A resale certificate is a separate document that lets you buy inventory tax-free. Most states require you to have a certificate of authority before you can use a resale certificate.
5. Registration is usually free and can be completed online.
6. Once registered, you must collect sales tax, file returns on schedule, and remit what you collect.

Related Articles

• Resale Certificate vs Sales Tax Permit: What's the Difference?
• Tax Exempt Form Guide 2026: Every Sales Tax Exemption Form You Need
• Understanding Sales Tax Nexus: A Complete Guide for Online Sellers