Resale Certificate for Dollar Stores and Variety Shops: Save on Every Wholesale Order
Dollar stores and variety shops run on volume. Thin margins on thousands of low-cost items mean every penny counts. A typical independent dollar store purchases $15,000 to $35,000 in wholesale merchandise per month. At 7% sales tax, that is $12,600 to $29,400 per year in tax you should not be paying.
A resale certificate ensures your wholesale suppliers do not charge sales tax on inventory purchases. Given the already tight margins in this category (typically 30-40% markup on cost), eliminating wholesale sales tax directly increases your profit per item.
Where Dollar Stores Source Inventory
Wholesale distributors. DollarDays, S&S Worldwide, Kole Imports, Four Seasons General Merchandise, and Dollar Tree's own wholesale operations. These companies specialize in closeouts, overruns, and budget-priced merchandise. Your resale certificate is required to open a wholesale account.
Closeout and liquidation dealers. Bulq, B-Stock, Direct Liquidation, and Via Trading sell pallets and truckloads of overstock from major retailers. When buying from liquidation sources, provide your resale certificate for tax-free purchasing.
Import brokers and direct import. Many dollar store operators import directly from manufacturers (primarily from China and Southeast Asia). Import duties and customs fees are separate from sales tax. When you buy from a domestic importer or warehouse, the resale certificate applies.
Cash and carry warehouses. Costco Business Center, Restaurant Depot, and regional cash-and-carry operations. Present your certificate for tax-exempt purchases on items you will resell.
What You Can Buy Tax-Free
Everything on your shelves for customer purchase:
- Household goods (cleaning products, storage containers, kitchen utensils)
- Health and beauty (shampoo, soap, toothpaste, razors, hand sanitizer)
- Food and snacks (candy, chips, canned goods, beverages, spices)
- Party supplies (plates, cups, napkins, balloons, streamers, gift wrap)
- Seasonal merchandise (holiday decor, summer toys, back-to-school supplies)
- Toys and games
- Stationery and school supplies (notebooks, pens, tape, glue)
- Hardware and tools (batteries, flashlights, duct tape, basic tools)
- Automotive supplies (air fresheners, cleaning cloths, small accessories)
- Pet supplies (treats, toys, leashes, bowls)
- Greeting cards and gift bags
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Shelving and display fixtures | Store equipment |
| Shopping baskets and carts | Store equipment |
| POS system and receipt paper | Business equipment |
| Security cameras | Business equipment |
| Cleaning mop and bucket (for store) | Business use |
| Store signage | Business property |
| Price stickers and labels (internal use) | Business supply |
Dollar Savings
| Store Type | Monthly Wholesale Spend | Annual Tax Savings (7%) |
|---|---|---|
| Small variety shop | $8,000 | $6,720 |
| Standard dollar store | $20,000 | $16,800 |
| High-volume location | $35,000 | $29,400 |
| Multi-store operator (3 locations) | $80,000+ | $67,200+ |
Common Mistakes
Paying tax on personal items pulled from inventory. Taking products off your own shelves for personal use requires you to pay use tax on those items. This is a common audit issue in dollar stores where the line between inventory and personal supplies blurs.
Not keeping the certificate current. If your sales tax permit lapses, your resale certificates become invalid. Distributors may start charging tax again.
Ignoring food tax rates. In many states, food and grocery items are taxed at a lower rate (or exempt) compared to non-food items. Your POS needs to differentiate. Dollar stores with food sections must get this right.
How to Get Started
- Apply for your resale certificate through your state or our service.
- Register with wholesale distributors. DollarDays, Kole Imports, and closeout dealers need the certificate on file.
- Set up your POS tax tables. Food vs. non-food rates may differ in your state.
- File sales tax returns on schedule. Monthly filing is typical for stores with consistent revenue.